The Contraction Of China'S Credit Policy Has Begun.

Combined with authoritative speeches and April credit data, we can judge that China's monetary policy will tighten in the process of returning to stability, but there will be great risks in the rapid change of direction.

In the next stage, monetary policy will return to sound and cooperate with fiscal policy, so that the bottom line of steady employment and risk prevention can be maintained.

China's credit policy has begun to shrink? Has China's credit policy begun to shrink?

The central bank released credit data on 5 / 13. In April, the new RMB loan decreased by 60% from March to 1 trillion and 370 billion yuan, to 555 billion 600 million yuan, less than expected 800 billion yuan. The scale of social financing dropped from 68% to 751 billion yuan in March, reaching only half of expected 1 trillion and 300 billion. M2 growth rate also dropped from 13.4% to 13.4%.

Among them, the medium and long term loans of non-financial enterprises and government organs decreased by 43 billion yuan, which is the lowest value since the beginning of credit statistics.

The stimulus to the economy, especially through leverage and over credit, will probably decrease. The credit data of April may indicate that the central authorities have already begun to adjust before the announcement of authoritative speeches.

However, the author estimates that although monetary policy will be less relaxed than the previous stage, the possibility of a 180 degree directional change is not large.

The author's judgement is based on the following three points:

First, the drop in credit data in April was an adjustment to excessive lending in the first quarter, and a huge credit substitution effect of local debt issuance in April.

According to the latest WIND data, the scale of issuance of local government bonds in April reached 1 trillion and 60 billion, compared with 166 billion 800 million in February and 7887 billion in March.

In the context of the replacement of local government debt, the extrusion effect of corporate loans is obvious, which distorts M2 and credit data.

Moreover, the interbank offered rate in Shanghai in April did not change significantly compared with the previous March, and the cost of capital remained low and did not tighten.

Looking back at the first quarter data, RMB loans increased by 4 trillion and 610 billion yuan, an increase of 930 billion 100 million over the same period last year, a record high of 4.59 trillion yuan in the first quarter of 2009.

The first quarter data triggered concern over the credit crisis of the super credit sector, coupled with the frequent occurrence of credit default in April, and the vigilance of the increase in non-performing loans and triggered systemic financial risks.

With the increase of RMB loans of 13 trillion yuan this year, new credit in the first quarter has reached about 40% of the whole year. The drop in credit data in April was a natural adjustment for the first quarter.

Second, there are two points to be noted in reviewing the authority's speech: the authorities did not propose to abandon the growth target of 6.5%-7%, prudent in judging the economic situation, reflecting the necessity of the economic need for bottom up. Although their attitude was against massive stimulus, they stressed the importance of "stabilizing and expanding employment" and "guarding against economic risks", which objectively needed relatively loose policy support.

First, authorities did not propose giving up 6.5%-7%.

The judgment of the economic situation in the first quarter is also relatively cautious.

He said, "overall, the economic situation started this year is steady.

The overall trend of economic operation is in line with expectations, and some bright spots are better than expected.

However, the inherent contradictions in economic operation have not been alleviated, and some new problems have exceeded expectations.

Therefore, it is difficult to describe the simple concept of "good start" and "little spring". However, it is undeniable that the inherent contradictions we are facing have not yet been fundamentally solved, and some new problems have also been exposed.

The foundation of "stability" still relies mainly on the "old way", that is, investment pull, pressure on fiscal revenue and expenditure in some areas is greater, and the probability of economic risk increases.

The prudent judgement of authoritative people's economic situation reflects the necessity of underpinning.

Secondly, although the authorities oppose the "flood irrigation" expansion method to give the economy a shot in the arm, they also say, "the demand side plays an important role in building up the environment for solving the main contradiction".

In the full text, the authority referred to "employment" for the 9 time, emphasizing that "stabilizing and expanding employment is an important goal of macroeconomic policy". Authoritative personages use a topic to answer "how to guard against economic risks", and put forward the importance of expected management and the key to expected management is "stable policy".

The objective of "stabilizing and expanding employment" and "guarding against economic risks" needs relatively supportive policy environment.

In fact, throughout the whole article, authoritative people criticize the stimulus policy mainly on "degree", emphasizing that "high" leverage is the original sin, and clearly point out that "investment expansion can only be" moderate "and can not be" excessive ".

Therefore, I read the signal released by authoritative people is to reduce stimulus rather than oppose all loose policies.

Third, China is now in a very complex and critical period. Even if we want to maintain "L" growth, we may face many challenges. At this time, tightening monetary policy is also unbearable.

There are three factors.

First of all, China's current domestic and international environment is complex.

Facing the problem of "three stages of superposition" of economic growth speed shift, structural adjustment pains and early stimulus policies, the domestic economic growth is on the "down stage", from 14% to 10% to 6.9% last year.

At the same time, although China's economy rebounded in March, the economic data released in April are not as good as expected. The rebound in investment has also reversed. Whether the economy can maintain the "L" type is not reliable.

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Nor is it optimistic that the global economic downturn is sluggish.

The world's major central banks maintain extremely loose monetary policy, and the Federal Reserve also postpones raising interest rates.

In particular, the uncertainty brought about by the change in the US dollar has made the decision - making wisdom increasingly tested against the financial crisis.

Secondly, the core point of authority is the supply side reform. Reform is a medium and long term process. Only by stabilizing the economic and social environment can we create conditions for reform.

To reform, there must be cost and labor pains. Factory closures will undoubtedly bring short-term impact to industrial production, employment and consumption. Deleveraging is bound to cause short-term liquidity crunch and shortage of funds, breaking rigid payment, allowing bond defaults will naturally trigger rise in capital market costs and temporary loss of confidence, and suddenly burst bubbles will bring turbulence in financial markets and even lead to financial crisis.

Therefore, a certain degree of easing policy is the need for steady growth.

Thirdly, the concrete operation of reform is also full of uncertainty and policy underpinning.

How to reform and how to promote the implementation process is controversial.

In fact, at the end of last year, the central economic work conference revealed three major difficulties. The article pointed out that the ideal vision of balanced growth and structural adjustment is unavoidable in the implementation of many objectives.

For example, how can we increase the growth of more than 6.5% in the economic downturn stage whether we go to capacity production or deleveraging? Besides, the key to capacity and deleveraging lies in the reform of state-owned enterprises, whether to be bigger or stronger, or to introduce modern corporate governance system, so that the market can play a decisive role?

To sum up, the author believes that in conjunction with authoritative speeches and credit data in April, China's monetary policy will be tightened in the process of returning to stability, but there will be great risks in the rapid change of direction.

Of course, as I emphasized repeatedly in the article "heavy burden of monetary policy", the global economy can not be sustained by monetary policy alone. Compared with its state, China still has room for fiscal policy. If supply side structural reform, especially the reform of state-owned enterprises can be effectively promoted, the opportunity to get rid of currency dependence and reshape the economic structure is greater than other countries.

Therefore, in the next stage, monetary policy will return to sound and cooperate with fiscal policy, so that the bottom line of steady employment and risk prevention can be maintained.