Article/Ren Zeping, Gan Yuan, Shi Lingling, columnist of Sina Financial Opinion Leader (WeChat official account kopleader)
The future monetary policy will mainly alleviate the financing problems of private enterprises from the financing tools, regulatory assessment and policy matching. Among them, financing tools are mainly targeted at innovative private enterprise debt and equity financing tools; The supervision assessment is mainly aimed at MPA assessment; The policy mix is mainly aimed at enterprise taxes, political and commercial relations, competitive environment and other aspects.
Event: On November 10, 2018, the Central Bank issued the Report on the Implementation of China's Monetary Policy in the Third Quarter of 2018.
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1. Core point:
The third quarter monetary policy implementation report highlighted that the liquidity management goal was shifted from "reasonable and stable" to "reasonable and sufficient", and deleted "effectively control macro leverage ratio and credit risk in key areas, actively resolve shadow banking risks, prudently handle risks of various financial institutions, comprehensively clean up and rectify the financial system", instead of "firmly do a good job in structural deleveraging" The deleveraging policy has been gradually corrected, and the macro-economy has entered the stage of stabilizing leverage. More emphasis has been placed on handling the relationship between stable growth, deleveraging, and strong supervision, and keeping the bottom line of no systemic risk; It is the first time to put forward the "triangular support framework", that is, the triangular support framework for implementing a sound and neutral monetary policy, enhancing the vitality of micro entities and giving full play to the functions of the capital market. It is proposed that the financial market interest rate and the entity interest rate should be "two tracks in one track".
The important problem facing the domestic economy is to ease the financing difficulties of private enterprises. At present, policies such as government credit enhancement and innovative private enterprise debt equity financing tools have been introduced, constraints have been increased in the MPA regulatory assessment, and the loan interest rate of small and micro enterprises has been reduced by 1 percentage point to achieve the loan structure goal of the "One Two Five Year Plan". The fundamental reason for the difficulty and high cost of private enterprise financing in China lies in the imbalance of credit supply and demand caused by institutional problems. In the future, it is necessary to further deepen the reform of state-owned enterprises, local governments, and land finance.
Facing the severe situation at home and abroad, the future monetary and financial policies will strengthen counter cyclical adjustment, revitalize the capital market, support private and small and medium-sized enterprises, and increase reform and opening up. On the one hand, the deleveraging task of monetary policy was completed and the macro-economy entered the stage of "stabilizing leverage". On the other hand, a "triangular support framework" will be formed. In the future, monetary policy will not only focus on the real economy, but also on the capital market. Considering the reasonable and sufficient management goal of liquidity, it is expected to solve the financing problems of private enterprises and reduce the reserve ratio again in the future to release long-term capital without cost to optimize the liquidity structure; There is a possibility of interest rate reduction in the future. According to the requirement that the interest rate of small and micro enterprises decrease by 1%, the interest rate system is "two tracks in one track", and the market interest rate is expected to continue to decline, reducing the financing costs of small and micro enterprises while avoiding stimulating asset price bubbles.
The report discussed "excess reserve ratio and policy transmission", "private economy and financial support", "building self-discipline mechanism to adapt to the development of foreign exchange market", and "analysis of current price situation" in the form of columns.
2. The downward pressure on the economy is increasing, and private enterprises are difficult to finance.
The central bank believes that the difficulty of private enterprises' financing is mainly due to the expectations and risk preferences caused by the economic downturn. The narrowing of superimposed financing channels has led some private enterprises to fall into a negative cycle of "debt default - increasing difficulty in credit financing".
1) The economic downturn is the primary reason why private enterprises are difficult to finance, which indicates that the central bank is worried about the future economy and it is urgent to stabilize growth. "The downward pressure on the economy has increased, some enterprises have more difficulties in operation, the risks and hidden dangers accumulated for a long time have been exposed, and some policy effects need to be released". Recently, the government has repeatedly mentioned "stability" in its statement, and the Central Bank has also clearly pointed out in its implementation report that the downward pressure on the economy is increasing. In the future, it may introduce more policies to hedge the pressure of economic decline, "several rises".
2) Unstable market expectations and declining financial risk appetite have increased the diffusion of private enterprise debt risks, further worsening the financing environment. The central bank said it is important to stabilize expectations. In the future, the central bank will pay more attention to the importance of monetary policy signal channels and adjust the credit structure by guiding market expectations. In the future, the collocation of different policies will be more coordinated, reducing the deterioration of market expectations caused by the opacity of policies.
