(Economic Watch) China releases monetary policy signals, where will the "live water" flow in the second half of the year?

  China News Service, Beijing, August 3 (Reporter Xia Bin) Judging from the signals released by two recent important meetings, the direction and goal of China's monetary policy in the second half of the year has been formally established.

  "Macropolicy must be active in expanding demand." The Politburo meeting of the Central Committee of the Communist Party of China held on July 28 proposed that monetary policy should maintain reasonable and sufficient liquidity, increase credit support for enterprises, and make good use of new credit from policy banks and infrastructure investment funds.

  On August 1, the People's Bank of China held a work meeting for the second half of the year to make arrangements for key tasks in the second half of the year. "Maintaining stable and moderate growth in money and credit" ranked first among the seven key tasks.

  Outside analysts believe that the implementation of existing policies will be the mainstay of the stable operation of the macro economy in the second half of the year.

Wen Bin, chief economist of Minsheng Bank, pointed out that from the statement of the Politburo meeting, it shows that there is no "overweight" in monetary policy, and it is expected that the policy will continue to maintain continuity in the second half of the year. We will increase the credit expansion of new credit banks and infrastructure investment funds.

  According to Mingming, the chief economist of CITIC Securities, the Politburo meeting of the Central Committee further clarified the direction of monetary policy: focusing on the liquidity environment, increasing corporate credit and quasi-fiscal support for infrastructure investment.

  Mingming believes that the goal of macro policy is to stabilize employment and prices, and there is no need to overdraft the total policy space in advance.

At the level of monetary policy, it is expected that the year-on-year CPI (Consumer Price Index) will increase in the weight of monetary policy decision-making in the second half of the year. Wide credit scene.

  According to Lian Ping, Chief Economist and Dean of the Research Institute of Zhixin Investment, macro policies need to focus on stabilizing the economic market, and give priority to ensuring the realization of the goal of stabilizing employment and prices; Stimulus measures, no over-issuance of money, no advance for the future.

  "The prudent monetary policy focuses on refined operations, and the aggregate tools will still maintain relatively ample liquidity to meet the needs of the economy to stabilize and recover." Lian Ping said that in July, the issuance of local government bonds shrank, and fiscal expenditures such as special debt funds were further accelerated. , the epidemic has repeatedly affected the seasonal revenue growth of the fiscal year in July, and the central bank’s reverse repurchase funds are relatively small, and 300 billion yuan (RMB, the same below) financial instruments and 800 billion yuan policy bank credit lines will also be released. Funds, the market liquidity in August may still maintain a relatively comfortable situation.

  "The monetary policy maintains a prudent tone, focusing on the dual functions of the total amount and structure of policy tools, and it is unlikely that the liquidity will shrink significantly during the year." Lian Ping believes that the current global inflation is still at a high level, and overseas monetary policies continue to tighten. And there are strong tightening expectations in the short term, and the probability of China's policy rate cut in August is still low.

  Macro policy needs to make a fuss about expanding demand. Where should the focus be?

Where will the "living water" driven by monetary policy flow?

  Guo Lei, chief economist of GF Securities, said that to drive total demand, it is nothing more than a troika of investment, export, and consumption. Among them, the relatively more flexible policy is mainly fixed asset investment, and among fixed asset investment, the policy is the most controllable. The most important thing is infrastructure, so this Politburo meeting specifically mentioned that policy banks should make good use of new credit and infrastructure construction investment funds.

  Previously, Chinese officials have increased the credit line of policy banks by 800 billion yuan, and promoted the establishment of 300 billion yuan of policy development financial instruments to support medium and long-term infrastructure loans.

  "The traditional infrastructure sector must play a counter-cyclical adjustment role, and it may also become one of the important starting points for medium and long-term loan issuance." Zhong Zhengsheng, chief economist of Ping An Securities, said that the 800 billion yuan new loan quota for policy banks in the second half of the year may be Loans to the infrastructure sector have been greatly boosted.

  According to Zhong Zhengsheng's team, the scale of new domestic loans of the three policy banks from 2019 to 2021 will be 1.35 trillion yuan, 2.13 trillion yuan and 1.65 trillion yuan respectively.

Taking into account the new loan quota of 800 billion yuan, the new loans of policy banks in 2022 may reach 2.4 trillion yuan to 2.6 trillion yuan.

  Zhong Zhengsheng said that among policy banks, China Development Bank is more focused on the field of infrastructure. According to the 2021 annual report data, the balance of its loans to infrastructure-related industries accounts for as high as 54%.

The volume of infrastructure investment in 2021 will be about 18.87 trillion yuan. Assuming that about 500 billion yuan of the new 800 billion yuan loan quota of policy banks will be invested in the infrastructure field, it will boost the growth rate of infrastructure investment by 2.65 percentage points, becoming the An important engine for "stabilizing growth" and "stabilizing credit".

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