Yi Xianrong: Will There Be A Major Adjustment In The Current Monetary Policy?

From the data in August, both financial data and economic data are worse than expected, such as fixed asset investment, total retail sales of social consumer goods, and scale industrial added value. The growth rate of Keqiang index (that is, electricity consumption, freight volume and new loan volume) is more than a new low since December 2008.

Many people believe that the central bank's monetary policy will face a major adjustment.

Some institutions predict that the possibility of reducing interest rates will increase, but some people believe that monetary policy will be more structural adjustment, and the central bank may achieve the goal of reducing interest rates through other policy tools.

For example, the people's Bank of China implemented the 500 billion yuan standing lending facility (SLF) operation for five major banks in September 16th, with a term of 3 months, similar in nature to the basic currency, and its scale was approximately 0.5 percentage points.

This also means that the monetary policy of the domestic central bank will be relaxed and normalized in a short period of time, and it is also expected to strengthen the overall adjustment of monetary policy.

That is to say, in the face of the downward pressure of economic growth, although the central bank will never introduce a comprehensive quantitative and qualitative easing monetary policy as in the second half of 2008, directional quantitative easing may become a normal policy of the domestic central bank in the short term.

The problem now is that the downward trend of domestic economic growth has become a trend. (some analysts believe that the economic growth in the third quarter of this year may not be higher than 7.3%). Will there be a major adjustment in the central bank's monetary policy? If there is a major adjustment, will it reduce the interest rate comprehensively? If there is a major adjustment, what is the effect of the real economy growth? If not, will the current quantitative easing monetary policy play a positive role? Can the issue of real economy be resolved by loose monetary policy?

In this paper, although the market is expected to reduce interest rates comprehensively, the probability of major adjustment of monetary policy in the central bank will not be too high.

Because, in the summer of 2014, Davos Premier Li Keqiang said that although some economic indicators fluctuated in the past few months, such as electricity consumption, freight volume and loan supply, China's economic growth is still in a reasonable range.

That is to say, the government's pressure on the downward trend of current economic growth is greater than that of the market, and it is not considered that the current economic data is less than expected.

Therefore, there is no need to introduce a comprehensive monetary policy to stimulate economic growth.

Two, the government should have a deep understanding of the sequelae of the comprehensive loose monetary policy launched in the second half of 2008.

This has the important conclusion of deepening the economic reform and economic growth mode pformation in the the third Plenary Session of the 18th CPC Central Committee resolution.

If one is facing the pressure of economic growth downward, the central bank's monetary policy will adopt a general loose monetary policy or a comprehensive reduction of interest rates. Then the Chinese economy will go to the old way of boosting investment and real estate by excessive credit expansion, which will make this economic growth the biggest stumbling block of reform.

Three, under the current China's economic background, if the domestic central bank once again adopts a more relaxed monetary policy, because many domestic enterprises and industries lack enough desire for capital, the most loose monetary policy funds will not flow into the real economy, unless these enterprises can enter the real estate market after borrowing money from bank of China.

Moreover, at present, domestic banks will have insufficient willingness to expand excessive credit expansion.

Because in the face of the risk of domestic economic downturn and the rapid increase of bad loans in the banking sector in recent years, forcing banks to compel credit risk control and be more cautious about credit expansion.

For example, the first half of the year showed that the balance of non-performing loans in the first half of the five banks totaled 423 billion 500 million yuan, up nearly 50 billion yuan compared with the same period last year, and the non-performing loan ratio also increased by 0.1%.

And the more serious problem is that

The vast majority of credit is related to the real estate industry. If the real estate market has a cyclical adjustment in depth, then the quality of domestic bank assets may face serious deterioration.

。

Under such circumstances, the most relaxed monetary policy allows the probability of capital flowing into the real economy is also not high.

Therefore, the central bank's monetary policy focuses on promoting the pformation and deepening reform of the domestic economic growth mode instead of making the domestic economy return to the old way of economic growth through excessive credit expansion.

It can be said that all kinds of problems in China's economic life are the sequelae of the "real estate" economy caused by various credit resources coming into the real estate market in the early years.

The old growth mode completely destroys the effective allocation of domestic resources, distorts the market price mechanism, reverses the distribution of social interests, and changes the national industrial structure, enterprise management mode and personal value orientation.

So after the eighteen and the following the third Plenary Session of the 18th CPC Central Committee, the government saw the serious problem of the old economic growth mode and asked for it to be carried out.

The pformation is the focus of China's current economic and monetary policies.

It can be said that the current downward pressure on domestic economic growth is difficult to alleviate, to a large extent, a result of the pformation of economic growth mode to another economic growth mode.

This pformation of economic growth mode will inevitably lead to a cyclical adjustment in the investment led housing market after more than 10 years of price inflation.

If there is no cyclical adjustment in the domestic housing market, it is impossible to achieve such a pformation.

The cyclical adjustment of the housing market will inevitably make the downward adjustment of the investment led housing market price. It will inevitably reduce the industry and industry demand which is closely related to the housing market, and the GDP growth with real estate as the main content will descend, and even the related financial risks will gradually emerge.

These are the costs and costs to be made in the pformation of the mode of economic growth.

Without paying these costs and costs, it is impossible to realize the pformation of the old economic growth mode to the new economic growth mode.

The pformation of China's economic growth mode must be realized through a series of deepening reforms.

Because the current "real estate" of China's economy lies not only in the old industrial policy and land system, but also in the existing financial system, monetary policy, tax policy, fiscal policy and household system.

Only through a series of deepening reforms can we gradually adjust the current mode of economic growth.

For example, the land finance of local governments is seriously related to the defects of the current fiscal policy, land system and real estate tax policy.

For example, in the first half of this year, the contribution rate of final consumption to GDP growth reached 54.4%, and the GDP growth rate was 4 percentage points.

Under such circumstances, loose monetary policy plays a very limited role in this pformation.

It can be seen that in view of China's actual situation, this year, the domestic central bank will reduce the probability of reducing interest rates completely. The directional macro regulation should be the theme of the coming months.