3) The narrowing of financing channels is the direct reason why private enterprises are difficult and expensive to finance, which indicates that the central bank attaches importance to financing tools and needs to establish multi-level capital markets and multi-channel financing channels. On the one hand, entrusted loans, trust loans, etc. were originally an important financing channel for private enterprises. With the introduction of new asset management regulations, shadow banks shrank rapidly, banks' monetary creativity declined, and their off balance sheet financing capacity declined. On the other hand, the bond and stock markets are depressed, and the financing capacity is declining. The financing channels of private enterprises have narrowed, from the previous three main ways of relying on bank on balance sheet loans, intermediary loans such as non bank loans, and direct financing of bonds and stocks to relying mainly on bank on balance sheet loans. In addition, institutional factors such as financial institutions' excessive reliance on mortgage guarantees, imperfect incentive and assessment mechanisms, and inadequate implementation of due diligence and exemption have also exacerbated the financing difficulties of private enterprises.
4) Monetary policy transmission is not impeded. In this implementation report, the Central Bank revised the "effectiveness" of monetary policy to "pertinence". The central bank mainly judges that the funds have not been silted up in the banking system through the low over reserve rate, and the funds invested by the central bank basically all flow into the real economy. We believe that banks do lend out funds, and recent credit data also show this. However, recent bank loans are mainly residential loans, and the significant decline in the proportion of medium and long-term loans to enterprises is also a major reason why private enterprises are difficult and expensive.
3. How far is the spring? Recently, a number of support policies have been introduced to improve market confidence in view of the difficulty and high cost of private enterprise financing:
1) On November 1, Xi Jinping's speech at the private enterprise symposium: ① emphasizing the difficulty and high cost of financing of private enterprises, linking the bank performance assessment with supporting the development of private economy, and solving the problem of not daring to lend or unwilling to lend; ② Broaden the financing channels of private enterprises, and give play to the role of private banks, small loan companies, venture capital, equity, bonds and other financing channels; ③ For private enterprises with the risk of equity pledge closing positions, relevant parties and local governments should study and take special measures to help enterprises tide over difficulties; ④ Guide local governments and provide necessary financial assistance to promising private enterprises that are in line with the direction of economic structure optimization and upgrading.
2) On November 6, Yi Gang, governor of the People's Bank of China, proposed that efforts should be made to solve the problem of financing difficulty and high cost of private enterprises from the "three arrows" of bonds, credit and equity: ① In terms of bonds, private enterprises should develop bond financing support tools, and the central bank should provide some initial funds, and sell credit risk mitigation tools and guarantee credit enhancement through market-oriented operation of professional institutions; ② In terms of credit, we comprehensively used monetary and credit policy tools to guide financial institutions to increase credit supply to private enterprises. Since this year, the Central Bank has implemented four targeted RRR reductions. On this basis, we have increased the amount of refinancing and rediscount by 300 billion yuan to support financial institutions to expand credit supply to private enterprises and small and micro enterprises; ③ In terms of equity, we will study the establishment of private enterprise equity financing support tools. The Central Bank will promote qualified private fund managers, securities companies, commercial banks, financial asset investment companies and other institutions to initiate the establishment of private enterprise equity financing support tools. The People's Bank of China will provide initial guidance funds to drive the joint participation of financial institutions and social capital The principle of rule of law provides phased equity financing support for private enterprises with financial difficulties. Clarify that the evaluation indicators for financing of small and micro enterprises will be added to the MPA of commercial banks to encourage financial institutions to increase the credit supply of private enterprises.
3) On November 7, Guo Shuqing, Chairman of the China Banking and Insurance Regulatory Commission, proposed to achieve the "One Two Five Year Plan" goal for private enterprise loans. Among new corporate loans, loans from large banks to private enterprises should not be less than 1/3, and loans from small and medium-sized banks should not be less than 2/3. Three years later, the proportion of bank loans to private enterprises in new corporate loans should not be less than 50%, Further strengthen the expectation of "credit forgiveness".
4) On November 9, the executive meeting of the State Council requested to increase financial support, ease the difficulty and high cost of financing of private and small and micro enterprises, strive to reduce the average loan interest rate of small and micro enterprises newly issued by financial institutions in the fourth quarter by 1 percentage point compared with the first quarter, expand the MLF qualified guarantee standard, and carry out special actions to solve the arrears of private enterprises.
