CCTV:

China's central bank, as mentioned previously, has conducted a series of supportive monetary policies this year. What results have these policies yielded so far? In what ways will monetary policy continue to support high-quality economic development?

Lu Lei:

Thank you for your questions. We appreciate your interest in monetary policy, including its implementation, outcomes and future course. I've shared some information about our monetary policy previously, so I'd like to offer more specific information in response to your questions.

The PBC has been firmly committed to the decisions and arrangements of the CPC Central Committee and the State Council, implementing a sound monetary policy in a flexible, appropriate, targeted and effective manner. Notably, we've strengthened counter-cyclical adjustments, effectively boosting the recovery trend for the economy and high-quality development. I'd like to provide a detailed breakdown in three areas. 

The first area is about policy implementation. On the one hand, aggregate monetary policy continues to take effect. At the beginning of the year, monetary policy was front-loaded, playing its role in keeping expectations stable and boosting confidence. We have cut the reserve requirement ratio by 0.5 percentage points as well as have lowered relending and rediscounting rates for the agriculture sector and small businesses by 0.25 percentage points, which have helped to reduce banks' funding costs. As a result, the over-five-year loan prime rate (LPR) was reduced by 0.25 percentage points, providing strong support for a good start to the development of macroeconomy. After the third plenary session of the 20th CPC Central Committee, the PBC has swiftly implemented reform arrangements, incorporating reforms into macro control and improving the mechanism for market-based interest rate adjustment. We explicitly stated and further lowered the policy interest rate as well as have reduced the open market operation rate for seven-day reverse repurchase agreements by 0.1 percentage points. This has led to a 0.1 percentage points decrease in both the one-year LPR and over-five-year LPR. These measures have been effective in stimulating demand, helping to consolidate and strengthen the momentum of economic recovery. Furthermore, we also directed major banks to reduce deposit interest rates, so as to maintain their capacity to provide services to the real economy in a sustainable manner.

The second area is concerned with the effectiveness of policy implementation. I would say structural policies play a crucial role in this regard. This year, there has been a substantial demand for structural policies. In order to promote the development of sci-tech finance, we have launched a 500-billion-yuan relending program to support technological innovation and upgrades, which has significantly boosted effective investment. We have introduced a comprehensive package of supportive financial policies for the real estate sector, aiming to foster a stable and healthy property market. Recently, we have provided an additional 100 billion yuan in loans to agricultural and small businesses, as well as for disaster relief efforts in the 12 regions that were severely affected by floods, so as to help them resume production and business operations. These measures have yielded positive outcomes. Furthermore, we have stepped up our efforts to foster a favorable monetary and financial environment to sustain economic recovery. Data shows that the growth rate of total social financing remains within a reasonable range. As of the end of July, there has been an 8.2% year-on-year increase in the stock of aggregate financing and an 8.7% year-on-year increase in the balance of yuan-dominated loans, with both of them outpacing nominal economic growth. Social financing costs have also dropped steadily. In July, the weighted average interest rate on newly issued corporate loans stood at 3.65% and the interest rate on newly issued housing loans was 3.4%, representing a year-on-year decrease of 22 basis points and 68 basis points, respectively. Furthermore, the loan structure has continued to improve. As of the end of July, inclusive loans for micro and small enterprises have increased by 17% year on year. Medium- and long-term lending to the manufacturing sector grew by 16.9% year on year, or almost hitting 17%. Loans for enterprises that use special and sophisticated technologies to produce novel and unique products increased by 15% year on year. All three figures have exceeded the 8.7% year-on-year growth rate in total outstanding loans that I mentioned previously.

The third area is about future policy orientation. The PBC will continue to maintain a supportive monetary policy, and make stepped-up efforts to ensure the implementation of existing policy measures, so as to provide stronger support for high-quality economic development. We will continue to focus on the overall quantity, interest rates and structure. In terms of overall quantity, we will make use of various monetary policy tools in a comprehensive manner to keep liquidity conditions ample, and guide banks to achieve stable and sustainable loan growth. We will ensure that the scale of social financing and money supply align with the expected targets for economic growth and price levels. When it comes to interest rates, we will leverage the recent reduction in policy interest rates and loan prime rates to further drive down enterprises' financing costs and households' credit costs. In terms of structure, we will step up efforts to implement existing policy tools and introduce new measures aiming at improving capital use efficiency, providing more and better financial services to support major strategic initiatives, key areas and weak links.

Our policy priorities in the next phase will center around three dimensions: overall quantity, price levels and structure. I'll keep my remarks brief for now. Zou Lan is director general of the Monetary Policy Department and he is available to answer any questions you may have regarding monetary policy. Please feel free to engage with him for more in-depth discussions in this area. Thank you.