Reveal six major signals!, Is it bearish to criticize China? Four ministries responded with great weight
In the face of the current internal and external noise of "bearish view of China, singing down China", at the State Council's regular policy briefing on the morning of September 20th, the National Development and Reform Commission, Ministry of Finance, Ministry of Industry and Information Technology, and People's Bank of China jointly stepped forward to interpret the economic situation and policies.
It is not common for the four major financial and economic departments mentioned above to release information on the same platform. This heavyweight briefing revealed at least six key signals at once.
Signal 1: "Short view of China, Sing Down on China"
Destined not to be realized
Since August, facing difficulties and challenges such as insufficient global economic recovery momentum and overlapping domestic cyclical structural contradictions, all relevant parties have continued to optimize a batch of phased policies, studied and introduced a batch of targeted new measures, actively planned a batch of reserve policies, and systematically implemented a set of policy "combination punches" to continuously consolidate the momentum of China's economic recovery and improvement.
Cong Liang, Deputy Director of the National Development and Reform Commission, said that looking back at history, even in the face of the huge impact of the 1998 Asian financial crisis and the 2008 international financial tsunami, the Chinese economy not only stood firm, but also continued to develop and grow in response, constantly leaping to new heights. "It can be said that the greater the wind and rain, the more it highlights the strong resilience of the Chinese economy. I believe that as long as the whole country works together and we persist in doing our own things well, there will be no obstacles that China's development cannot overcome."
Looking ahead to the future, Cong Liang stated that with the combined efforts of stock policies and incremental policies, policy effects continue to accumulate and positive factors continue to increase. We have every reason to believe that the Chinese economy will rebound and improve in the long term. At present, there is a lot of noise from both internal and external sources that are bearish and negative about China. What I want to say is that this kind of argument has never been realized in the past, and it is destined not to be realized now and in the future.
Signal 2: There is no so-called deflation in the Chinese economy
In response to concerns from the outside world about the price trend in China, Cong Liang stated that in recent years, under the background of high international inflation, some countries have achieved inflation rates of over 9%, and China's overall price level has remained relatively stable. Since the beginning of this year, prices have remained low and need to be taken seriously. However, based on factors such as price levels, demand recovery, economic growth, and money supply, it can be concluded that there is no so-called deflation in the Chinese economy, and it will not occur in the future.
Cong Liang stated that based on the data from August, household consumption continued to recover, and the supply-demand relationship continued to improve. The month on month increase in national household consumption prices slightly expanded, with a year-on-year shift from a decrease to an increase. Industrial producer prices also saw a month on month shift from a decrease to an increase, with a narrower year-on-year decrease, all showing positive changes. The price index belongs to the lagging indicator of economic operation. With the steady recovery of demand, market confidence gradually strengthens, economic operation continues to improve, and the low base effect gradually weakens, the overall price level in China is expected to continue to rise and gradually return to the annual average level.
Signal three: USD to RMB exchange rate
Not all
In response to the recent depreciation of the renminbi against the US dollar, Zou Lan, Director of the Monetary Policy Department of the People's Bank of China, responded that the renminbi against the US dollar exchange rate is very important, but it is not the entirety of the renminbi exchange rate. We should take a comprehensive view and pay more attention to the changes in the renminbi against a basket of currencies.
Zou Lan explained that from the perspective of macroeconomic operation, exchange rate fluctuations mainly regulate trade and investment in the real economy. Trade and investment are multilateral, involving multiple countries and currencies. Therefore, the fluctuation of the RMB against a basket of currencies can more comprehensively reflect the impact of exchange rate on trade, investment, and international balance of payments. Since mid July, thanks to the steady recovery of the Chinese economy, the renminbi has steadily risen against a basket of currencies. Influenced by the strengthening of the US dollar index, the bilateral exchange rate against the US dollar has weakened, while maintaining a relatively strong position against non US dollar currencies.
He emphasized that in the next step, the People's Bank of China and the State Administration of Foreign Exchange will aim to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level, based on long-term considerations, starting from the present, implementing comprehensive policies, correcting deviations, and stabilizing expectations. They will resolutely correct unilateral and pro cyclical behavior, dispose of behavior that disrupts market order, and prevent the risk of exchange rate overshoot.
