Hu Xiaolian: The achievements of China's monetary policy regulation in the Eleven-Five period

Hu Xiaolian December 27, 2010 "Eleven-Five" period, China's financial macro-control is facing a very complex and changeable internal and external environment, experienced a rare international financial crisis severe challenges. Under the unified deployment of the CPC Central Committee and the State Council, the People's bank adjusts the monetary policy orientation in time according to the changes of the domestic and foreign economic and financial situation, comprehensively utilizes the monetary policy tool, flexibly grasps the focal point, the intensity and the rhythm of the financial macro-control, and further enhances the predictability,　　It has played an important role in maintaining stable and rapid economic growth and basic stability of price level. First, the timely adjustment of monetary policy, the predictability of financial macro-control, scientific and effective further enhance the "Eleven-Five" in the first half period, in view of the continued expansion of the balance of payments double surplus and excessive liquidity, prices continue to increase pressure, in order to prevent economic growth from fast to overheating, The price changed from structural to obvious inflation, and monetary policy shifted from moderation to moderately tight, and tightened monetary policy began in the fourth quarter of 2007.　　From 2006 to the first half of 2008, through the flexible open market operation, has raised the deposit reserve ratio 18 times, hedged the most of the liquidity of foreign exchange inflow, and has raised the deposit benchmark interest rate 7 times and 8 times the benchmark interest rate, which has played an important role in curbing inflation and maintaining steady economic growth. The 2007 US subprime mortgage crisis began to appear, to 2008, the degree of crisis deepened, and China's inflationary pressure is still large. The People's bank adjusted the focus and intensity of monetary policy in time.　　In accordance with the needs of maintaining stable and rapid economic development, and to control the demand for price increase, reduce the open market operation, and the annual increase in the expected target to improve the goal moderately, guide the financial institutions to expand the total amount of credit, and the combination of structural optimization, to "three rural", small and medium-sized enterprises and post-disaster reconstruction and so on tilt. After the collapse of Lehman Brothers in September 2008, the global financial crisis broke out, leading economies plunged into recession, financial markets were nearly lost, and the world economy suffered severe shocks. The impact on China's economy, especially the foreign trade sector, has increased markedly. Faced with the unprecedented complex situation, the people's Bank of the Central Committee under the unified deployment of the State Council began to implement moderately loose monetary policy, shrink open market operations, innovative use of short-term tendering tools (TAF), such as liquidity support Tools, has 4 times down deposit reserve ratio, 5 times down deposit and loan benchmark interest rates Moderately loose monetary policy has been effectively transmitted, financial support for economic development has increased significantly, strongly support the implementation of the stimulus package, to withstand the impact of the financial crisis played an important role. China's rapid economic stability, the world's first to achieve economic recovery. According to the Quarter-on-quarter data after the GDP season adjustment, the annual growth rate of China's GDP in the four quarter of 2008 was only 1.8%, and the 2009-year quarter rose to 8% and two in the quarter. Year-on-year GDP growth increased quarterly, from 2009 to four quarters respectively 6.5%, 8.1%, 9.6% and 11.3%, allAnnual GDP growth reached 9.1%.　　The effective implementation of appropriate loose monetary policy has eased deflationary expectations, quickly curbing the potential risks of mutually reinforcing deflation and recession, and a significant increase in market confidence, which has played an important role in helping to revive the economy as soon as possible, and has played a positive role in promoting a global economic recovery. Since 2010, with the international financial crisis easing, global liquidity abundant environment, along with the domestic economy to recover quickly, the labor cost rises, the commodity price rises and so on, also appeared the inflation anticipation to rise, the economic finance operation exists the risk hidden trouble and so on. While maintaining policy continuity and stability, monetary policy has made great efforts to improve the pertinence and flexibility of the policy in the light of the new situation. Focus on the use of market-based means of dynamic fine-tuning, properly handle the rapid economic development, adjust the economic structure and the management of inflation expectations of the relationship.　　Since 2010, the People's Bank synthesizes the quantity tool and the price type tool, the nimble carries on the open market operation, has raised the deposit reserve ratio 6 times, 2 times raise the deposit loan benchmark interest rate, the implementation difference reserve ratio, the differential mortgage interest rate and so on measures, guides the monetary condition to gradually from the crisis state to the Ii. the reform of RMB exchange rate formation mechanism has made a breakthrough, the role of market supply and demand in the formation of exchange rate has been further enhanced since July 21, 2005, China began to implement the market supply and demand as the basis of reference to a basket of currency regulation, managed floating exchange rate system, the reform of RMB exchange rates a historic step In the special period of the international financial crisis, many countries ' currencies have depreciated sharply against the US dollar, the RMB exchange rate has remained basically stable, which is beneficial to our country's stable external demand, resisting the international financial crisis, and has