Central Bank: Prevent Capital From Going To Real Money And Unreasonable Leverage.

The "China's monetary policy implementation report" for the fourth quarter of 2016, which was released by the people's Bank of China, once again emphasized "deleveraging" and "risk prevention".

The report said that funds should be prevented from being "real to the virtual", "stir up money with money" and unreasonable leverage actions to guide funds to support the real economy.

The report points out that the people's Bank of China will conscientiously implement the spirit of the central economic work conference and follow the strategic plan of the Party Central Committee and the State Council, and adhere to the overall settlement of the steady progress.

In order to maintain stable and micro policies, we should implement a general and steady monetary policy, enhance the pertinence and effectiveness of regulation and control, and do well in the management of aggregate demand in the supply side structural reform, so as to create a moderately moderate monetary and financial environment for structural reform.

We should pay more attention to reform and innovation, combine reform with regulation and control, closely combine monetary policy regulation with deepening reform, and give full play to the decisive role of the market in resource allocation.

In view of financial deepening and innovative development, we should further improve the regulation and control mode, strengthen the price regulation and pmission, improve the macro Prudential policy framework, smooth the pmission channels and mechanisms of policies, curb asset bubbles, prevent "de going to reality" and improve the efficiency and service of financial operation.

Meanwhile, we must firmly guard against the bottom line of systemic financial risks.

Guotai Junan macro team analysis said that the second half of the financial cycle superimposed the US interest rate cycle, and the keynote of China's monetary policy is still neutral.

At present, monetary policy has tightened margin, focusing on controlling financial risks and credit growth.

If credit growth can not be effectively controlled, it is not ruled out that the central bank may raise the operating rate of money market again.

At the same time, the fourth quarter monetary policy report also shows that the central bank does not think China has opened interest rate cycles, although the central bank has seen the positive factors of China's economy increase, but there are still downward pressure.

It is worth noting that the monetary policy report has also opened a special column on asset price, monetary policy and macro Prudential policy on housing finance.

The report said that in the next stage, we should implement the spirit of the central economic work conference, carry out the construction of various systems and mechanisms, control the money on the macro level, and support micro credit policies in a rational and independent house purchase. We should strictly limit the flow of credit to invest in speculative houses. More importantly, we should solve the problem of supply and demand mismatch from the supply side, and build a long-term mechanism for the healthy development of the real estate market.

Compared with the three quarter report last year, the central bank has added "neutral" two words in the "prudent monetary policy" to "neutral monetary policy" and more emphasis on neutrality. This is echoed with the statement put forward by the central economic working conference last December that "monetary policy should be stable and neutral".

What is "neutral"? Yi Gang, vice president of the central bank, explained in a recently held 50 Member Forum of Chinese economy that sound monetary policy is a neutral situation and neutral attitude is not tight.

To understand this, monetary policy will not be substantially adjusted to maintain stability and continuity, and the market will be chosen to guide interest rates on a discretionary basis. Changes in internal and external factors may also affect the subtle changes in monetary policy.

In terms of liquidity, the central bank also changed the "reasonably abundant liquidity" in the three quarter of last year to "basically stable liquidity", indicating that the central bank intends to tighten liquidity gradually.

Deng Haiqing believes that changes in the presentation of monetary policy and liquidity mean that the excessive easing of money market in the first half of 2015 and 2016 will not continue to occur, and that the monetary policy tightening in 2017 will be tightened.

Founder Securities chief economist Ren Zeping also said

On the description, the central bank changed the "flexibility" to "neutral and moderate" in the previous quarter. In addition, the central bank also emphasized "adjusting the currency gate", and in the face of a series of real estate bubbles and financial risks, the monetary policy was further tightened and the probability of easing was reduced.

On the basis of setting "moderate and neutral", monetary policy has shifted to risk prevention in the past year due to a series of outsourcing and leveraged housing prices caused by a large number of liquidity last year.

Insiders said that through the reading report, not only did the risk explicit words such as "capital flow to reality" and "money fry money" were widely mentioned, but the central bank also indicated that it should put "prevention and control of financial risks in a more important position", indicating that the central bank's attitude towards risk prevention continued and strengthened.

The central bank also added some "strict restrictions on credit flows to speculative investment houses" in the credit support policy, and raised the issue of asset bubbles.

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