Accurate and effective implementation of macroeconomic regulation | bonds | macroeconomic regulation

The semi annual report of China's economy shows that since the beginning of this year, the national economy has continued to recover and overall rebounded. At the same time, issues such as insufficient domestic demand and operational difficulties for some enterprises cannot be ignored. During the deployment of economic work in the second half of the year, the Central Political Bureau meeting pointed out the need to increase macroeconomic policy regulation, focus on expanding domestic demand, boosting confidence, and preventing risks.

Strongly support the real economy

In the first half of the year, the gross domestic product (GDP) increased by 5.5% year-on-year, significantly faster than the economic growth rate of 3% for the entire year last year and also faster than the economic growth rate of 4.5% in the first quarter. This achievement cannot be achieved without the proactive efforts of macroeconomic policies such as fiscal and monetary policies. To consolidate the momentum of sustained recovery and development, and address the difficulties and challenges faced by economic operation, macroeconomic policies need to further play a role. The Central Political Bureau has deployed to continue, optimize, improve, and implement tax and fee reduction policies, leverage the role of aggregate and structural monetary policy tools, and vigorously support technological innovation, the development of the real economy, and small and micro enterprises.

Since the beginning of this year, in accordance with the requirements of "continuation and optimization that should be continued", relevant departments have improved tax and fee preferential policies, enhanced policy accuracy and targeting, involving incentives for enterprises to increase research and development investment, support for the development of small and micro enterprises and individual businesses, and support for employment and livelihood protection. According to statistics from the State Administration of Taxation, in the first four months, the country added 468.9 billion yuan in tax reductions and deferred tax refunds.

Yang Zhiyong, Director of the Finance and Taxation Research Center of the Chinese Academy of Social Sciences, believes that tax and fee incentives should be further implemented with precision, and more targeted assistance should be provided to business entities, especially small and medium-sized enterprises and individual businesses, to solve their problems and face the prominent problems they have reported. Improper charging, fines, and assessments should be effectively prevented.

Insufficient demand is a prominent contradiction facing the current economic operation. Li Xuhong, Director of the Academic Committee of the National Institute of Accounting in Beijing, believes that tax policies can further enhance demand and boost consumption. For example, implementing tax policies to support small and medium-sized enterprises, as well as private enterprises, to increase disposable income of residents from the perspective of promoting employment, and thereby expand consumption scale; By implementing policies such as tax reduction and exemption for the purchase of new energy vehicles, we aim to help upgrade consumption and increase total consumption.

The relevant person in charge of the Ministry of Finance stated that on the basis of implementing various policies already introduced this year, we will strengthen policy reserves in response to changes in the situation, actively plan targeted and pragmatic tax and fee preferential policies, focus on relieving difficulties for business entities, continuously enhance development momentum, optimize economic structure, and promote sustained economic recovery and improvement.

In terms of monetary policy tools, we will continue to implement inclusive small and micro loan support tools, carbon reduction support tools, and special re loans to support clean and efficient utilization of coal, and increase support for key areas such as small and micro loans and green development; Implement the Action Plan for Strengthening Support for Financing of Technological Enterprises and Increase Financial Support for Technological Innovation.

"For policy tools that have already ended their implementation period, the stock balance will continue to play a policy role. It is necessary to ensure that the banking system's support for relevant fields does not decrease, and if necessary, new policy tools can be created to provide precise financial support for key areas and weak links in the high-quality development stage." said Zou Lan, Director of the Monetary Policy Department of the People's Bank of China.

Actively expanding effective investment

On July 26th, the Finance Department of Inner Mongolia Autonomous Region successfully issued a batch of special bonds through open bidding, with a total scale exceeding 18.5 billion yuan. This batch of special bonds will focus on the construction of Inner Mongolia's "five major tasks" and provide financial support for high-quality development.

"Special bonds are an important means for local governments to drive and expand effective investment, used for the construction of profitable public welfare projects, requiring a balance between project returns and financing," said Li Dawei, Deputy Director of the Budget Department of the Ministry of Finance.

Since the beginning of this year, special bonds have accelerated their issuance, disbursement, and use, effectively playing a positive role in driving investment. In the first half of the year, various regions issued 2172.1 billion yuan of special bonds for project construction, supporting the implementation of a large number of projects that benefit people's livelihoods, fill gaps, and strengthen weak areas. It is worth noting that around 200 billion yuan has been used as project capital in various regions, effectively leveraging the leverage of government investment.

