China Fund News Chenxi
The People's Bank of China and the State Administration of Foreign Exchange have made a heavy statement!
On the afternoon of April 18, the State Council Information Office held a press conference. Zhu Hexin, deputy governor of the People's Bank of China and director of the State Administration of Foreign Exchange, Wang Chunying, deputy director and spokesman of the State Administration of Foreign Exchange, Zou Lan, director of the Monetary Policy Department of the People's Bank of China, and Zhang Wenhong, responsible person of the Survey and Statistics Department of the People's Bank of China, attended the press conference and answered reporters' questions.
At the press conference, Zhu Hexin pointed out that a series of monetary policy measures introduced in the early stage are gradually playing a role, and the national economy has continued to rebound and made a good start. "There is still room for monetary policy in the future, and we will closely observe the effect of the policy, the economic recovery, and the realization of the target, and make good use of the reserve tool at the right time. ”
In addition, since the beginning of this year, the turmoil in the international financial market has intensified, and the fluctuations in the exchange rates of some currencies have increased. Zhu Hexin said that although the exchange rate of the renminbi against the US dollar has also fluctuated, it has in fact remained stable against a basket of currencies, and there is still a certain appreciation on the basis of stability. The RMB exchange rate remains basically stable, and there is a solid foundation at both the macro and micro levels. "We always have the confidence, conditions and ability to maintain the stable operation of the foreign exchange market. ”
Let's see the details -
In the first quarter, financing costs were stable and declined, and there is still room for future monetary policy
Zhu Hexin said that since the beginning of this year, the People's Bank of China and the State Administration of Foreign Exchange have comprehensively used a variety of policy tools to support the economic recovery. Up to now, the implementation of the policy has achieved good results. Mainly embodied in:
First, the total financial aggregate has grown steadily. At the end of March, the growth rate of social financing was 8.7%, with 12.9 trillion yuan of new social financing in the first quarter, the growth rate of M2 was 8.3%, with an increase of 12.5 trillion yuan in the first quarter, and the growth rate of RMB loan balance was 9.6%, with an increase of 9.5 trillion yuan in the first quarter. These data show that financial support for the real economy remains solid.
Second, the cost of financing has been steadily declining. In the first quarter, the interest rate on newly issued corporate loans was 3.75 percent, down 0.22 percentage points year-on-year, especially the interest rate on newly issued personal housing loans was 3.71 percent, down 0.46 percentage points year-on-year.
Third, the credit structure continued to be optimized. At the end of March, the year-on-year growth rates of financial institutions' loans to high-tech manufacturing, inclusive small and micro loans, agriculture-related loans and private economy loans were 27.3%, 20.3%, 13.5% and 10.7% respectively, all of which were significantly higher than the growth rate of all loans (9.6%).
Fourth, the pace of credit is stable. In the first quarter of 2023, financial institutions will be able to provide loans quickly, and since the second half of last year, the People's Bank of China (PBoC) has strengthened its guidance for the balanced provision of credit to alleviate the phenomenon of financial institutions' "rushing to the right time". In the first quarter of this year, the ratio of loans to the historical average returned to the historical average, leaving plenty of room for credit growth in the next three quarters.
Fifth, the foreign exchange market has shown strong resilience. The renminbi has risen steadily against a basket of currencies and has performed steadily among global currencies. Cross-border capital flows were generally balanced, and foreign exchange reserves were generally stable.
Zhu Hexin said that a series of monetary policy measures introduced in the early stage are gradually playing a role, and the national economy has continued to rebound and made a good start. There is still room for monetary policy in the future, and we will closely observe the effect of the policy, the recovery of the economy, and the realization of the target, and make good use of the reserve tools at the right time.
In addition, Zhu Hexin also introduced that in the first quarter, nearly 30% of all cross-border settlements of China's trade in goods were settled in RMB, and RMB has become the fourth payment currency in the world for four consecutive months. You may also be aware that the data released by the Society for Worldwide Interbank Financial Telecommunication (SWIFT) shows that the share of the renminbi has increased to nearly 4.7%.
Since the beginning of this year, the market's expectations for the Fed's monetary policy pivot have been repeated, the turmoil in the international financial market has intensified, and the volatility of some currency exchange rates has increased. Zhu Hexin said that although the exchange rate of the renminbi against the US dollar has also fluctuated, it has in fact remained stable against a basket of currencies, and there is still a certain appreciation on the basis of stability. As of the end of March, the RMB exchange rate index of the China Foreign Exchange Trade System was reported at 99.78, up 2.4% from the end of the previous year.
