On October 20, the central bank website published the speech and Q&A of President Yi Gang at the 2021 G30 International Banking Conference. The full text is as follows:
I am very happy to participate in this international At the banking seminar, I will mainly introduce China’s recent economic situation, challenges and macro policy responses.
Currently, the global economy continues to recover, but the differentiation is serious. On this point, I completely agree with the views of Georgieva, President of the International Monetary Fund. The world faces many common challenges, including sharp increases in energy prices and supply chain bottlenecks. At present, all parties are still divided on whether inflation is a temporary phenomenon or will last for a long time, when and how to withdraw from the easing policy, and how to deal with policy spillover effects.
In terms of the epidemic, although China has occasionally confirmed cases, the overall control is relatively good. Up to now, the vaccination rate in China is close to 80%, and the resumption of work and production is progressing smoothly. At the same time, the global epidemic has repeatedly blocked the global supply chain, and the prolonged supply chain bottleneck may push up inflation and affect the pace of sustained economic recovery.
Next, I will talk about the recent economic situation in China. In the first half of this year, China’s economy grew by 12.7% year-on-year, and the annual growth rate is expected to be around 8%. Affected by factors such as flood conditions and the epidemic, the recent economic growth is facing certain challenges, but overall, the trend of stable economic recovery has not changed.
PPI is operating at a high level, and CPI is rising moderately. In September, PPI rose 10.7% year-on-year, and CPI rose 0.7% year-on-year. The rising prices of raw materials such as energy and metals are an important reason for the rapid rise in PPI. It is expected that the PPI may remain high in the next few months, but the upward pressure is expected to ease by the end of this year. The decline in food prices, especially pork prices, is an important reason for the relatively mild increase in China’s CPI.
The employment situation is generally stable. In August, the urban surveyed unemployment rate was 5.1%, the same as in July. Imports and exports were relatively strong, and the ratio of the current account surplus to GDP in the first half of the year was 1.5%, which continued to be within a reasonable range.
Although the overall performance of the Chinese economy is relatively good, we still face some challenges, including coping with the downward pressure on economic growth, maintaining a basically stable macro-leverage ratio, and some small and medium-sized banks facing operating difficulties , And prevent individual companies in specific industries from facing default risks due to poor management and blind expansion. These issues do not yet constitute systemic risks, and we will pay close attention to them.
For the aboveRegarding the problem, since the beginning of this year, we have persisted in implementing a prudent monetary policy. From July 15, 2021, the People’s Bank of China will reduce the deposit reserve ratio of financial institutions by 0.5 percentage points. In order to continue to increase support for small, medium and micro enterprises, a small reloan line of 300 billion yuan has recently been added. Fiscal policy pays more attention to improving quality and efficiency and making it more sustainable. Financial departments at all levels have established a normalized direct fiscal fund mechanism, and expenditures in key areas such as people’s livelihood are guaranteed.
At the same time, the People’s Bank of China is actively preventing and resolving financial risks, including maintaining the basic stability of the macro leverage ratio, disposing of a few financial institutions such as Baoshang Bank in accordance with the law, and supporting banks, especially Small and medium banks replenish capital through multiple channels. In addition to vigorously supporting small, medium and micro enterprises, we have also focused on promoting two tasks:
The first is green finance. Since the beginning of this year, the People’s Bank of China has done a lot of work in supporting the green transformation, including completing the revision of the “Green Bond Support Project Catalog”; referring to the recommendations of the Climate-Related Financial Information Disclosure Working Group, issuing the “Guidelines for Environmental Information Disclosure of Financial Institutions” and so on. Currently, carbon reduction support tools are being designed. At the same time, we actively participate in international cooperation on green finance and support the green transformation of developing countries.
The second is financial technology. The development of financial technology has reduced the cost of financial services, improved the efficiency of financial services, and effectively contributed to inclusive finance. However, the development of financial technology has also brought about problems such as abuse of monopoly advantage and excessive collection and use of user data. In this regard, we continue to make up for the “shortcomings” of the regulatory system, continuously enhance policy transparency, continue to strengthen anti-monopoly supervision, maintain fair competition, and strengthen data protection to protect the legitimate rights and interests of consumers.
In the next step, we will continue to do a good job. At the same time, the People’s Bank of China is willing to continue to strengthen communication and cooperation in these areas with all parties to jointly promote a strong, balanced, sustainable and inclusive recovery of the global economy. Thanks!
Question 1: As the Evergrande incident continues to ferment, do the People’s Bank of China and the Chinese government consider it necessary to take measures to avoid systemic risks? Can private companies only buy Evergrande bonds to replace the Central Bank of China and the authorities in taking more measures?
Answer: The situation of Evergrande has attracted more attention recently. Evergrande is a real estate company. The main risks at present are the failure to repay the due debts, the suspension of some construction sites, and the uncertainty of the timely delivery of pre-sold real estate. In general, Evergrande risk is a case-by-case risk. In terms of response measures, we must first prevent Evergrande’s risks from spreading to other real estate companies. The second is to avoid risk transmission to the financial sector.Evergrande’s debt is about US$300 billion, of which one-third are financial liabilities, creditors are scattered, and there are collaterals. In general, the spillover of the Evergrande incident to the financial industry is controllable. Our principle in responding to the Evergrande incident is to strictly follow the order of payment prescribed by law, and fully respect and protect the legal rights and interests of creditors and property owners. In this process, it is especially important to protect the legitimate rights and interests of consumers who have purchased houses. We will adhere to the principle of rule of law to ensure that the legitimate rights and interests of all creditors and stakeholders are treated fairly. In general, we are confident that we can control risks within a certain range and avoid systemic risks.
Question 2: Can you talk about how the digital renminbi will affect the importance of the renminbi in the world, especially for the “Belt and Road” that may become a “renminbi zone” Nationally?
Answer: At present, the design and use of digital renminbi is mainly to meet the domestic retail payment needs. Cross-border and international use are relatively complex, involving legal issues such as anti-money laundering and customer due diligence, and are also being discussed in depth internationally. In view of the complexity of cross-border use, digital renminbi currently mainly meets domestic retail demand. We will pay attention to the use of digital renminbi, and are willing to strengthen cooperation in related fields with central banks, the International Monetary Fund, the Bank for International Settlements and other international institutions. There is currently no plan to promote the use of digital renminbi in the “Belt and Road” countries.