Lou Jiwei: Now we should definitely reduce leverage, especially in financial business | Monetary Policy-Finance News

Original title: Lou Jiwei: We should definitely reduce leverage now, especially in financial business

　　Reporter Chen Peng

Lou Jiwei, chairman of the Foreign Affairs Committee of the National Committee of the Chinese People’s Political Consultative Conference and a former minister in the Ministry of Finance, said on Friday that China has come to study the orderly withdrawal of flexible monetary policy. In addition, you should now decidedly reduce leverage, especially the financial business.

He said at the Caixin Summit that studying the withdrawal of the policy does not mean that the policy is withdrawn immediately, but both fiscal and monetary policies require a withdrawal. Fiscal policy may continue to expand next year, but the intensity is expected to be less than this year.

“Currently, the debt cycle and the business cycle are out of alignment, debt is piling up, and the economy is far from recovering, but asset prices are at a high level. Once the economy recovers, it is It is necessary to recover excess liquidity and there is also the risk of debt collapse. Therefore, the pace of withdrawal is safe. We must master it well and we cannot allow the economic recovery to respond to the debt crisis, “said Lou Jiwei .

According to data from the Central Bank, from January to October this year, new RMB loans from financial institutions amounted to 16.95 trillion yuan, which exceeded 16.82 trillion yuan in the whole of last year. At the end of October, the credit balance increased 12.9% year-on-year. Since July, the credit growth rate has been around 13% for many consecutive months. From the perspective of increasing social financing, in the first 10 months of this year, the increase in social financing exceeded 31 trillion yuan, far exceeding the level of 25.6 trillion yuan in all of last year.

According to research data from the National Finance and Development Laboratory, in the first three quarters of 2020, China’s macro leverage ratio increased from 245.4% at the end of the previous year to 270.1%, an increase of 27.7 percentage points. From a structural point of view, the corporate sector was the most important driver for the increase in leverage in the first quarter, contributing 70% of the increase in corporate debt; the corporate sector’s contribution to leverage in the third quarter was negative, with residents and government departments becoming the main driver of the increase in leverage. , The contribution rates are 46% and 65% respectively.

At the Central Bank’s third-quarter financial statistics release conference in October, Ruan Jianhong, Director of the Department of Surveys and Statistics of the People’s Bank of China, said the spike in macro leverage is a manifestation of macro policies. that support the prevention and control of epidemics and the recovery of the national economy, and macro leverage should be allowed. Go up in stages and expand credit support to the real economy.

In addition, Sun Guofeng, director of the Monetary Policy Department of the People’s Bank of China, stated in a policy briefing held by the State Council Information Office last week that sound monetary policy in the next stage will be more flexible, moderate and precise, and that the intensity and pace of the policy will be adjusted over time according to changes in the market situation and demand. And the key points, the policies introduced during the special period will be adjusted in due course.

Lou Jiwei also believes that there are certain objective reasons for the increase in the macro leverage ratio this year, but stressed that now “the important thing is to reduce.” “Policies should be used to protect the livelihoods of individuals and small and medium-sized businesses, but also to prevent the leverage ratio of businesses and residents from getting too high, and the finance business should continue to reduce leverage,” he said.

From a global perspective, Lou Jiwei believes that the economy is still in a period of recession and that the macro-control policies of all countries are responsible for the basic livelihood of people and market players. Therefore, fiscal and monetary policies will continue to expand. But given the high debt ratio, the political space is shrinking.

Georgieva, president of the International Monetary Fund (IMF), also proposed at the event that “Do not withdraw ‘prematurely’ from support for fiscal and monetary policies.”

Talking about the economic and trade relations between China and the United States, Lou Jiwei said that even if Biden becomes the next president of the United States, he cannot be too optimistic about the relations between China and the United States. “But if Biden can return to common sense and science without extreme pressure, the next step may be to cooperate with China and other major countries to study and improve the global economic governance system.”

Editor in charge: He Zhongfu