Zhu Hexin said that the goal and determination of the People's Bank of China and the State Administration of Foreign Exchange to maintain the basic stability of the renminbi exchange rate will not change, and there is a foundation and conditions for the renminbi exchange rate to remain basically stable. In fact, the basis for the stability of the exchange rate has a lot to do with the economy, and the economy showed a positive momentum in the first quarter, which also reflects the quality of our economic development and international competitiveness.
"There is a solid foundation for the basic stability of the RMB exchange rate at the macro and micro levels, and we always have the confidence, conditions and ability to maintain the stable operation of the foreign exchange market. Zhu Hexin said that the People's Bank of China and the State Administration of Foreign Exchange will focus on me and take into account the balance between internal and external. Adhere to a managed floating exchange rate system based on market supply and demand and adjusted with reference to a basket of currencies. We will not only pay attention to the decisive role of the market in the formation of the exchange rate, but also continue to implement comprehensive policies and stabilize expectations, pay close attention to the changes in the foreign exchange market situation, resolutely correct pro-cyclical behavior, prevent the market from forming unilateral expectations and self-reinforce, resolutely guard against the risk of exchange rate overshoot, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.
Since the beginning of this year, foreign investors have accumulated a net increase of more than US$40 billion in domestic bonds
Wang Chunying reported on the specific situation of foreign exchange receipts and expenditures in the first quarter of 2024: in the first quarter of this year, the foreign-related income of banks on behalf of customers was 1,658.6 billion US dollars, the external payment was 1,655.5 billion US dollars, and the surplus of foreign-related receipts and payments was 3.1 billion US dollars;
As of the end of March this year, the scale of the mainland's foreign exchange reserves was US$3,245.7 billion, an increase of US$7.7 billion from the end of 2023, and the change in the balance was mainly affected by valuation factors such as exchange rate translation and asset price changes.
Wang Chunying mentioned that in recent years, the scale of foreign institutions' investment in domestic bonds has increased significantly. Judging from last year, the net increase in holdings for the whole year was 23 billion US dollars, and the net increase in the first quarter of this year has reached 41.6 billion US dollars. As of the end of March this year, 1,129 foreign institutions from more than 70 countries and regions had entered China's bond market, and foreign holdings had exceeded US$570 billion, accounting for about 2.6% of the total domestic bond custody, an increase of 0.2 percentage points from the end of last year.
From the perspective of holders, foreign central banks and banking and financial institutions increased their holdings of domestic bonds in an orderly manner, and invested more in medium and long-term bonds such as government bonds and policy financial bonds. From October last year to March this year, foreign investment in onshore bonds with a maturity of more than one year accounted for 56%. Investment income remained stable. Looking ahead, foreign institutional investment in onshore bonds is expected to remain stable.
From an economic point of view, first, the macro environment is supportive. The long-term positive trend of the mainland economy has not changed, various macroeconomic policies have continued to exert force, and the domestic economy has continued to pick up and improve, which has provided a good and stable macro environment for foreign investors.
Second, the investment value is guaranteed. The RMB exchange rate is relatively stable, and RMB assets have relatively independent asset income performance in the world, which helps investors diversify risks. At the same time, China's bond market is the second largest in the world, with expanding breadth and depth, and very good liquidity, which will also enhance the investment value of RMB bonds.
Third, there is a demand for global allocation. The proportion of RMB in global cross-border transactions has been steadily increasing, and the international influence of RMB is gradually increasing, and RMB assets have become an important choice for foreign institutions to invest in the global layout.
From a policy perspective, the People's Bank of China (PBoC) and the State Administration of Foreign Exchange (SAFE) will continue to follow the direction of marketization, rule of law and internationalization, steadily expand the opening up of China's bond market, and make it more convenient for foreign investors to participate. Wang Chunying said that the People's Bank of China and the State Administration of Foreign Exchange are carrying out the following work:
The first is to open up the repurchase business to more overseas institutions and enrich the liquidity management tools for foreign investors.
