Event: Recently, the premier presided over an executive meeting of the State Council to deploy policies and measures to promote consumption, decided to further strengthen policy support such as export tax rebate, and proposed "timely use of reserve requirement reduction and other monetary policy tools".
The official announced to lower the standard and landed quickly. Following the deployment of "timely use of monetary policy tools" to support the development of the real economy at the national standing committee meeting last week, the national standing committee meeting this week clearly pointed out that the "RRR reduction" will increase support. From past experience, this means that the RRR reduction may be implemented soon, and the approximate maturity rate of 150 billion MLF on April 15 is the time point for the implementation of the policy. The monetary policy of overseas developed economies represented by the federal reserve tends to tighten, and the reason why China's easing policy is renewed at this time is mainly due to the pressure of the internal and external economic environment. On the one hand, the spread of the epidemic in China has not been eased, and many regions are still in the state of closure and control; On the other hand, from the export data in March, there has also been a certain degree of decline. After the epidemic, foreign demand has made a great contribution to economic growth, and the decline in exports has attracted policy attention.
Policy has shifted from supply to demand. Last week, the support policies of the national standing committee mainly focused on the supply subject, while this week's national Standing Committee policy supports facing the demand directly: on the one hand, it aims at the consumer end of the weak link of domestic demand, or will further liberalize the regulation in the service field. The short supply of medical and health care, elderly care, childcare and other support social forces are insufficient. Bulk consumer goods such as cars and household appliances are also important, especially encouraging the consumption of new energy vehicles, Make it clear that the restrictions on car purchase shall not be increased; On the other hand, for foreign trade, export tax rebate is adopted to stabilize the pressure. The amount of tax refunded by processing trade enterprises can be used as input to offset value-added tax.
The effect of the policy remains to be seen. As a result of the "new downward pressure" on economic growth, the extent to which monetary easing can offset the impact of the epidemic remains to be seen. According to our calculation, if the closure measures continue in April, the drag on economic growth in the second quarter will be at least more than 1 percentage point. In addition, even if the impact of the epidemic is eliminated, the recovery of the real estate industry is still slow. If the residents' leverage is absent this year, it is difficult to ensure the sustainability of enterprises' leverage, and the difficulty of "grasping" the annual economic development goals will be greatly increased. We believe that the transformation from supply to demand is the right policy direction, but the effect of the policy still needs to wait and test.
Guard against devaluation pressure, boost or more limited. Recently, China's monetary environment is quite similar to that of Japan. While the US Federal Reserve raised interest rates and released the contraction signal, Japan maintained a loose orientation, which also led to the sharp depreciation of the yen by 8% - 9% in March. Of course, China's export growth rate is much higher than that of Japan, which can support the exchange rate to a certain extent, but it should also be noted that the RMB exchange rate is currently operating in a strong range. The interest rate difference between China and the United States has also been upside down recently, which has long been far from the comfort zone. The implementation of monetary easing measures is likely to bring devaluation pressure to the RMB exchange rate. With the continuous tightening of overseas monetary policy, we can "go opposite" in the short term, but the foundation of successive easing is not solid, so the boosting effect on the equity and bond markets may be limited.
Risk tip: policy changes, economic recovery is less than expected.
