SCIO briefing on efforts to coordinate COVID-19 control with economic, social development

The State Council Information Office held a press conference on Monday morning in Beijing to introduce the efforts being made by various government departments to coordinate the prevention and control of the COVID-19 epidemic with continued economic and social development. February 25, 2020

Singapore Lianhe Zaobao:

Will China issue strong stimulus monetary or financial policy measures to alleviate the epidemic's impact on the economy? Thank you.

Chen Yulu:

Thank you for your question. Monetary and financial policies are an important tool to address emergencies and restore economic growth. Since the outbreak of the epidemic, in line with the decisions and plans of the CPC Central Committee and the State Council, the People's Bank of China has pursued a prudent monetary policy that is flexible and appropriate, intensified counter-cyclical adjustments, and released a string of measures. First, we have provided enhanced liquidity to guarantee the abundance of liquidity of the banking system and money market and stabilize the market sentiment in time. Second, we have established a 300-billion-yuan low-cost special re-lending to provide targeted support for key enterprises combating the epidemic. Third, the People's Bank of China and five other departments have jointly issued 30 measures on the control and prevention of the epidemic so as to offer financial security for containing the epidemic and restoring production. So far the measures have all taken effect.

Next, the People's Bank of China (PBOC) will firmly implement the spirit invoked by the important speeches of General Secretary Xi Jinping and promote a prudent monetary policy that is more flexible and appropriate. We will strengthen the following three major categories of measures: 

First, we will continue to maintain reasonably sufficient liquidity, and make good use of the guiding role of the policy interest rate to ensure the overall market interest rate continues to fall, this lowering enterprises' financing costs. 

Second, we will make better use of structural monetary policy tools. On the one hand, we will continue to make good use of the 300 billion yuan ($42.97 billion) of special re-lending funds and offer credit support to enterprises in need as soon as possible. Presently, nearly 1,000 enterprises have obtained such special loans. Next, we will continue to implement the policy with targeted measures. On the other hand, we will make good use of existing inclusive monetary policy tools, such as relending and rediscount for farmers and small businesses. We will step up our policy support in this regard. We will shortly adopt an annualized dynamic adjustment to the targeted reserve requirement ratio (RRR) for inclusive financing, and more qualified banks will enjoy the preferential policy. Third, we will bring into full play the role of policy-based financing. In the previous stage, the three policy banks actively took many financial measures to support anti-epidemic efforts, and these measures have worked well. In the future, the PBOC will give more support to the three policy banks to help them better play their role: It will support China Development Bank, the Export-Import Bank of China and the Agricultural Development Bank of China to intensify financing support to businesses in manufacturing, foreign trade, and the whole industrial chain of hog production, respectively. 

We are formulating relevant plans for implementation of these measures and will roll them out at the earliest possible moment. Presently, China's monetary policy space and policy tools remain sufficient, so we are confident and capable of winning the battle against this epidemic, and supporting the orderly resumption of work and production for quick recovery of economic growth. Thank you. 

Ou Wenhan:

As for the fiscal policies, I touched upon them when answering questions. They mainly focus on two aspects: First, we will fully implement various policy measures that have already been introduced; second, we will make our proactive fiscal policy more active, and stage some new measures in the light of the trend of our economic development. Thank you.

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