The second is to continue to promote onshore RMB bonds to become widely accepted qualified collateral offshore. Earlier this year, bonds under the Bond Connect Channel were included in the list of eligible collateral for the HKMA's RMB Liquidity Facility. At present, we are studying and expanding more application scenarios, including using bonds through the Bond Connect channel to offset the margin of Swap Connect.
The third is to optimize the operating mechanisms of direct market entry by overseas institutions, "Bond Connect" and "Swap Connect", and continue to strengthen exchanges and communication with overseas institutions to create a better investment environment. Overall, China continues to improve the level of institutional opening of the financial market, improve the investment environment and improve services, and foreign investment in the mainland bond market has stable and sustainable room for improvement.
Some banks still have a "scale complex" and will strengthen the monitoring of capital idling
Zou Lan said that the current balance of broad money M2 exceeds 300 trillion yuan, which is a reflection of the continuous financial support for the development of the real economy in the past few years.
For quite a long time in the past, the mainland's economy maintained high-speed growth, the size of the economy continued to increase, and the accumulation of enterprise capital and household assets accelerated, all of which will bring about an increase in the demand for money. In line with the stage of economic development, the mainland's monetary and credit policies have also maintained a relatively high growth rate of more than double digits for a long time, creating a suitable environment for economic development. Especially in the three years of the epidemic, in order to focus on stabilizing the economic market, the financial sector has stepped up counter-cyclical adjustment. On the whole, the current stock of money is indeed not low.
At present, the mainland's economic restructuring, transformation and upgrading are accelerating, the relationship between supply and demand in the real estate market has undergone major changes, the prevention and control of local debt risks has been strengthened, the economy has become lighter, the demand for credit has weakened compared with previous years, and the credit structure is also being optimized and upgraded. However, there is still a process of understanding and adapting to the changes in all aspects.
Zou Lan further pointed out that some banks still have a scale complex in terms of business models and internal assessments, which exceed the effective financing needs of the real economy. With the help of their own advantageous position, some enterprises use the money raised from low-cost loans to buy financial management, deposit time, or re-lend to other enterprises, the main business does not make money, but finance has become the main source of profits, which is easy to form idling and capital precipitation, reducing the efficiency of capital use. To this end, this year's "Government Work Report" timely proposed to "avoid the idling of capital precipitation".
Relevant departments will strengthen the monitoring of the idling of funds and improve the management assessment mechanism. In the future, with the transformation and upgrading of the economy, the recovery of effective demand, and the improvement of social expectations, the phenomenon of idle capital precipitation will also be alleviated. At present, the growth of the huge monetary aggregate may slow down, and there will be disturbances in the data, so it is not appropriate to simply compare them with the same period. However, this does not mean that the intensity of financial support for the real economy will be reduced, and efficient enterprises that really need funds will get more financing, which is a reflection of the improvement of the quality and efficiency of financial support.
In terms of structural monetary policy support tools, Zou Lan said that structural monetary policy tools do not change the business attributes of commercial bank loans and re-lending provided by the central bank to commercial banks, and the central bank does not directly or indirectly issue loans to enterprises. At the end of March 2024, the total amount of structural monetary policy tools was 7.5 trillion yuan, accounting for 17% of the total assets of the central bank, and the number of existing tools was 10.
Regarding the recent real interest rate issue that the market has been concerned about, Zou Lan said that the nominal interest rate has continued to decline in the past two years, which has played a positive role in promoting the overall recovery of the economy. However, domestic demand is weak and prices are running at a low level at the same time. For example, the year-on-year growth rate of CPI fell to -0.8% in January this year, which is also an important reason for the increase in real interest rate discussions.
"From the structural point of view of prices, the price indicators such as CPI and PPI, which we often say, including the average interest rate on loans, are all an average concept. Zou Lan said that in the process of economic structure transformation and upgrading, the transformation of old and new kinetic energy, and the solid promotion of high-quality development, the differentiation of economic and financial indicators in different fields will increase significantly. In this context, in addition to looking at the average, we should also look at the structure. There are differences in the loan interest rates of different industries and enterprises, and at the same time, the rise and fall of their product prices are also different, and the actual interest rate is different.
Judging from the phased nature of prices, on the one hand, the mainland's economy has continued to improve, aggregate demand is expanding, and there is a foundation and conditions for prices to rebound. On the other hand, the prices of some agricultural products have also reached an inflection point of adjustment, and tourism is more active, which will also boost the price recovery. Prices are expected to rise moderately at low levels overall, and real interest rates will change accordingly. Of course, the magnitude, speed and volatility of the rally also need to be observed.
