SCIO briefing on government work report
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E-mail China.org.cn, March 10, 2022
Shou Xiaoli:
The last question, please.
Red Star News:
Major economies globally, including the U.S. the EU, have entered the interest rate rise cycle. Will this affect China's monetary policy? The report says a considerable drop will be seen in the overall financing costs of businesses. What measures will be taken to this end? Thank you.
Xiang Dong:
You have paid attention to the monetary policy. Therefore, Mr. Song will answer the questions.
Song Li:
Historically, most policy adjustments in developed economies have produced spillover effects, affecting the global economy and increasing economic and financial volatility in developing countries, especially emerging market economies. Therefore, China needs to pay close attention to these adjustments as an open economy. However, compared with the last interest rate rise cycle of developed economies, China's ability to deal with external shocks has been significantly improved:
First, China's economy has grown in size, with stronger resilience, broad prospects, and plenty of room to maneuver.
Second, there is much room for policy adjustment. We have been firm in choosing not to adopt a deluge of strong stimulus policies. With ample monetary policy instruments and policy space, we have a strong ability to deal with external shocks effectively.
Third, the RMB exchange rate remains generally stable and floats more freely. So, it can better function as an automatic stabilizer.
Fourth, China's financial system has become more prudent; mutual openness in the financial sector has been enhanced; two-way cross-border capital flows have become more active; RMB assets have become more attractive, and the vitality and resilience of the capital market are increasing.
In the next stage, we will continue implementing a prudent monetary policy and maintaining reasonably adequate liquidity. We will give full play to the role of monetary policy in terms of both amount and structure to provide stronger support for the real economy. Regarding the amount, we will increase new loans, ensure the increases in money supply and aggregate financing are generally in step with economic growth in nominal terms, and further improve the transmission mechanism of monetary policy. Regarding the structure, we will channel more funds to key areas and weak links and extend the coverage of inclusive financing. In addition, we will encourage financial institutions to lower real loan interest rates and cut fees, increase inclusive loans to micro and small businesses, including credit loan, make it easier for those businesses to access financing, and reduce overall financing costs to help them solve financing difficulties.
Thank you.
Shou Xiaoli:
Thank you, Mr. Xiang. Thank you to all the speakers and friends from the media. Today's press briefing is at this moment concluded. Goodbye.
Translated and edited by Zhang Rui, Liu Sitong, Ma Yujia, Li Huiru, Zhu Bochen, Zhang Liying, Wang Yanfang, Chen Xia, Gong Yingchun, He Shan, Zhou Jing, Wang Qian, Wang Yiming, Yuan Fang, Cui Can, Jay Birbeck, David Ball and Tom Arnstein. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.
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