On May 22, Xiao Gang, member of the National Committee of the Chinese People’s Political Consultative Conference and former chairman of the China Securities Regulatory Commission, talked about his views on “monetizing the fiscal deficit” at an online event.
Xiao Gang said that “monetization of fiscal deficit” can be discussed further in theory, but it has not yet been introduced in practice for two reasons: < br>
First of all, from a practical point of view, the premise behind the monetization of the deficit is not to affect inflation. The reason why modern currency theory (MMT) came into being is because the inflation rate of Western countries has generally been relatively low in the past 20 years. But the situation in China is different. There is still some inflation in China. China ’s CPI deducts pork prices. Other prices do not seem to be high, but many price indicator data are not included in the CPI. Chinese people feel that the purchasing power of the renminbi five years ago is different from today’s. It can be said that the purchasing power of the renminbi is somewhat degraded. This issue needs attention. How to maintain the purchasing power of the RMB is a big problem.
Second, China ’s macro-control policy space is still very large, and the interest rate level has not reached zero interest rate. Although the deposit reserve has fallen several times, it is still at a fairly high level. Level. There is still room for the next step in RRR cuts and interest rate cuts. In this sense, the bullets of macro policy are far from exhausted.