On August 9, the Governor of the Central Bank Yi Gang made the latest statement on the direction of monetary policy in the second half of the year. In an interview with the media, he said that the monetary policy should be more flexible, appropriate, and precise, and the policies that have been introduced to stabilize enterprises and ensure employment should be implemented and effective.
Not only Yi Gang, but according to the statistics of China Business News, in recent days, the central ministries and commissions such as the Development and Reform Commission, the Ministry of Finance, the Ministry of Human Resources and Social Security, and the Ministry of Commerce have also spoken intensively. This is after the Politburo meeting held at the end of last month to set the tone for economic work in the second half of the year, the main responsible persons of the central ministries and commissions have concentrated their voices on specific work arrangements, sending an important signal.
From the information disclosed by the ministers, in the specific work of the second half of the year, relevant ministries and commissions will grasp the strategic basis of expanding domestic demand and promote the domestic and international dual cycle. Smart retail, online education, and auto appliances will become important areas for boosting consumption in the second half of the year. , The development of county consumption is the focus and potential of this expansion of domestic demand. Promoting "two new and one heavy", public health, transportation and energy and other fields to make up for shortcomings is an important focus of stabilizing investment, and promoting the recovery of private investment has become an important starting point for stabilizing investment in the second half of the year.
How to go about fiscal and monetary policy in the second half of the year
The Politburo meeting held on July 30 pointed out that to do a good job of economic work in the second half of the year, we must adhere to the general tone of the work of seeking progress while maintaining stability and firmly grasp the strategic basis of expanding domestic demand. It is necessary to ensure that macro policies are implemented and effective. Fiscal policy should be more proactive and effective, focusing on practical results. Monetary policy should be more flexible, moderate, and precise.
Minister of Finance Liu Kun said in an interview with the media on August 6 that, as of July 29, of the 1.7 trillion yuan of funds that have been directly managed, the provincial finance departments have allocated 1.5 trillion yuan, and the city and county financial departments The project has been implemented in detail to 1.29 trillion yuan, providing effective financial support for the "six stability" work, the implementation of the "six guarantees" task, and the implementation of tax and fee reductions. As of July 30, the 1 trillion yuan anti-epidemic special treasury bond has all been issued.
In order to make the newly-increased financial funds go to the grassroots level of cities and counties directly to benefit enterprises and people, the Ministry of Finance has established a special transfer payment mechanism to build an institutional system covering the entire process of fund allocation, appropriation, use, and supervision, and develop China Unicom The direct fund monitoring system of all levels of finance realizes the whole chain and whole process monitoring.
He said that in the next step, fiscal policy will focus on the implementation of the "six guarantees" tasks. Among them, to ensure the employment of residents is to comprehensively strengthen the employment priority policy and support the employment of college graduates, migrant workers, veterans and other key groups. . Basic people's livelihood protection means to do a good job of inclusive, basic, and comprehensive people's livelihood construction, to provide key guarantees for the unemployed, college graduates, people in need, and retirees, and resolutely win the fight against poverty. Protecting market entities, that is, focusing on supporting the relief and development of small, medium and micro enterprises and industries that have been hit hard by the epidemic, and fully implement various tax and fee reduction policies and measures to help enterprises save volume, ensure capital chain, and ensure employment post.
In addition, to ensure food and energy security means to construct and improve the policy system and institutional mechanism for financial support to implement the rural revitalization strategy, and to ensure the supply of food and important agricultural products. To ensure the stability of the supply chain of the industrial chain, that is, to give full play to the structural control advantages of fiscal and taxation policies, support to open up the "blocking points" in the supply chain of the industrial chain, make up "breakpoints", accelerate the resumption of production and resumption of enterprises, and stabilize foreign trade. Basic foreign capital, guaranteeing enterprise production and stabilizing Chinese manufacturing. To ensure the operation of the grassroots level is to increase support for local financial resources, ease the pressure on fiscal expenditures caused by the slowdown in local income growth, and secure the bottom line of the "three guarantees".
In an interview on August 9th, Yi Gang said that a variety of monetary policy tools will be used to guide the broad money supply and the growth rate of social financing to be significantly higher than last year. At the same time, pay attention to grasping the rhythm, optimizing the structure, and promoting inclusiveness. Loans to small and micro enterprises and medium- and long-term manufacturing loans increased reasonably.
This is the third time the central bank has expressed its position on monetary policy in a week.
Since the outbreak of the epidemic, in response to the impact of the epidemic, the central bank has adopted a financial policy of "expanding total volume, ensuring supply, promoting growth, lowering interest rates, adjusting structure, and protecting the main body", and has achieved remarkable results.
