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SCIO briefing on China's financial statistics in H1 2021

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Speakers:

Ruan Jianhong, spokesperson of the People's Bank of China (PBC) and director general of the statistics and analysis department at the PBC

Sun Guofeng, director general of the monetary policy department at the PBC

Zou Lan, director general of the financial market department at the PBC

Chairperson:

Chen Wenjun, head of the Press Bureau of the State Council Information Office (SCIO) and spokesperson of the SCIO

Date:

July 13, 2021


Chen Wenjun:

Ladies and gentlemen, good afternoon. Welcome to this press conference about China's first-half financial statistics of 2021. We are delighted to invite Ms. Ruan Jianhong, spokesperson of the People's Bank of China (PBC) and director general of the statistics and analysis department at the PBC; Mr. Sun Guofeng, director general of the monetary policy department at the PBC; and Mr. Zou Lan, director general of the financial market department at the PBC, to meet with you to introduce the financial statistics and answer your questions.

Now, I give the floor to Ms. Ruan.

Ruan Hongjian:

Friends from the media, good afternoon. Since 2021, the PBC has resolutely implemented the deployments of the CPC Central Committee and the State Council; adopted a prudent monetary policy that is accurate, flexible, proper, and stable; maintained reasonable and ample liquidity; reduced the required reserve ratio; optimized the funding structure of financial institutions; and given full play to the targeted guiding role of structural monetary instruments such as refinancing, rediscount, and direct tools. We have continued to release the dividends of LPR reform, kept the increases in money supply and aggregate financing generally in step with economic growth in nominal terms, maintained the macro-leverage ratio basically stable, and built support for key areas and weaknesses in the real economy. 

First, total financial resources have grown appropriately and maintained reasonable and ample liquidity. In 2021, the financial system consolidated its achievements in coordinating epidemic control with economic and social development. We have put the real economy in a more prominent position, and the total financial resources increased appropriately. RMB loans for the first half of the year increased by 12.76 trillion yuan, a year-on-year increase of 667.7 billion yuan. The balance of the M2 money supply was 231.78 trillion yuan, an increase of 8.6% year-on-year and 0.3 percentage points higher than at the end of the previous month. The balance of aggregate financing was 301.56 trillion yuan, an increase of 11% year-on-year, and the same as seen at the end of the previous month. The growth rate of M2 and aggregate financing were generally in step with economic growth in nominal terms.

Second, significant results have been achieved in maintaining the basic stability of the macro-leverage ratio. In the first half of the year, the overall national economy continued to recover stably and the order of production and life was steadily restored, providing a basic guarantee for the stability of the macro-leverage ratio. In the first quarter of 2021, China's macro-leverage ratio was 276.8%, 2.6 percentage points lower than at the end of the previous year. The leverage ratios of non-financial enterprises, government departments, and households declined by 0.9, 1.3, and 0.4 percentage points, respectively, all of which fell by varying degrees. Judging from the economic recovery and debt growth in the second quarter, we expect the macro-leverage ratio to remain stable in the second quarter.

Third, the overall financing cost of the real economy has steadily decreased. Since the beginning of the year, the PBC has continued to improve the market-based interest rate formation and transmission mechanism and the PBC's policy interest rate system, optimize supervision over deposit interest rates, release the potential for LPR reform, and promote further reductions in actual loan interest rates. Meanwhile, two monetary policy tools directly concerning the real economy were also leveraged to reduce the financing costs of micro and small enterprises. In the first half of the year, the contract interest rate of new loans issued to micro and small enterprises was 5.18%, down by 0.3 and 1.06 percentage points than during the same period in 2020 and 2019. The contract interest rate for manufacturing loans was 4.13%, down by 0.25 percentage points, compared to the same period last year. In addition, the universal RRR cut has reduced capital costs among financial institutions by about 13 billion yuan per year, and transmission through financial institutions has promoted the reduction of overall financing costs.

Fourth, the financial sector has bolstered support for high-quality development. The financial system has implemented an innovative, coordinated, green, open, and shared development philosophy and built on the new development paradigm to promote high-quality economic development and increased support for technological innovation. As of the end of May, the rate of obtaining loan for small and medium sci-tech enterprises were 41.8%, while the loan balance increased by 8.75% over the beginning of the year, and the development of green finance was solidly promoted. We have improved the green financial standard system, established a climate and environmental information disclosure system, and encouraged the financial sector to increase support for green industries. We have also continued to develop inclusive finance. At the end of June, the balance of inclusive loans for micro and small firms reached 17.7 trillion yuan, a year-on-year increase of 31% and 18.7 percentage points higher than the growth rate of various loans in the same period. At the end of June, 38.3 million micro and small firms had received inclusive loans, a year-on-year increase of 29.2%.

Fifth, we have effectively controlled financial risks in key areas. By the end of the first quarter, the shadow banking assets, non-standard credit assets, and non-standard capital in the financial system dropped by about one-fifth, one-fourth, and one-fifth, respectively, compared to historical records. We have been exploring risk control mechanisms in small- and medium-sized financial institutions, and made progress in installing risk control mechanisms in small- and medium-sized financial institutions with high risks. We are also improving and establishing long-term financial regulation mechanisms for the real estate sector with a focus on stabilizing land prices, property prices, and people's expectations.

To sum up, the finance sector has been progressing smoothly with continued improvement in its structure. In the next step, the PBC will conscientiously implement the principles of the fifth plenary session of the 19th CPC Central Committee as well as the Central Economic Work Conference, uphold the underlying principle of pursuing progress while ensuring stability, keep a prudent monetary policy that is consistent, stable, and sustainable. We will deepen structural supply-side reforms in the finance sector, increase financial support for key sectors such as the private sector, small- and micro-businesses, rural vitalization, and green and low-carbon. We will continue to improve the adaptability and inclusiveness of the financial system and financial services and make contributions to reaching the second centenary goal.

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