SCIO briefing on national economic performance in H1

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Xing Zhihong, spokesperson and director general of the Department of Comprehensive Statistics, National Bureau of Statistics

Xi Yanchun, vice director-general of the Press Bureau, State Council Information Office

July 17, 2017

Nihon Keizai Shimbun (Nikkei):

I would like to know the possible impact of the current interest rate rise on both financial market and for mortgage loans in the second half year. Thanks.

Xing Zhihong:

This is related to the currency market. China's monetary policy, as made clear both at this year's Central Economic Work Conference and the Report on the Work of the Government (2017), is to maintain policy continuity and stability, and continue to implement a proactive fiscal policy and prudent monetary policy. China's monetary policy will remain stable and neutral; that is, it should provide necessary liquidity support for the economy to float within a reasonable range, and create a favorable financial environment for supply-side structural reform. At the same time, monetary policy should not be too loose, as this might lead to a leveraging effect, amplifying asset bubbles and thus bringing risks to the Chinese economy.

For your question concerning the current interest rate and money supply, I noticed a few days ago that a top officer from the People's Bank of China stated China's M2 figure had expanded 9.4 percent from a year earlier as of the end of June, slowing down a little. From the introduction of the People's Bank of China, this slower M2 expansion was mainly the result of financial deleveraging. This was especially evident in a slower pace of interbank lending, including off-balance sheet activities, where the total outstanding yuan-denominated loans at the end of June had risen 12.9 percent year-on-year,which is regarded as moderate growth. The central bank also diversified liquidity types through a variety of monetary policy tools. Such arrangements helped maintain market stability and provides important support for the real economy. The reform of China's financial system is speeding up. We will continue to improve and strengthen the transmission mechanism of monetary policy to stabilize market interest rate and ensure the stable and healthy development of the Chinese economy. Thank you.

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