At present, my country's economy has achieved the first recovery in the world. my country's GDP rebounded strongly in the second quarter. GDP grew by 3.2% year-on-year, making it the only major economy in the world with positive growth. Yi Gang said: "In general, the characteristics of China's economic potential and resilience have not changed. my country's economic growth will continue to recover in the second half of the year, and it is expected to achieve positive growth throughout the year."
As economic growth continues to pick up, the monetary policy that was loose in the previous period will be adjusted. Yi Gang said that in the second half of the year, the central bank will maintain a moderate and reasonable growth of financial aggregates, focus on stabilizing enterprises to ensure employment, prevent and resolve major financial risks, accelerate the deepening of financial reform and opening up, and promote healthy economic and financial development.
The chief analyst of CITIC Securities’ fixed income clearly told reporters: “From the perspective of the total amount, a moderate monetary policy must be loosened and cannot be flooded. In fact, this itself is a continuation of the operation of the monetary policy since the second quarter. That is to say, the amount of liquidity is reduced and the interest rate of open market operations remains stable. On this basis, stable currency will continue throughout the second half of the year."
Hue, chief economist of Founder Securities, also told CBN: “Monetary policy depends on the economic operation trend. With the national economy gradually improving and gradually coming out of deflation, the policy trend of June and July will continue. Monetary policy will not If it is too loose, it will still focus on stability. The probability of a RRR cut in August is low."
Relevant data shows that as of July 27, the 1 trillion re-lending and rediscount policy has supported local corporate banks to issue loans with preferential interest rates of 457.3 billion yuan. "There is still 542.7 billion yuan of re-loan rediscount quotas, and monetary policy tools that directly reach the real economy will continue to play a role. Relatively speaking, the probability of targeted RRR cuts is relatively small." Mingming said.
Wang Qing, chief macro analyst at Oriental Jincheng, believes that, combined with the analysis of the monetary policy implementation report in the second quarter, the possibility of the central bank lowering the MLF bidding rate and the 7-day reverse repurchase rate in the second half of the year will decline, but including corporate general loan rates The comprehensive financing costs of enterprises in this category will still maintain a rapid downward trend.
Stabilize foreign and foreign trade and expand domestic demand
When studying and judging the foreign trade situation in the second half of the year, Minister of Commerce Zhong Shan said recently, "The main task in the second half of the year is to stabilize the basic market for foreign trade and foreign investment, promote the development of domestic consumption, and promote the domestic and international dual cycle."
In the second half of the year, the situation facing my country's foreign trade is more complicated and severe. The impact of the global economic downturn on demand will be further revealed, the supply chain of the industrial chain will be blocked, and the survival pressure of foreign trade companies will still be great. Efforts should be made to stabilize the main body of foreign trade, stabilize the supply chain of the industrial chain, and stabilize the status of a global trading country.
"The Ministry of Commerce will increase policy support, promote the introduction and implementation of a series of stabilization and relief policies such as export tax rebates, foreign trade credit, export credit insurance, and export to domestic sales, so that the policies will benefit more foreign trade enterprises, encourage enterprise innovation and development, and stimulate enterprise vitality "Zhong Shan said.
"China has a huge market of 1.4 billion people and a complete industrial supporting system. The business environment is constantly improving. I believe that smart foreign businessmen will not abandon the Chinese market." Zhong Shan said that the Ministry of Commerce will focus on three aspects in the second half of the year, focusing on Efforts should be made to stabilize the stock of foreign capital and increase the increase in foreign capital to maintain its status as a major country in the use of foreign capital.
In the second half of the year, efforts will be made to expand domestic demand. Zhong Shan said that efforts should be made to innovate circulation and promote consumption, including increasing urban consumption, expanding rural consumption, and developing service consumption.
How to advance the strategy of expanding domestic demand? Ning Jizhe, deputy director of the National Development and Reform Commission, said that my country has a population of 1.4 billion people and more than 400 million middle-income groups, and the domestic market is vast. It is necessary to actively expand consumer demand, implement consumer policies, guide the direction of consumption, improve the consumption environment, and increase consumption capacity.
To expand domestic demand, we must give better play to the fundamental role of consumption in economic growth. Ning Jizhe said that in the second half of the year, China will accelerate the promotion of high-quality development of new types of consumption such as smart retail and online education, promote the transformation and upgrading of consumption of automobiles and home appliances, encourage cities with restricted purchases to appropriately increase vehicle purchase quotas, relax restrictions on the purchase of new energy vehicles, and impede the purchase of new energy vehicles. Appropriate subsidies are given to energy vehicles.
The sudden epidemic has caused consumption to move from offline to online, and new types of consumption such as online education, remote office, live delivery, and store-to-home have become popular, which not only efficiently matches the supply and demand sides, stimulates consumption replenishment, but also profoundly affects the industrial form, Livelihood security and other aspects.
