RMB Exchange Rate Needs To Remain Stable

Zhu Guangyao, Vice Minister of finance of China, today attended the G20 meeting of the International Finance Association (IIF), pointing out that China will raise its deficit this year and the RMB exchange rate needs to remain stable, hoping to have a good communication with the market.

Zhu Guangyao pointed out that China still has room to raise its budget deficit in 2016. "The two sessions will raise the deficit in March."

He also mentioned that avoiding financial risks and regional risks is one of the important tasks of this year.

China sees that the global economy is at risk, and China is trying to coordinate with G20 members to enhance global confidence.

In communication with the market, he said that this year also hopes to have good communication with the market and enhance pparency.

China is striving to leverage and cope with overcapacity.

The RMB exchange rate also needs to remain stable, and it is confident that the RMB exchange rate should be kept at a reasonable and balanced level.

Yesterday's Wall Street news report, the central bank survey and Statistics Division Director Sheng Songcheng recently written in his personal name, suggested that in the next period of time, China's fiscal deficit rate can be raised to 4% or even higher.

Sheng Songcheng said that assuming that the government debt ratio at the end of 2015 was 39%, the local currency debt interest rate will be 4% every year for the next 10 years, and the GDP growth rate will remain unchanged at 6%.

How to change.

The result shows that even if the deficit rate reaches 4%, the government debt ratio of our country in 10 years will be only 68.9%, which is lower than most countries.

This shows that there is still room for China to adopt a proactive fiscal policy. The so-called 3% warning line is not in line with China's actual situation.

At the end of last year, Lou Jiwei, Minister of finance, pointed out clearly at the national financial work conference that in accordance with the deployment of the central economic work conference, we should continue to implement the proactive fiscal policy and intensify our efforts in 2016 and in the future.

This is mainly reflected in the following aspects: increasing the deficit rate stage by stage, expanding the deficit scale, and increasing accordingly.

The scale of issuance should be reasonably determined to determine the new debt limit of local governments.

According to the Ministry of finance, China's fiscal expenditure increased by 15.8% to 17 trillion and 600 billion yuan in 2015, while the fiscal revenue increased by 8.4% to 15 trillion and 200 billion yuan.

In this regard, Nomura, China's chief economist

The deficit is equivalent to 3.5% of GDP, which is higher than the 2.3% deficit limit set by the Chinese government.

This means that the Chinese government is further loosening its fiscal policy.

In addition to Nomura, Huatai Securities analyst Zhang Jing and Wang Yupeng also pointed out that the deficit in 2015 exceeded the target of the beginning of the year: the actual deficit in 2015 was 2 trillion and 354 billion 630 million yuan, an increase of about 630 billion yuan compared with the budget deficit arrangement, an increase of 36.60% over the budget.

Without considering the budgetary stability regulation, the actual deficit rate of the fund and the last year's carry over funds reached 3.48%.