The future monetary policy will mainly alleviate the financing problems of private enterprises from the financing tools, regulatory assessment and policy matching. Among them, financing tools are mainly targeted at innovative private enterprise debt and equity financing tools; The supervision assessment is mainly aimed at MPA assessment; The policy mix is mainly aimed at enterprise taxes, political and commercial relations, competitive environment and other aspects.
4. At present, the fundamental reason for the difficulty and high cost of private enterprise financing lies in the imbalance of credit supply and demand caused by institutional problems.
From the experience at home and abroad, the effectiveness of structural monetary policy is general, and it can not fundamentally solve the problem of financing difficulties of private enterprises. In the future, it is more necessary to further deepen the reform of state-owned enterprises, local governments and land finance.
1) From abroad, in the time of economic crisis, structural monetary policy can effectively maintain financial stability, but it is difficult to reverse the imbalance of economic structure, which may also aggravate moral hazard and distort the allocation of market resources.
2) Domestically, the structural monetary policy in the past has not worked well. China's structural monetary policy has been gradually implemented since 2014, focusing on targeted RRR reduction and re lending. Judging from the growth rate and percentage change of agricultural loans and loans to small and micro enterprises, as well as the investment situation of branches and other indicators, the support and guidance of the policy has achieved little. The first reason is that the micro incentive mechanism of targeted policies for banks has not been fully rationalized, and the relevant assessment indicators ignore the difference in the difficulty of reaching the standard between different types of banks; Second, the past few years have witnessed the rise of the shadow banking system and the boom of idle arbitrage. Most banks have strong incentives to participate in this feast for the liquidity released by the targeted RRR reduction.
5. The central bank believes that the inflation pressure is not big, and pays attention to the stability of the exchange rate stage.
1) Short term inflation is not likely to rise significantly. The recent rise in prices is mainly due to short-term factors, mainly the CPI rise driven by the rise in food prices. In the future, the downward pressure on the economy will increase, and the money supply will grow moderately. In the medium and long term, the pressure on price increases will be small.
2) The RMB exchange rate emphasizes "basic stability at a reasonable level" and pays more attention to the stage stability of the exchange rate. Different from the second quarter's "increasing the strength of the market to determine the exchange rate, enhancing the two-way floating flexibility of the RMB exchange rate, and maintaining the RMB exchange rate in a reasonable balance", the third quarter has more emphasis on "maintaining the basic stability of the RMB exchange rate at a reasonable and balanced level", strengthening the exchange rate flexibility, so that the exchange rate can fully play the role of "automatic stabilizer" in adjusting the macro-economy and the balance of payments.
6. Global economic problems mainly lie in the expansion of economic differentiation, the intensification of trade frictions, and the increase of economic and financial vulnerability
Since 2018, the global economy has generally continued to recover, but differences between different economies have widened, the synchronization of global economic growth has decreased, trade frictions have intensified, and the vulnerability of the global economy and finance has increased.
1) The growth trend of major economies continues, and the operation of global economies is differentiated
The main economies continued their growth trend, and the economic operation was divided. The U.S. economy grew strongly, the inflation rate rose, the unemployment rate remained low, the momentum of the euro economy slowed slightly, the employment situation continued to improve, the growth of the British economy slowed slightly, and the inflation pressure remained, while the Japanese economy gradually stabilized after the slowdown.
2) The Federal Reserve raised interest rates to stimulate the economic cycle of emerging economies to decline and increase potential risks
The appreciation of the dollar index slowed down, the yen, the euro and the pound depreciated against the dollar, and the currencies of some emerging market economies continued to depreciate. At the end of September, the exchange rates of the euro, sterling and yen against the US dollar were 0.64%, 1.36% and 2.66% lower than those at the end of June. In terms of emerging economies, the exchange rates of the Argentine peso, the Turkish lira, the Indian rupee, the Russian rouble and the Brazilian real against the US dollar depreciated by 30.04%, 24.26%, 5.59%, 4.25% and 4.23% respectively from the end of June. The Mexican peso appreciated 6.42% against the US dollar.
The interest rate in the global money market generally rebounded slightly, the global economic cycle and financial cycle were not synchronized, and the potential risks increased. Under the influence of continuous interest rate hikes by the Federal Reserve, USD Libor in the London interbank borrowing market rose slightly. Under the influence of the ECB's monetary tightening expectations, Eurozone interbank borrowing Euribor rose slightly. The economic cycles of emerging markets and developed economies are not synchronized. The Federal Reserve's interest rate increase may lead to a downward trend in the financial and economic cycles of emerging economies, which may also have an impact on the U.S. economy and increase potential risks.