Signal 4: Support local governments, especially grassroots finance
Smooth operation
Since the beginning of this year, the Chinese economy has shown an overall upward trend. However, Li Xianzhong, Director of the Treasury Department of the Ministry of Finance, bluntly stated that some regions lack sufficient economic development momentum and their fiscal operations are in a tight and balanced state. In this regard, the central government attaches great importance to it, adopts multiple measures, and links up and down to support the smooth operation of local, especially grassroots finance. The main measures taken are to increase the intensity of transfer payments; Make full use of the direct access mechanism for fiscal funds; Strengthen national financial operation monitoring.
Li Xianzhong revealed that as of the end of August, the central government has issued 9.55 trillion yuan for local transfer payments, and those that meet the conditions have been issued, providing strong financial support for ensuring the smooth operation of local finance.
In addition, this year the central government will include approximately 4 trillion yuan of transfer payment funds in the direct management mechanism. From January to August, a total of 3.83 trillion yuan in direct funds has been allocated, with the exception of some actual settlement projects, accounting for 95.1% of the total scale of direct funds in 2023. In terms of fund utilization, in addition to being coordinated by local governments to support the liquidation of last year's tax refunds, reductions, and fees, various regions have generated expenditures of 2.37 trillion yuan, accounting for 69.2% of the central government's allocated funds, which is 2.5 percentage points faster than the chronological progress.
Signal 5: Most of the first sets of stock that meet the requirements
The mortgage interest rate will be reduced to the quoted rate
The reduction of interest rates on existing housing loans has attracted much attention, and Zou Lan stated that it is understood that this policy has been actively and effectively promoted. Considering that the duration of mortgage loans can reach up to 30 years, and there are significant differences in the timing, geography, and individuals of different loans, after the policy was announced, the central bank maintained close communication with major banks, guiding them to refine the policy implementation plan in accordance with the principles of marketization and rule of law, and providing convenience for borrowers as much as possible.
On September 7th, four state-owned banks announced that they will actively adjust interest rates in bulk on September 25th, which is the first day of policy implementation, for first-time home loans with floating interest rates priced based on the reference loan market quotation rates. The entire process does not require borrower operation. For other situations such as the conversion of the second set to the first set, the borrower can apply to the bank and provide proof materials from September 25th, and the bank will make batch adjustments to the approved business. Most of the first home loan interest rates that meet the requirements will be lowered to the quoted rate, and those after May 2022 will be lowered by 20 basis points to the policy lower limit. Small and medium-sized banks are also gradually referring to state-owned banks to formulate and issue implementation rules.
Zou Lan said that it is expected that more than 90% of eligible borrowers will fully enjoy the policy dividend in the first time, and the interest rates of other borrowers' existing housing loans will also be adjusted by the end of October.
Signal 6: The development momentum of high-end equipment manufacturing industry is improving
Since the beginning of this year, China's automobile export volume has achieved the world's first place for the first time. Tao Qing, Director of the Operation Monitoring and Coordination Bureau of the Ministry of Industry and Information Technology, stated that the equipment manufacturing industry is the main driving force for industrial growth, especially the high-end equipment manufacturing industry, which is showing a positive development trend.
She introduced that in the high-tech manufacturing industry, in August, the aviation, spacecraft, and equipment manufacturing industry grew by 16.2%, while the manufacturing of electronic industry specific equipment and electronic components increased by 15.7% and 13%, respectively. New energy vehicles maintain a dual increase in production and sales. According to data from the China Association of Automobile Manufacturers, in August, the production and sales of new energy vehicles reached 843000 and 846000 respectively, with year-on-year growth of 22% and 27%, respectively. The production of new materials and products maintains rapid growth. In August, the production of ultra white glass, polycrystalline silicon, monocrystalline silicon and other products used in the solar energy industry increased by 63.3%, 84.6%, and 79.9%, respectively.
The increase in competitiveness of high-quality and high value-added high-end equipment products injects new impetus into foreign trade exports. Tao Qing revealed that China's three major shipbuilding indicators have seen comprehensive growth. From January to August, the national shipbuilding completion volume, new ship orders undertaken, and handheld ship orders all maintained double-digit growth. China's shipbuilding completion volume, new order volume, and handheld order volume respectively account for 49%, 68.8%, and 53.9% of the world market share, continuing to maintain a global leading position. The export of automobiles continues to grow. According to statistical analysis by the China Association of Automobile Manufacturers, the export of automobiles in August reached 408000 units, a year-on-year increase of 32.1%.