contributed to the economic recovery in Asia and even the global economy, and has demonstrated our efforts to promote With the gradual recovery of the global economy, China's economic rebound to further consolidate the good foundation, the economic operation tends to be smooth, June 19, 2010, the People's Bank announced the further development of the renminbi exchange rate mechanism reform, emphasis on the market supply and demand based on the reference to a basket of currencies to adjust. Continue to carry out dynamic management and regulation of RMB exchange rate fluctuation according to the announced exchange rate fluctuation range of foreign exchange market. Since the 2005 transfer to the end of November 2010, the RMB exchange rate has risen 23.97% against the dollar, the euro exchange rate has risen 14%, according to the BIS data, the RMB nominal effective exchange rate has appreciated 13.58%, the real effective exchange rate has appreciated 21.2%.　　With the increasing flexibility of RMB exchange rate, it has played an active role in promoting structural adjustment and directing resources to the allocation of domestic demand departments. During the Eleven-Five-year period, the People's Bank of China has done a lot of work around perfecting the managed floating exchange rate system: first, we should vigorously promote the construction of foreign exchange market, and provide institutional support for the RMB exchange rates mechanism based on the supply and demand of markets. The introduction of inquiry and market-making system, improve the formation of RMB exchange rate intermediate price, and vigorously develop the renminbi forward and swap market, improve the peopleRMB forward exchange rate pricing mechanism, actively and steadily carry out currency swap operation. Second, under the managed floating exchange rate system, the establishment and gradual improvement of the foreign exchange Exchange-level trader system is established. Third, strengthen and improve foreign exchange management, and constantly expand foreign investment channels, has issued a series of policies to relax the restrictions on enterprises and residents to hold foreign exchange. Expand foreign investment channels of financial institutions and enterprises, set up national foreign exchange investment company, broaden the investment field of foreign exchange reserve.　　Meanwhile, we should strengthen the supervision of cross-border funds and prevent the inflow of short-term arbitrage capital. Since the reform of the exchange rate formation mechanism, the RMB exchange rate has been fluctuating, the elasticity has gradually strengthened, the market base of exchange rate has gradually expanded, and the role of market supply and demand in exchange rate formation has been enhanced. Perfecting the managed floating exchange rate system is the choice according to our country's national conditions and development strategy, conforms to the reform direction of perfecting the socialist market economy system, conforms to the requirement of implementing the scientific development view, is the needs of our country's national interest under the globalization condition, conforms to our country long-term and the fundamental core interest　　It is helpful to promote structural adjustment and overall coordinated sustainable development, to restrain inflation and asset bubbles, to enhance the initiative and effectiveness of macro-control, to improve macro-control ability and to maintain strategic opportunity period. Third, the interest rate marketization reform is advancing steadily, the interest rate in the monetary policy conduction further strengthens our country interest rate marketization reform goal is establishes the sound interest rate formation mechanism which by the market supply and demand decides, the central bank through uses the Monetary policy tool to guide the market interest rate, maintains the economy steady healthy development, the reasonable During the period of "Eleven-Five", the People's Bank made new progress in promoting the marketization of interest rate: first, construct the benchmark interest rate of money market, establish and perfect the market interest rate system of our country. Since the Shibor of the interbank market in Shanghai in 2007, the benchmark position of Shibor in the money market interest rate system has been gradually established, and it is gradually becoming the pricing benchmark of money market, Bill Market, bond market and derivative product market. The second is to realize the marketization of the interest rate of money market and bond market, to enlarge the interest rate of deposit and loan, to open up the limit of loan interest rate and deposit interest rate, to adjust the lower limit of mortgage interest rate, to enlarge the independent pricing space of commercial banks, and to exert the role of market in The third is to strengthen the guidance of the interest rate pricing of financial institutions, urge the financial institutions to continuously improve the pricing mechanism and improve pricing capacity, improve the interest rate monitoring system, and guide financial institutions to reasonable pricing. Four is the central bank's interest rate adjustment system gradually improved, the central bank uses the monetary policy tool to guide the market interest rate further enhancement, the central bank bill and the repurchase rate has played the leading interest rate trend the function. In general, during the period of "Eleven-Five", the pricing level of China's financial institutions has improved markedly, the sensitivity of micro-subjects to interest rates has been enhanced, and the role of interest rates in adjusting resource allocation and conduction monetary policy is further apparent. The marketization of interest rate in China is a process of advancing and perfecting, which needs to cultivate various conditions, such as strengthening financial institutionsPricing ability and risk management ability, improve customer's self choice, self-protection ability, create benign competition market environment, etc.　　