800 Billion Yuan Liquidity Release Policy Package, "Steady" Has Started

Down to the scheduled landing 800 billion yuan liquidity released today

Policy package renewed, the economy started "steady" in the beginning of the year

Just after the beginning of the year, the steady economic policy of "gift package" continued to fall: from January 6th, the deposit reserve ratio of financial institutions was reduced by 0.5 percentage points, and the liquidity of about 800000000000 yuan began to be released; the first executive session of the State Council, held in January 3rd, was the first meeting of the Executive Council of the State Council. The first topic was to determine measures to promote the steady growth of manufacturing industry, to stabilize the basic plate for economic development. In January 2nd, with the issuance of local debt in Sichuan and Henan, the annual local debt issue was launched, and the progress was earlier than last year. Since January 1st, more than 850 new commodities have been lowered to import tariffs, and some administrative fees have been reduced.

Industry experts pointed out that, in accordance with the deployment of the central economic work conference, in 2020, China's economy was "stable" at the head. Whether it was the "steady economic" policy that had been launched in successive years, or the recent annual work conference held by various departments, all released a strong letter of "stability".

The central bank sent the first "big gift package" in the first year of 2020: landing today is scheduled to fall on schedule. This time it will release the long-term capital of about about 800000000000 yuan, effectively increase the financial institutions' support for the stable sources of funds for the real economy, reduce the financial cost of financial institutions to support the real economy, and directly support the real economy.

Li Yiju, a researcher at Bank of China Research Institute, said that lowering the quota is conducive to steady economic growth. At present, steady growth has become the focus of economic work. This reduction reflects the strengthening of the counter cyclical regulation of monetary policy, which is conducive to the upgrading of aggregate demand.

The relevant people in charge of the people's Bank of China said that in this comprehensive reduction, only about 120000000000 cities, such as rural commercial banks, rural cooperative banks, rural cooperative banks, rural credit cooperatives and village banks, which operate in the provincial administrative region, will receive long-term funds of RMB, which is conducive to enhancing the financial strength of small and medium banks, small and micro enterprises and private enterprises based on the local and returning to their original sources. At the same time, the reduction of the bank's capital cost will cost about 15 billion yuan a year, which can reduce the actual cost of social financing, especially reduce the financing costs of small and micro enterprises and private enterprises.

On the one hand, financial support for entities is increasing. On the one hand, it focuses on the steady growth of manufacturing industry and stabilise the basic economic development.

The executive meeting of the State Council, held in January 3rd, clearly stated that the spirit of the central economic work conference should be implemented and the economic operation should be kept at a reasonable interval. We should use reform measures and marketization measures to fully stimulate the vitality of market players, enhance the development of kinetic energy and promote the steady growth of manufacturing industry.

"Manufacturing is the leading sector of China's economic growth. At present, the added value of manufacturing industry accounts for nearly 30% of GDP. To achieve the goal of steady growth, the growth of manufacturing industry must be supported." Lin Zhiyuan, deputy director of the center for macroeconomic research of Xiamen University, told reporters in the economic reference daily that steady growth in employment is the basic way to achieve steady employment. At the same time, manufacturing industry is the carrier of knowledge economy. The development of high technology industry is closely related to manufacturing industry. Promoting the development of manufacturing industry is the only way to achieve high quality development. Therefore, for the Chinese economy, promoting the steady growth of manufacturing industry is of great significance.

He said that the realization of the goal of "six stability" in 2020 is inseparable from the timely and counter cyclical adjustment of macroeconomic policies. Since the beginning of the year, including MLF (medium term loan convenience), the first quarter of maturity, tax payment and advance issuance of local debt, and more capital recovery, coupled with the strong demand for funds during the Spring Festival, the release of long-term funds is about about 800000000000 yuan, which is a hedge against the withdrawal of funds from the beginning of the year. It helps maintain the basic stability of the total liquidity of the banking system, and is not the basic orientation of changing the prudent monetary policy. The accelerated issuance of local debt is aimed at stabilizing the growth rate of infrastructure investment and providing an important support for steady investment and steady growth.

Zhang Jun, chief economist at Morgan Stanley Huaxin securities, looks at the importance of steady growth in the manufacturing sector, which reflects the importance of the policy level for the steady growth of counter cyclical adjustment. As a core part of "six stability", steady investment is an important means to achieve steady economic growth. In particular, the investment in high-tech manufacturing and service industries has increased rapidly in recent years, and the contribution of new industries to economic development will further contribute to steady growth.

He told the economic reference daily that the comprehensive layout and the quickening of the issuance of local debt were the embodiment of the policy layout of "broad money, tight credit and loose finance". It also highlighted the main objective of the current policy, namely, to counter cyclical regulation of steady growth with my own priority.

First of all, in order to cooperate with the implementation of the proactive fiscal policy, the central bank conducted a comprehensive reduction in the year ahead, further reducing the cost of bank capital and releasing more cheap medium and long-term funds to enhance the willingness of banks to lend voluntarily and enhance the financing ability of manufacturing enterprises. By improving the corporate environment, we will consolidate the long-term working mechanism of manufacturing industry, such as "willing to lend, dare to lend, and loan", and enhance the expansion of production capacity from the inside.

Secondly, the issuance of special bonds also reflects the policy orientation of steady growth in infrastructure construction, and provides a better interest rate environment for the issuance of special debt by adjusting interest rates and appropriately lowering the time limit. By boosting the endogenous growth momentum of production and investment in the whole society, we should ease the pressure of economic downturn when external uncertainties remain.

At present, the macro-control toolbox for counter cyclical adjustment has been opened. It is noteworthy that, in addition to the policy that has already landed, the annual working conference held by multi departments has also released a clear policy signal, and has planned to store more policies and measures around the "six stability" and resolutely fighting the "three major battles".

For example, the National Conference on development and reform has made clear that we should vigorously promote the formation of a strong domestic market, carry out the implementation of major project reserves, strive to expand effective investment, and actively foster and expand new consumption growth points. The national financial work conference pointed out that we should consolidate and expand the effectiveness of tax reduction and cost reduction. The national industrial and informatization work conference pointed out that the implementation of the "six stable" deployment should ensure that the industrial economy is running in a reasonable range. Efforts should be made to stabilize investment in manufacturing industry, and guide funds to invest in the fields of supply and demand that benefit from each other, advanced manufacturing with multiplier effect, short infrastructure and other fields, so as to promote "double upgrading" of industries and consumption.

More financial policies aimed at supporting entities will fall in the first quarter. From March 1, 2020, the stock loan interest rate will "change anchor", and the application of LPR in the stock loan will further expand. This will further promote the marketization of interest rates, and with the LPR playing a greater role in guiding the downward trend of loan interest rates, the financing cost of the real economy is expected to continue to decrease.

The 2020 meeting of the people's Bank of China, held in from January 2nd to 3rd, also carried out a comprehensive deployment of the 2020 work. The meeting called for the implementation of a prudent monetary policy, resolutely winning the battle against major financial risks, deepening financial reform and opening up, doing a comprehensive job of "six stability", and promoting steady growth, promoting reform, adjusting the structure, benefiting people's livelihood, preventing risks and maintaining stability, so as to create a favorable monetary and financial environment for the development of high-quality economy.