On April 10, Boc International (China) Co.Ltd(601696) global chief economist Guan Tao said in an exclusive interview with the reporter of China Securities Journal that in terms of monetary policy, the impact of the epidemic on different industries of the real economy is asymmetric, which requires the precise drip irrigation of structural monetary policy. There is still room for China to cut reserve requirements and interest rates, and the two tools can be used alternately or superimposed.
Guan Tao believes that since this year, fiscal policy has actively escorted the acceleration of construction of major projects in many places. Under the background of steady growth, it is expected that the fast pace of issuance of special bonds in the second quarter will continue, and infrastructure investment has become an important starting point for driving steady economic growth.
According to Xinhua news agency, an economic Symposium of experts and entrepreneurs was held on April 7. Guan Tao attended and spoke at the Symposium on economic situation.
in the second half of the year, we need to be prepared to meet difficulties
China Securities Journal: at present, in the face of the increasing uncertainty of the international situation and the frequent occurrence of multiple outbreaks in China, what characteristics do you think the economy will show in the second quarter
Guan Tao: at present, the challenges facing China’s economic operation are both external and internal. Internally, the recent epidemic has spread in many places and affected a wide range, which has had varying degrees of impact on manufacturing, service industry, domestic and foreign demand, and blocked the supply chain and logistics. However, if China’s epidemic situation is effectively controlled in time, economic activities will rebound significantly in the second quarter as the epidemic situation is unsealed and investment is accelerated. Of course, the rebound does not mean recovery or stabilization. We still need to be prepared for difficulties in the second half of the year.
Externally, the intensification of geopolitical conflicts since this year will weaken the momentum of global economic recovery. The latest report of the world bank points out that the conflict between Russia and Ukraine and the impact of sanctions on Russia are disrupting commodity supply, increasing financial pressure and curbing global growth; The world bank lowered the growth forecast of East Asia and The Pacific Securities Co.Ltd(601099) region this year to 5%, 0.4 percentage points lower than the forecast in October last year; If global conditions worsen and national policy responses are weak, growth may slow to 4%.
At the same time, geopolitical conflicts also continue to push up global commodity prices, which may narrow China’s trade surplus faster. It is estimated that according to the calculation of the global average price of crude oil of US $103 / barrel in the first quarter of this year, assuming that the crude oil import volume is the same as that in the same period last year, an additional US $130 billion will be paid compared with last year.
China Securities News: the symposium proposed that “keeping the economy running within a reasonable range is mainly to stabilize employment and prices”. With the continuous rise of commodity prices, what do you think of China’s inflationary pressure this year
Guan Tao: last year’s prediction of this year’s inflation level, it is generally believed that China will face moderate inflation pressure, PPI is expected to peak and fall, and CPI rebounds slightly. However, this year, affected by some unexpected factors in the international environment, China may face certain external input inflation pressure and price rise caused by internal supply pressure such as supply chain interruption and logistics obstruction. Although the CPI growth rate in Japan has been relatively low since the epidemic, with only 0.6% in February, the governor of the Bank of Japan recently said that Japan’s inflation rate may reach about 2% from April, but cost driven inflation “is not a good thing”. Therefore, achieving basic price stability is also one of the main objectives of maintaining economic operation in a reasonable range.
targeted monetary policy has more precise drip irrigation effect
China Securities Journal: it was proposed at the symposium that for consumers who consume durable consumer goods and have difficulty in repaying loans affected by the epidemic, it is necessary to study the corresponding financial support policies. From your professional point of view, what financial support policies should be given
Guan Tao: from the perspective of monetary policies such as direct physical financial instruments and refinancing and discount interest introduced during the epidemic, targeted monetary policies play a more accurate role in drip irrigation. According to different purposes, financial support policies can be divided into three categories: first, in terms of price, the central bank can guide financial institutions to transfer profits to specific types of consumer loans for durable goods in specific regions through the refinancing and discount policy; Second, in terms of quantity, according to the different conditions of consumers, the loan ceiling can be raised to alleviate the liquidity pressure; Third, in terms of extension, for consumers who are affected by the epidemic and have difficulty in repaying loans, they can postpone the payment of interest, or cooperate with fiscal policies to make certain debt relief according to the degree of impact and income decline.
China Securities Journal: it was proposed at the symposium that we should further strengthen the rescue of some industries and give full play to the leveraging role of local government special bonds. What do you think the capital market will play in this process
Guan Tao: local government special bonds are bonds issued by local governments to build a specific special project. The funds raised by issuing bonds are mainly invested in projects with certain income, and the debt repayment is guaranteed by the corresponding government funds or project income. Therefore, the special bond project has a natural capital term mismatch, which requires the intervention of idle medium and long-term funds to release the early precipitation cost. REITs, which has been actively promoted in recent years, plays this role. How to connect the capital transfer between investors and maximize the utility is the task of the capital market. Moreover, due to the participation of the capital market, the capital week changes rapidly, which is conducive to the formation of investment results faster.
there is still room for reducing reserve requirements and interest rates
China Securities Journal: it was proposed at the symposium that policies and measures should be strengthened in advance and in time, and those that have been issued should be implemented as soon as possible. What are your suggestions for the next fiscal policy to help stabilize economic growth
Guan Tao: under the background of weakening market expectations and low willingness of private investment and consumption, fiscal policy can play a more effective role than monetary policy. Structural fiscal policy can focus on economic pain points and blocking points; At the same time, government investment and leverage can be driven by active fiscal policy to promote economic recovery, so as to improve private investment and consumption willingness.
Since the beginning of this year, the fiscal policy has actively escorted the acceleration of construction of major projects in many places. In the first quarter, the issuance scale of local new special bonds accounted for 35.56% of the annual new quota. Under the background of steady growth, it is expected that the fast pace of issuance of special bonds in the second quarter will continue, and infrastructure investment has become an important starting point for driving steady economic growth.
In addition, in order to deal with the adverse impact of the epidemic on people’s livelihood, it is suggested that financial policies should appropriately compensate difficult market subjects, such as small, medium-sized and micro enterprises in some industries and some families and individuals, alleviate the pressure of cash flow tension caused by the epidemic, and strive to help them tide over the difficulties.
China Securities Journal: how do you think the monetary policy will work in the future in view of the economic pressure faced in the second quarter
Guan Tao: in the first quarter of this year, China’s economic recovery suffered from multiple outbreaks, which means that from the second quarter, macro policies should strengthen support for steady economic growth. At the symposium, it was also proposed that “take the initiative to overcome difficulties and respond to difficulties” and “policies should rely on the front force, add force in time, and study new plans”.
In terms of monetary policy, the impact of the epidemic on different industries of the real economy is asymmetric, which requires precise drip irrigation of structural monetary policy. At the same time, a prudent monetary policy can not increase its support for the real economy without the aggregate tool. In the next stage, it is necessary to timely introduce aggregate policies such as reducing reserve requirements and interest rates. Although the Federal Reserve has accelerated the tightening of monetary policy and some changes have taken place in China’s cross-border capital flows and the trend of RMB exchange rate, it is still basically stable and within a normal and controllable range, This has also created conditions for China to further relax its monetary policy environment.
From the specific choice of reducing the reserve requirement and interest rate, both can reduce the financing cost of the real economy, but the effect of reducing the interest rate on reducing the financing cost is more direct, and the transmission chain of reducing the reserve requirement will be longer. There is still room for China to cut reserve requirements and interest rates, and the two tools can be used alternately or superimposed.