Next, the People's Bank will continue to actively promote the maturity of all aspects of the conditions, according to the "Twelve-Five" planning requirements, there is planning, there is a step, and unswervingly promote the marketization of interest rates. The Monetary policy tool system is further enriched, which plays an important role in the regulation of total amount and structure adjustment. The open market business and the Deposit Reserve tool cooperate with each other to strengthen the liquidity management of the banking system. Since the balance of payments has led to more passive currency delivery, strengthening liquidity management has become an important issue in China's financial macro-control. As early as 2003, the People's bank began to strengthen the liquidity management of the banking system by issuing central bank bills. "Eleven-Five" period, the People's Bank to strengthen the banking system liquidity supply and demand and market environment analysis and monitoring, to issue central bank bills, Treasury bond repurchase operation as a supplement, innovative operating tools, through the adjustment of open market operation scale, rhythm and tool combination, reasonable adjustment of the various term varieties operating rate, etc. Flexible open market operation. 2006 to 2010 November, a total of open market operation of about 33 trillion yuan, which issued about 20 trillion central bank bills, to carry out repurchase operation of about 13 trillion yuan. While using the open market operation to carry out daily liquidity management, the paper also makes full use of the characteristics of strong initiative and deep freezing of liquidity, and strengthens the liquidity management by adjusting reserve ratio flexibly. Since "Eleven-Five", the deposit reserve ratio has been raised 24 times, cut 4 times, in addition, through the implementation of differential reserve tools, total control and individual risk differences, strengthen liquidity management, guide the rational delivery of credit.　　"Eleven-Five" period, the People's Bank through the use of open market operations and deposit preparation tools to adapt to changes in the situation, regulation of liquidity levels, for the smooth operation of the economy to create a good environment. To play the function of loan and discount to guide credit funds and optimize the structure of loan. In accordance with the principle of "differential treatment and combination", the People's Bank will carry out the classified management of refinancing, effectively play the role of supporting agriculture, refinancing and discounting to expand the guidance of "three rural" and other weak areas, and strengthen the maintenance of loan claims. During the "Eleven-Five" period, the target and the scope of the agricultural re loan should be expanded appropriately, and the agriculture-related bills and the SME bills should be the focus of the discount support, and the western region and the main grain-producing areas should be increased. By the end of October 2010, the balance of agricultural loans in the whole country was 67.6 billion yuan, of which the proportion of agriculture-supporting loans in the western region and main grain-producing areas was over 93%, and the discount balance was 60.5 billion, among which, the agriculture-related bills accounted for 32% and the SME bills accounted for 85%.　　Re-loan and discount to guide the investment of credit, optimize the structure of credit, support the expansion of "three rural" and SME financing role further enhanced. The steady development of financial market has further improved the transmission mechanism of monetary policy. First, the financial system continues to develop and improve. From the cityField categories, money markets, capital markets, foreign exchange markets, gold market, futures market and insurance market have formed a certain scale, from the market level, to the interbank market as the main body of the OTC market and exchange as the main body of the market mutually complementary and common development. Second, the function of financial market continues to deepen. The participation degree of the market main body is increasing, the financial products and tools are gradually rich, the market scale is expanding, and the resource allocation ability has been enhanced significantly. Third, the financial market basic system construction is becoming more and more perfect. The market legal system and supervision system are further perfected, the infrastructure construction has achieved great achievements, the transaction settlement system, the Trusteeship System and the fund clearing system have been improved continuously, and each system is effectively connected and coordinated.　　Four is the financial market opening to the outside level unceasingly enhances, "The introduction comes" the steady advancement, "goes out" the pace speeds up. The breakthrough of financial enterprise reform has further strengthened the micro-foundation of monetary policy transmission. First, the shareholding system reform of large commercial banks has been basically completed. Eleven-Five "During the period, the Bank of China, Construction Bank, ICBC and Bank of Communications, ABC successively completed the financial restructuring and shareholding system reform, and in Hong Kong H shares and a domestic a-share successfully listed. The commercial transformation of the National Development Bank is advancing smoothly. The corporate governance of large commercial banks has been improved, and the quality of assets and profitability of the company has been improving, especially under the impact of the international financial crisis. Second, the reform of rural credit cooperatives continues to advance further. In accordance with the procedures and conditions stipulated in the Pilot Fund for the reform of rural credit cooperatives, the People's Bank of China and the CBRC will conscientiously carry out their assessment duties and strictly examine the effectiveness of rural credit cooperatives reform. At present, the National Special paper issuance and special loan issuance has been basically completed, special bills to honour the progress of more than 97%. The smooth