SCIO press conference on China's financial statistics in H1 2022
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E-mail China.org.cn, July 21, 2022
Yicai:
How will the PBC judge the economic trend in the year's second half? How will monetary policy support and stabilize the economy in the year's second half? Are there enough tools to deal with unexpected changes? Are there any plans for the interest rate or RRR cuts? Thank you.
Zou Lan:
Let me answer your questions. Since May, under the leadership of the CPC Central Committee and the State Council, with the overall improvement of the domestic epidemic situation, the State Council has accelerated the implementation of a package of measures to stabilize the economy. Fiscal policy, monetary policy, and industrial policy have all stepped up implementation, the national economy has tended to improve, and major economic indicators have marginal improvement. However, the foundation for recovery is not yet solid, and the economic operation in the year's second half still faces great uncertainty and instability. Hard efforts are still needed to stabilize the economy, and at the same time, attention must be paid to changes in the inflation situation.
In recent years, we have adhered to a normal monetary policy, leaving sufficient policy space and tool reserves to deal with new challenges and changes beyond expectations. In the second half of the year, the PBC will continue to implement a sound and prudent monetary policy and accelerate the implementation of the established policy measures, including implementing various structural monetary policy tools introduced earlier and guiding financial institutions to enhance the ability of providing financial services to serve the real economy following the market-based and rule-of-law principles. We will guide policy-oriented development banks to implement an additional 800 billion yuan in the scale of credit loans and set up financial tools of 300 billion yuan to support infrastructure construction. We will complete the annual turn-in of surplus profits to the central government ahead of schedule to help stabilize the overall economy, stabilize employment and ensure people's living standards.
Regarding the RRR cut and interest rate cut you asked about, at present, the weighted average interest rate on 7-day repos between depository institutions in the interbank market, which is what we often call DR007, is currently around 1.6%, which is lower than the rate in the open market operation. Liquidity is maintained at a level that is reasonably sufficient but slightly excessive. From January to June, the corporate loan interest rate was 4.32%, a year-on-year decrease of a 0.31 percentage point, which continues to stabilize with some declines, hitting a new low since statistics. In the future, in accordance with the deployment of the CPC Central Committee and the State Council, the PBC will comprehensively consider economic growth, price conditions, and other fundamentals, rationally match monetary policy tools, maintain reasonably ample liquidity, further promote financial institutions to reduce corporate financing costs, and create a suitable monetary and financial environment for consolidating economic recovery.
We paid great attention to the accelerated tightening of the monetary policy in major economies. We have taken forward-looking measures such as adjusting the foreign exchange deposit reserve ratio and strengthening macro-prudential regulation of cross-border capital flows in the early stage, reducing the negative spillover impact caused by changes in the external environment to a certain extent. The RMB exchange rate fluctuated in two ways and remained at a reasonable level, and cross-border capital flows were generally stable. At the same time, as a super-large economy, China's domestic monetary and financial conditions are mainly determined by domestic factors. The monetary policy will continue to adhere to the orientation of self-centeredness, considering internal and external balance. Thank you.
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