The Federal Reserve raised interest rates and shrunk the table, the European Central Bank reduced the scale of bond purchases, and global liquidity ebbed. The yields of government bonds in the global economies generally rose. At the end of September, the yield of the US 10-year government bonds was 3.056%, up 20.5 basis points from the end of June. The yields of the German, British, French and Japanese 10-year government bonds closed at 0.474%, 1.574%, 0.808% and 0.126% respectively, up 16.6, 29.5, 14 and 9.5 basis points from the end of June.
3) Global trade frictions have developed in depth, and the vulnerability of the economy and financial markets has continued to strengthen
First, global trade frictions are escalating and policy uncertainties are increasing. Sino US trade frictions are developing in depth. Trump officially imposed tariffs on China's $200 billion goods. The US Canada Mexico trade agreement is clearly targeted at China, which is in line with our "long-term and increasingly severe Sino US trade war" and "containment under the banner of trade protectionism" "Our best response to the Sino US trade war is to push forward a new round of reform and opening up with greater determination and courage and unswervingly. In this regard, we should maintain sober calm and strategic determination".
Second, the vulnerability of the global financial market has increased. Under the background of good recovery in major economies and loose global liquidity, asset prices are at a high level. Once the pace of global liquidity contraction exceeds expectations, it may lead to increased volatility in the financial market, and uncertainty in the global economic outlook and policies may promote investors' risk aversion.
7. Financial deleveraging turned to stable leverage. In the future, monetary policy will strengthen the service of the real economy. It is expected to reduce reserve ratio and interest rates of small and micro enterprises, with reasonable and abundant liquidity
In the face of foreign trade friction, the vulnerability of the financial market has increased, and the domestic economy has declined. In the future, monetary and financial policies will strengthen counter cyclical adjustment, increase reform and opening up, revitalize the capital market, and support private and small and medium-sized enterprises.
First, the macro-economy has entered the stage of "stabilizing leverage", and the task of deleveraging monetary policy has been completed. In the third quarter's monetary policy implementation report, "effectively control the macro leverage ratio and credit risk in key areas, actively resolve the shadow banking risk, prudently handle the risks of various financial institutions, comprehensively clean up and rectify the financial system" was deleted, and "firmly do a good job in structural deleveraging" was no longer mentioned, In addition, the third quarter meeting of the Political Bureau on October 31 stressed that "we should implement positive fiscal policies and sound monetary policies, do a good job in stabilizing employment, finance, foreign trade, foreign capital, investment and expectations, effectively respond to changes in the external economic environment, and ensure the stable operation of the economy", stressed "six stability", and also did not mention "deleveraging", This fully demonstrates that China's leverage policy has gradually corrected, and the macro-economy has entered the stage of stabilizing leverage. It has put more emphasis on handling the relationship between stable growth, deleveraging, and strong supervision, and has kept the bottom line of no systemic risk.
Second, the "triangular support framework" has been formed. Monetary policy is not only focused on the real economy, but also on the capital market. In the future, the monetary policy will fully grasp the comprehensive balance of many objectives, timely and dynamically pre adjust and fine tune, strengthen policy coordination, and gradually dredge the micro transmission mechanism, forming a triangular support framework of "implementing a stable and neutral monetary policy, enhancing the vitality of micro entities, and giving full play to the functions of the capital market", so as to ensure the overall benign cycle of the national economy.
Third, the liquidity is reasonable and abundant, and the interest rate system is "two tracks in one track", which is expected to continue to reduce the reserve ratio in the future. The liquidity management goal has changed from "reasonable and stable" to "reasonable and abundant", increased the medium and long-term liquidity investment, and kept the liquidity level matching the demand of economic fundamentals. On the one hand, it is expected to reduce the reserve ratio again, release low-cost long-term funds, improve the liquidity structure, and facilitate bank lending. On the other hand, the policy puts more emphasis on "two tracks in one track". Considering that the loan interest rate of small and micro enterprises has dropped by 1 percentage point, which is equivalent to avoiding stimulating asset price bubbles such as real estate while cutting interest rates, the market interest rate may be closer to the benchmark interest rate in the future.
(The author of this article introduces: Chief Economist of Evergrande Group, President of Evergrande Economic Research Institute. He once served as Deputy Director of the Research Office of the Macro Department of the Development Research Center of the State Council, Director General Manager and Chief Macro Analyst of Guotai Jun'an Securities Research Institute.)
