CCTV:

We know that this year we need to keep the growths of broad money, or M2, and the size of social financing to match the nominal economic growth. Does this mean that the size of the money supply will increase this year? What will the M2 growth rate be like this year? Thank you.

Chen Yulu:

Thank you to the journalist from CCTV. Maintaining growth of the M2 and the size of social financing to match the nominal economic growth is an important part of improving our country's modern monetary policy frame. I want to tell you all that "basically match" doesn't mean being of the exact same amount. The growth of the M2 and the size of social financing could be slightly higher or lower than the nominal economic growth - according to the economic situations and requirements of macroeconomic governance - to reflect the counter-cyclic adjustment in medium-to-long term monetary policy. And when the economy operates irregularly, for example when suffering major epidemics similar to the one that we're currently facing, economic growth could hugely deviate from the level of potential outputs. At that point, monetary policy should be decided according to a nominal economic growth that reflects potential outputs.

In 2020, being stricken by the epidemic, the PBOC continued to implement a prudent monetary policy and didn't adopt quantitative easing and other irregular monetary policy measures. The size of the balance sheet of the central bank maintained basic stability. Moreover, the monetary policy was flexible, moderate, and precisely targeted, and better hedged against the high uncertainty in a macro situation since the outbreak of the epidemic. Financial operating maintained stability and matched the level of potential output for our economy.

In 2021, the prudent monetary policy will be more flexible and precisely targeted, as well as rational and moderate, continuing to offer the necessary support for economic recovery. The PBOC will prioritize stability and not make rash decisions, and decide the intensity, rhythm, and emphasis of monetary policy flexibly according to the characteristics of epidemic prevention and control and socioeconomic development at various stages. It will make sure money supply growth and the size of social financing match the nominal economic growth, to support continued economic recovery and high-quality development via moderate monetary growth. Thank you.