In the first half of the year, China's fixed assets investment increased by 3.8% year on year, and investment in key areas continued to strengthen. Affected by multiple factors, investment growth has slowed down. In the next stage, promoting the construction of major infrastructure and new infrastructure, and enhancing the key role of investment in optimizing the supply structure, the task remains relatively heavy.

In this regard, the Central Political Bureau meeting emphasized the need to better leverage the driving role of government investment and accelerate the issuance and use of local government special bonds. "Active fiscal policies should leverage the synergistic effect of various fiscal tools such as special bonds, mobilize more social capital, and stimulate the vitality of private investment," said Li Xuhong.

To better play a stabilizing role in growth, special bonds must quickly generate physical workload and improve the efficiency of fund utilization. "Local governments should actively plan special bond projects to provide space for the docking of special bond funds. The investment direction of special bond funds should continue to be optimized, appropriately expanding the areas of special bond investment and the scope of project capital, coordinating development and safety, and paying attention to high-quality development while preventing risks." Yang Zhiyong said.

Lian Ping, Chief Economist and Dean of the Research Institute at Zhixin Investment, analyzed that with the continuous increase in investment in infrastructure construction and the continuous promotion of new infrastructure policies, major projects in various regions will continue to present a situation of continuous efforts to sign contracts, start construction, and put into operation.

"Next, we will continue to report and warn on the progress of special bond expenditures in various regions, guide them to accelerate the pace of special bond issuance and use, actively play the positive role of special bonds in driving effective investment, stabilize investment, drive stable employment and growth, and better leverage the effectiveness of special bonds," said Li Dawei.

Equal emphasis on the overall structure of monetary policy

Since the beginning of this year, a prudent monetary policy has increased its efforts in countercyclical adjustment, promoting an overall improvement in economic performance. Overall, liquidity is reasonable and abundant, credit structure continues to optimize, financing costs for the real economy remain stable and have decreased, and financial support for the economy continues to strengthen.

The meeting of the Central Political Bureau requires the continued implementation of a prudent monetary policy, leveraging the role of both aggregate and structural monetary policy tools; Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

"In accordance with the deployment of the Central Committee of the Communist Party of China and the State Council to increase macroeconomic policy regulation, focus on expanding effective demand, and strengthen policy measure reserves, a prudent monetary policy will continue to be precise and effective, and there is still sufficient policy space to respond to unexpected challenges and changes." said Liu Guoqiang, Deputy Director of the People's Bank of China.

Dong Ximiao, Chief Researcher of Zhaolian Finance, believes that it is expected that in the next stage, the central bank will comprehensively use various monetary policy tools, balance quantity and price, combine long and short, more accurately and effectively implement a prudent monetary policy, continue to maintain reasonable and sufficient liquidity, further stabilize the confidence and expectations of business owners, guide financial institutions to increase support services for various business entities, especially private enterprises and small and micro enterprises, and provide greater support for the continuous improvement of economic operation, helping to achieve the expected goals for the whole year.

According to the deployment of the People's Bank of China, in terms of total volume, we will reasonably grasp the pace and intensity according to changes in the situation, and increase countercyclical adjustment. In terms of price, promoting the stable and moderate reduction of financing costs in the real economy, effectively supporting the expansion of demand potential; In terms of structure, we will focus on key areas, be reasonable and moderate, with progress and retreat, and increase financial support for key areas such as small and medium-sized private enterprises and green innovation.

It is worth noting that the extension of the "16 Financial Measures" for the real estate industry sends a clear policy signal, which is conducive to guiding financial institutions to continue extending the existing financing of real estate enterprises and increasing financial support for guaranteed delivery of buildings.

Lianping analysis shows that in the second half of the year, China's monetary policy will continue to adhere to a stable tone, avoid "flooding", ensure the basic stability of prices and exchange rates, balance short-term and long-term, and balance internal and external factors, providing a stable and relatively comfortable financial environment for the recovery of domestic demand.

"The Central Political Bureau meeting has released a clear signal of stable growth, and macroeconomic policies will further focus on expanding domestic demand and boosting market confidence." Wang Qing, Chief Macro Analyst at Dongfang Jincheng, said that under the dual effect of policy efforts and the potential for upward recovery inherent in the economy, the macroeconomic recovery momentum in the second half of the year is expected to strengthen, and the endogenous growth momentum represented by household consumption and private investment is expected to improve.