Zou Lan said that in the future, the central bank will continue to closely observe the economic rebound, inflation trend and the promotion of transformation and upgrading. It is necessary not only to keep the nominal interest rate at a reasonable level according to the changes and trends in prices, consolidate the positive trend of economic recovery, but also give full consideration to the needs of high-quality development, etc., to avoid reducing the momentum of structural adjustment, preventing interest rates from being too low, intensifying involution competition or capital idling, further reducing prices, and falling into a negative cycle.
In the first quarter, the scale of social finance remained at a historically high level
Zhang Wenhong said that the scale of social financing in the first quarter increased by 12.93 trillion yuan, a year-on-year decrease of 1.61 trillion yuan, which was mainly affected by the high base of the previous year. Judging from the same period in history, the increase in the scale of social financing in the first quarter of this year is still at a relatively high level in the same period in history.
From the structural point of view, there are four main characteristics:
First, the pace of credit delivery was stable, and the RMB loans issued by financial institutions to the real economy maintained a reasonable growth. In the first quarter, RMB loans issued by financial institutions to the real economy increased by 9.11 trillion yuan, 1.59 trillion yuan lower than the same period in 2023 but 773 billion yuan higher than the same period in 2022.
Second, government bond financing should maintain a reasonable scale. The net financing of government bonds in the first quarter was 1.36 trillion yuan, although it increased slightly year-on-year, but it was basically the same as the average of the same period from 2020 to 2023.
Third, corporate bond financing has increased. In the first quarter, the net financing of corporate bonds was 1.12 trillion yuan, an increase of 255.1 billion yuan year-on-year.
Fourth, trust loans and undiscounted bank acceptance bills in off-balance sheet financing increased year-on-year. In the first quarter, trust loans and undiscounted bank acceptance bills increased by 198.3 billion yuan and 550 billion yuan respectively, an increase of 202.4 billion yuan and 81.4 billion yuan respectively year-on-year.
Zhang Wenhong said that the growth of the scale of social financing in the first quarter basically matched the expected targets of economic growth and price levels this year, especially to achieve a growth of about 8.7 percent on the basis of last year's high base, which is actually not low.
At the same time, this year, the People's Bank of China paid more attention to guiding the balanced growth of credit of financial institutions, and although the scale of new social financing in the first quarter fell year-on-year, it was still at a relatively high level in history.
In terms of credit delivery, Zhang Wenhong introduced that at the end of March, the balance of RMB loans of financial institutions was 247.05 trillion yuan, a year-on-year increase of 9.6%. In the first quarter, RMB loans increased by RMB9.5 trillion, which was lower than the same period last year, mainly due to the high base of the previous year. The data shows that the financial system's credit support for the real economy remains at a high level.
From the perspective of industry investment, new loans were mainly invested in key areas such as manufacturing, infrastructure and service industries, and the growth rate of loans to the real estate industry also picked up. The investment structure of the loan industry continued to be optimized.
Medium and long-term loans to the manufacturing industry continued to maintain a relatively high level of growth. At the end of March, the medium- and long-term loans to the manufacturing industry increased by 26.5%, 12.2 percentage points higher than the growth rate of medium- and long-term loans to all industries. Among them, the medium and long-term loans for high-tech manufacturing increased by 27.3 percent, 0.8 percentage points higher than the end of the previous month. Medium- and long-term loans to the infrastructure sector grew steadily. At the end of March, medium and long-term loans to the infrastructure industry increased by 13.4 percent, with a cumulative increase of 1.97 trillion yuan in the first quarter.
Medium and long-term loans to the service sector, excluding real estate, increased significantly. At the end of March, the medium and long-term loans of the service industry, excluding the real estate industry, increased by 13.1 percent, with a cumulative increase of 2.87 trillion yuan in the first quarter, accounting for half of the increase in medium and long-term loans to all industries. The growth rate of medium and long-term loans in the real estate industry has increased. At the end of March, medium and long-term loans in the real estate industry increased by 4.9%, 0.6 percentage points higher than the end of the previous year. The cumulative increase in the first quarter was 672.7 billion yuan, and the new increase was higher than that of the same period last year.
Editor: Xiao Mo
Review: Muyu