According to reports, in order to ensure the smooth realization of the main expected goals of economic and social development throughout the year, starting from April, a series of measures to stabilize growth and expand domestic demand are expected to be intensively introduced. These measures will focus on investment and consumption. In terms of investment, it is expected that key livelihoods such as infrastructure construction, affordable housing projects, and shantytown reconstruction in the central and western regions will be implemented.
In terms of consumption, we will actively cultivate new consumption growth points, focus on improving the overall layout of domestic trade and circulation, and it is expected that the access in the fields of commerce, logistics and e-commerce will be further relaxed.
Stable growth still requires investment
Experts and analysts pointed out that from the perspective of stabilizing growth measures, investment will continue to be the main focus. The scope mainly covers affordable housing projects, agriculture, major water conservancy, central and western railways, energy conservation and environmental protection, social undertakings, urban smog management, Underground pipe network transformation, water supply and drainage facility construction, urban subway, rail transit, etc. The State Council executive meeting held on March 19 pointed out that efforts should be made to maintain economic operations within a reasonable range, to promptly introduce established measures to expand domestic demand and stabilize growth, accelerate the preliminary work and construction progress of key investment projects, and allocate budget funds in a timely manner. Implement the national new-type urbanization plan, and complete the construction tasks of affordable housing projects including the transformation of shanty towns on schedule.
Zhu Haibin, chief economist at JPMorgan Chase China, predicts that more measures to stabilize growth will be introduced in the future, including speeding up investment in infrastructure and affordable housing, increasing spending on railways, environmental protection and clean energy, and accelerating structural reforms. The fiscal surplus in the first two months of this year was 786 billion yuan, a significant increase from the 632 billion yuan in the first two months of last year. The budget target for this year is 1.35 trillion yuan, which means that expenditures will increase in the future.
Li Xunlei, chief economist of Haitong Securities, said that the adjustment of economic policies is expected to be prudent and small, fiscal expenditures will increase, and the stimulus to the economy will be mainly reflected in infrastructure investment.
Monetary policy may be fine-tuned
Regarding monetary policy, Zhu Haibin predicts that the central bank will maintain a neutral monetary policy and credit policy, but may make fine-tuning to support measures to stabilize growth. The central bank may maintain the inter-bank interest rate at a lower level for a longer period of time, which is conducive to stabilizing the financing cost of the ultimate borrower. He does not think that the central bank will lower the reserve ratio as a measure to stabilize growth.
Li Xunlei said that monetary policy will be moderately relaxed. In February, the broad money M2 increased by 13.3% year-on-year, and has fallen and is close to the full-year target value (13%). There is little room for tightening monetary policy. At the same time, the current inflation level is significantly lower than the annual target value, the renminbi exchange rate has depreciated, and the amount of foreign exchange has decreased, but the possibility of interest rate cuts is unlikely, and the possibility of lowering the deposit reserve ratio exists. Under the conditions of declining investment demand, the market’s demand for funds will also decline. Funding in the second quarter should not be too tight. The time point for reducing the deposit reserve ratio may be delayed. Therefore, the moderate easing of monetary policy will be mainly reflected in the central bank’s open market operations.
Post time: Oct-14-2020