According to industry analysis, the new type of consumption is a new breakthrough point in the consumer sector, and it will be a great weapon to boost consumption, expand domestic demand and promote smoother domestic circulation. The role of new consumption is to allow consumers to obtain more consumption services through channels such as reducing transaction costs, improving consumption experience, and accelerating consumption speed under the condition that consumers’ income remains unchanged. Upgrade and other phenomena.
For example, smart retail requires retail to fundamentally improve efficiency and reduce costs. Behind it is the joint improvement and in-depth cooperation in the fields of logistics, Internet and technology. Once smart retail develops rapidly, it means that transaction costs in the consumption process will be reduced. This will stimulate consumption growth.
The transformation and upgrading of consumption of automobiles and home appliances will also inject vitality to boost consumption. In the first half of the year, the State Council, the National Development and Reform Commission and other departments have launched supporting policies "combined boxing." For example, the "Opinions on Accelerating the Development of Circulation and Promoting Commercial Consumption" proposes to gradually relax or cancel the restrictions on automobile purchases; the "Notice on Several Measures to Stabilize and Expand Automobile Consumption" clearly extend the new energy vehicle purchase subsidy policy until the end of 2022. Local policies and measures for unbinding purchase restrictions have also been introduced. Since August 1, Beijing has issued a one-time additional 20,000 new energy minibus indicators for "car-free families".
"There is another point. The development of consumption clusters in the county is the focus of this expansion of domestic demand, and it is also a place with great potential for consumption development. For example, the reconstruction of pedestrian streets in the county should be supported by loans, and some enterprises can also be issued. Bonds are used to support this transformation, making China's consumption not only in large cities, but also in medium-sized cities, as well as in county towns." Ning Jizhe said.
The Politburo meeting on July 30 pointed out that it is necessary to drive investment and consumer demand with new urbanization, and promote the innovation of the integrated development system of urban agglomerations and metropolitan areas.
Feng Kui, a researcher at the China Center for Urban and Small Town Reform and Development, believes that from a demand perspective, the advancement of urbanization will expand domestic demand, increase investment, and discover China's long-term growth potential. In the long run, we must firmly follow the path of urbanization, absorb and train new citizens, and continue to grow the middle-income group.
Attracting private capital into new areas such as "two new and one heavy"
In terms of investment, Ning Jizhe stated that it is necessary to effectively expand investment demand, promote the "two new and one heavy" (that is, new infrastructure construction, new urbanization construction, transportation, water conservancy and other major construction projects), increase public health, emergency material reserves, To make up for shortcomings in areas such as transportation and energy, implement urban renewal, and speed up the transformation of old urban communities.
Ning Jizhe emphasized that the investment in the national budget, local special bonds and special anti-epidemic special national bonds should be used for investment in projects, direct to enterprises and projects, and funds follow the projects.
Private investment accounts for nearly 60% of the investment of the entire society. It is an important force in stabilizing investment and an important starting point for stabilizing investment in the second half of the year.
In the first half of the year, especially in the second quarter, stable investment including stable private investment has made positive progress. The rate of decline in private investment in the second quarter narrowed by 18.6 percentage points from the first quarter. The private investment in 11 provinces including Hunan and Zhejiang has achieved positive growth, and the growth rate of private investment in 5 provinces including Shanxi and Yunnan has exceeded 8%. However, compared with the overall investment, the growth of private investment is still relatively lagging, and more targeted measures must be taken to promote the development of private investment.
Opening major investment areas to private enterprises is an important part of stimulating the vitality of enterprises and tapping the potential of private investment. Recently, a series of policies and measures have been intensively introduced from ministries and commissions to local governments to attract private capital into the "two new and one heavy" field. Ning Jizhe emphasized that in the second half of the year, my country will further improve the environment for private investment and increase policy support. Support the entry of private investment into new areas, and encourage private capital to increase investment in the "two new and one heavy" areas.
Pan Helin, executive dean of the Digital Economy Research Institute of Zhongnan University of Economics and Law, told China Business News that the frequent implementation of recent private investment stimulus policies is an important measure for us to improve the market-based investment and financing mechanism and encourage private capital to participate in social construction. This indicates The spring of private investment has arrived, and among them, the "two new and one heavy" is one of the breakthroughs, and in the future it will also become a key area for private investment to show its talents.
Pan Helin said that from an objective point of view, with the gradual advancement of tax and fee reduction policies, the government's financial burden has increased, and it is imperative to use private investment to share some of the burden of government investment. From the perspective of investment effects, private investment is often less affected by objective factors such as administration, and investment efficiency is higher than that of government investment, and its stimulus effect on the economy is also better.
Author: ▪ sweet wish Duan Yu