implementation of the Fund support policy has played an important positive role in the effective solution of the historical baggage of rural credit cooperatives, urging, guiding and promoting the reform work of rural credit cooperatives. Overall, the reform of rural credit cooperatives has achieved important results, which has played an important role in maintaining the stable development of rural finance, improving the ability and level of rural financial service and promoting the solution of "three agriculture". Third, promote other financial reform. Eleven-Five "During the period, we will continue to promote the reform of policy financial institutions such as China Import and Export bank, China Agricultural Development Bank and China Export Credit insurance company. Promote the deepening reform of China postal Savings Bank. Further promote the market transformation of financial asset management companies. Steadily promote the comprehensive operation of the financial sector pilot.　　The improvement of corporate governance structure of financial institutions, the strengthening of capital restraint mechanism and the improvement of internal management ability all contribute to the effective conduction of monetary policy. Five, the renminbi "go out" to achieve a breakthrough in the Cross-border trade and investment in the use of the renminbi rapidly expanded in the context of the international financial crisis, in order to further promote trade and investment facilitation, adapt to our enterprises to circumvent the main international settlement currency exchange rate risk, since September 2008, With the concerted efforts of the people's Bank and the relevant ministries, the renminbi has made a breakthrough in "Going Out". July 2009 begins to crossForeign trade renminbi settlement pilot, the pilot is progressing smoothly, and various aspects of the pilot initiative is very high, in June 2010, the pilot region of the territory from Shanghai and Guangdong Province 4 cities to expand to Beijing and other 20 provinces (autonomous regions, municipalities), the geographical range from Hong Kong and Macao and the ASEAN region expanded to all countries and regions, The types of business include cross-border goods trade, trade in services and other current projects, and the pilot enterprise for the renminbi settlement of exports of goods has expanded from 365 to 67,724. RMB cross-border trade settlement volume increased significantly to the end of November 2010, the pilot region banks to deal with cross-border trade renminbi settlement business 388 billion yuan. Along with the development of RMB settlement business of cross-border trade, enterprises "go out" to develop foreign direct investment and financing demand growth in RMB, the People's bank carried out a pilot project of RMB cross-border investment and financing, which was generally welcomed by banks and enterprises. To the end of November 2010, the cumulative RMB cross-border investment and financing business more than 55 billion yuan. The bilateral exchange-currency swaps signed between the People's bank and the foreign central bank or monetary authorities are also evolving from monetary cooperation in response to the crisis to supporting bilateral trade investment.　　The expansion of RMB in cross-border trade and investment will also put forward new topics and higher requirements for the implementation and impact of monetary policy. At present, the extreme turbulence of the international financial crisis has eased, the developed economies into a slow and tortuous recovery process, emerging economies growth is relatively strong, external need to improve accordingly. The momentum of steady and rapid economic development in China is further consolidated. To adapt to the current economic and financial situation development and change, monetary policy orientation from moderately loose regression to a stable. The implementation of sound monetary policy can continue to meet the need to maintain stable and rapid economic growth, to strengthen the management of inflation expectations and prevent asset price bubbles, to prevent systemic financial risks, to promote economic restructuring and the transformation of development mode. The People's bank will seriously analyze and grasp the trend of economic development at home and abroad, strengthen the research on the deep problems and contradictions in the economic and financial operation, and strive to improve the ability to deal with complex situations. The next stage, the theme of scientific development, in order to speed up the transformation of the mode of economic development as the main line, the overall level of stable prices in a more prominent position, and actively and prudently deal with the maintenance of stable and rapid economic development, adjust the economic structure, the management of inflation expectations of the relationship to enhance the financial regulation of pertinence, flexibility and effectiveness Continuous use of interest rates, reserve requirements, open market operations and other conventional prices and quantitative tools to enhance the effective combination of tool use. We should explore and enrich the means of innovation regulation, accelerate the construction of macro-prudential policy framework, combine the total volume regulation of liquidity management with the construction of macro-prudential policy framework, and put the general floodgates of liquidity into good. According to the requirements of overall soundness, degree of adjustment and structural optimization, we should guide credit funds to the real economy, especially "three agriculture" and small and medium-sized enterprises, and accelerate the strategic adjustment of economic structure. We should further improve the mechanism of RMB exchange rate formation, maintain the basic stability of RMB exchange rate at a reasonable and balanced level, and steadily promote the reform of interest rate marketization. EffectiveTo guard against financial risks, maintain the safe and sound operation of the financial system, and ensure the sustainable ability of financial support for economic development.