China’s Monetary Policy Implementation Report for the Second Quarter of 2021


Since the beginning of this year, under the strong leadership of the Party Central Committee with Comrade Xi Jinping at its core, my country has continued to consolidate and expand the results of epidemic prevention and control and economic and social development, and effectively implemented macroeconomic policies. The economy has continued to recover steadily, stabilized and improved, supply stabilized, and demand rebounded. High-quality development is advancing steadily. In the first half of 2021, the gross domestic product (GDP) increased by 12.7% year-on-year, and the two-year average growth rate was 5.3%, of which the second quarter increased by 7.9% year-on-year, and the two-year average growth rate was 5.5%, 0.5% faster than the first quarter; The consumer price index (CPI) rose by 0.5% year-on-year, the employment situation was generally stable, and the import and export trade grew well.

The People’s Bank of China adheres to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, resolutely implements the decisions and deployments of the Party Central Committee and the State Council, takes the lead in a stable and stable monetary policy, which is flexible, precise, reasonable and appropriate, does a good job in cross-cycle policy design, and maintains policy continuity. It is necessary to ensure the stability, sustainability, and scientific management of market expectations, persist in serving the real economy, effectively prevent and control financial risks, and create a suitable monetary and financial environment for high-quality economic development.

One is to maintain reasonable and sufficient liquidity. Comprehensive use of multiple monetary policy tools such as RRR cuts, medium-term lending facilities, and open market operations, flexibly and accurately carry out liquidity adjustments, maintain market expectations and stability, guide the smooth operation of money market interest rates, and optimize the funding structure of financial institutions. The second is to give full play to the leading role of structural monetary policy tools. Implement the extension of two monetary policy tools that directly reach the real economy, and support coordinated regional development through comprehensive measures such as increasing re-lending to provinces with slow credit growth, and areas that require long-term support for technological innovation, small and micro enterprises, green development, and manufacturing. Increase policy support. The third is to continue to unleash the potential of interest rate reforms in the loan market to promote lower loan interest rates. Further promote the use of LPR in the loan market, optimize the supervision of deposit interest rates, adjust the method for determining the self-discipline upper limit of deposit interest rates, and promote the steady and slow decline of social comprehensive financing costs. Fourth, take me as the mainstay and grasp the balance between internal and external equilibrium. Deepen the market-oriented reform of the exchange rate, strengthen the flexibility of the RMB exchange rate, strengthen the management of expectations, and give play to the role of exchange rate regulation as an automatic stabilizer of the macro economy and international balance of payments. Fifth, adhere to the principle of marketization and rule of law, coordinate development and safety, effectively prevent and control financial risks, and firmly hold the bottom line of avoiding systemic financial risks.

Generally speaking, since the outbreak of the epidemic, my country has adhered to the implementation of normal monetary policy. In the first half of this year, the intensity of monetary policy has basically returned to the normal state before the epidemic, maintaining a leading position in global macro policies. At the end of June, broad money (M2) increased by 8.6% year-on-year, and the stock of social financing scale increased by 11% year-on-year. The credit structure continued to be optimized. At the end of June, the balance of inclusive small and micro loans and long-term and medium-term manufacturing loans grew at 31% and 41.6%, respectively. In June, the weighted average interest rate of loans was 4.93%, a record low since statistics; the weighted average interest rate of corporate loans was 4.58%, a decrease of 0.06 percentage points from the same period last year, and the comprehensive financing cost of small and micro enterprises was steadily decreasing. The RMB exchange rate fluctuates in both directions and remains basically stable at a reasonable and balanced level. At the end of June, the China Foreign Exchange Trading Center (CFETS) RMB exchange rate index reported 98.00, an appreciation of 3.3% from the end of the previous year.

At present, my country’s economy continues to resume growth, and the development momentum is further strengthened. We must also see that the global epidemic is still evolving, the external environment has become more severe and complex, and the domestic economic recovery is still unstable and uneven. We must strengthen our confidence in this, but also face the difficulties, concentrate on doing our own affairs, and work hard. Achieve high-quality development. In the next stage, the People’s Bank of China will adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, implement the spirit of the Fifth Plenary Session of the 19th CPC Central Committee and the Central Economic Work Conference, implement the requirements of the “Government Work Report”, and follow the requirements of the Party Central Committee and the State Council. Adhere to the general keynote of seeking progress while maintaining stability, implement new development concepts in a complete, accurate and comprehensive manner, deepen supply-side structural reforms, accelerate the construction of a new development pattern, and promote high-quality development. Make overall plans for the convergence of macroeconomic policies for the next two years, maintain the stability of monetary policy, enhance forward-looking and effectiveness, not only strongly support the real economy, but also resolutely refrain from “overwhelming flooding”, and support high-quality economic development with moderate currency growth. Help small and medium-sized enterprises and difficult industries continue to recover, and maintain economic operations within a reasonable range.

A prudent monetary policy must be flexible, accurate, reasonable and appropriate, and stable. Adhere to normal monetary policy, do a good job in cross-cycle policy design, enhance macro policy autonomy, and grasp the intensity and rhythm of the policy according to the domestic economic situation and price trends, and handle it well. The relationship between economic development and risk prevention, maintain the overall stability of the economy, and enhance the resilience of economic development. Build a modern central bank system, improve a modern monetary policy framework, improve the money supply control mechanism, manage the currency gate, maintain reasonable and sufficient liquidity, keep the money supply and the growth rate of social financing scale basically matched with the nominal economic growth rate, and maintain macroeconomics The leverage ratio is basically stable. Closely track and judge price trends, stabilize social expectations, and maintain overall price stability. Give full play to the leading role of re-lending, rediscounting, and monetary policy tools that directly reach the real economy, implement re-lending policies in provinces with slow credit growth, orderly promote the implementation of carbon emission reduction support tools, and guide financial institutions to increase their commitment to technological innovation, small and micro businesses Support for enterprises, green development, manufacturing and other fields. Improve the market-based interest rate formation and transmission mechanism, continue to unleash the potential for interest rate reform in the loan market, improve the central bank’s policy interest rate system, continue to optimize deposit interest rate supervision, and promote further reductions in actual loan interest rates. Deepen the reform of exchange rate marketization, strengthen the flexibility of the RMB exchange rate, stabilize market expectations, strengthen macro-prudential management, guide enterprises and financial institutions to adhere to the concept of “risk neutrality”, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level. Improve the financial risk prevention, early warning, disposal, and accountability systems, and firmly hold the bottom line that systemic financial risks do not occur. Consolidate the stable and positive trend of the economy, so that the economy will reach a higher level of equilibrium in the recovery, ensure that the “14th Five-Year Plan” has a good start and a good start, and promote stable and long-term economic development.


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