SCIO briefing about policies and measures on stabilizing employment, ensuring stable growth and promoting high-quality development

21st Century Business Herald:

The meeting of the Political Bureau of the CPC Central Committee has emphasized increasing support for the real economy. Looking at the data of the credit structure, what progress has been made in financial support for major strategies, key areas and weak links? What are the plans moving forward? Thank you.

Zou Lan:

Thank you for your questions. Let me address these. Since the beginning of this year, the PBC has earnestly implemented the decisions and deployments of the Central Economic Work Conference and the Government Work Report, increased macro-control efforts, strengthened counter-cyclical adjustments, comprehensively used various monetary policy tools, strengthened the coordination of various policies, urged banks to continuously optimize the credit structure, and promoted the continuous recovery and improvement of the economy.

In terms of total volume, the PBC has injected targeted liquidity, ensuring reasonable growth in money and credit. At the end of March, the broad money M2 balance was 326 trillion yuan, a year-on-year increase of 7%; the stock of social financing was 423 trillion yuan, a year-on-year increase of 8.4%; and the balance of RMB loans was 265 trillion yuan, a year-on-year increase of 7.4%.

Regarding the growth rate of loans, I'd like to point out that since the end of last year, the government has implemented a large-scale debt swap program, under which local governments issue special refinancing bonds to repay existing implicit debts, mainly in the form of loans. This has had some impact on the analysis of statistical data. If this factor is excluded, the year-on-year growth rate of the balance of RMB loans should exceed 8% on a comparable basis.

In terms of structure, financial support was strengthened for key areas, and support was significantly increased for key areas and weak links of the national economy, such as technological innovation, green and low-carbon development, and inclusive finance. At the end of March, the loan balance of innovative SMEs that use special and sophisticated technologies to produce novel and unique products was 6.3 trillion yuan, a year-on-year increase of 15.1%; the balance of green loans exceeded 40 trillion yuan, an increase of 9.6% from the beginning of the year; the balance of inclusive small and micro loans was about 35 trillion yuan, a year-on-year increase of 12.2%; and the number of inclusive finance credit recipients for small and micro businesses was about 62 million, an increase of 930,000 in the first quarter of this year, which was 550,000 more than the increase in the same period of last year. The balance of RMB household consumption loans was close to 60 trillion yuan, increasing by about 250 billion yuan in the first quarter, which was over 200 billion yuan more than the increase recorded in the same period of last year. The balance of personal housing loans was about 38 trillion yuan, increasing around 220 billion yuan in the first quarter, which was over 200 billion yuan more compared with the increase in the first quarter of last year.

In terms of loan periods, medium- and long-term loans continued to maintain a relatively high growth rate, providing funding guarantees for stable investment. At the end of March, the outstanding medium- and long-term loans of all sectors by major financial institutions grew by 8.5%. Among them, outstanding medium- and long-term loans in the manufacturing industry grew by 9.3%; outstanding medium- and long-term loans in the industrial sector grew by 11.2%; outstanding medium- and long-term loans in the infrastructure industry grew by 8%; and outstanding medium- and long-term loans in the service industry excluding real estate grew by 7.5%, all of which were higher than the average growth rate of various loans.

From the perspective of interest rates, the PBC has promoted a reduction of financing costs for the real economy, and the interest burden on business entities and residents continued to decrease. In March this year, the weighted average interest rate of newly issued corporate loans was about 3.3%, a decrease of 0.45 percentage point year on year; and the interest rate of newly issued inclusive small and micro enterprise loans was about 3.6%, a decrease of 0.55 percentage point year on year.

Next, in accordance with the spirit of the meeting of the Political Bureau of the CPC Central Committee, the PBC will step up the implementation of more proactive and effective macro policies, make full use of the appropriately accommodative monetary policy, and make timely cuts to required reserve ratios and interest rates based on domestic and international economic conditions and financial market operations to maintain ample liquidity. We will fully leverage the role of monetary policy tools in adjusting both the monetary aggregate and structure, introduce new structural monetary policy tools, and provide targeted and stronger financial support in key areas of stabilizing employment and growth.

First, we will take targeted and stronger steps to stabilize employment. We will more vigorously promote the implementation of the entrepreneurial guarantee loan policy, and increase support in terms of entrepreneurship and employment for key groups such as returning migrant workers, new urban residents, college graduates and women.

Second, we will take targeted and stronger steps to stabilize foreign trade. We will guide financial institutions to not call in or cut off loans for SMEs which have a high dependence on foreign trade, are facing temporary difficulties and are producing competitive products to ensure reasonable financing needs.

Third, we will take targeted and stronger steps to promote consumption. We will focus on the supply side of service consumption, concentrating on key areas such as culture, tourism, sports, catering, accommodation, education and training, increase financial support, form a policy synergy, and jointly promote substantial improvements and enhancements of service consumption supply to meet people's increasingly diverse service consumption needs.

Fourth, we will take targeted and stronger steps to expand investment. We will support financial institutions in innovating financial tools, increase the issuance of medium- and long-term loans, and provide financing support for key areas such as implementing major national strategies and enhancing security capacity in key areas as well as promoting the large-scale equipment upgrades and consumer goods trade-in programs.

In addition, we are also studying how to enrich the policy toolbox, and will introduce incremental policies in due course to help stabilize employment, enterprises, markets and expectations, thereby effectively consolidating the fundamentals of economic development and social stability. Thank you.