那提西银行-中国-宏观经济-中国面临的货币政策挑战-20180605-7页_744kb

Flash Economics Summary

Core Content

The document outlines the monetary policy challenges faced by the People's Bank of China (PBoC), focusing on three main areas:

1. Preventing financial instability without curbing growth
2. Developing domestic financial markets to support renminbi internationalisation
3. Improving the efficiency of savings usage

These challenges are analyzed in the context of China's economic structure and policy goals, with an emphasis on balancing growth, financial stability, and market development.

Main Challenges and Key Points

1. Preventing Financial Instability without Curbing Growth

• Challenge: The PBoC must control liquidity and credit growth, prevent asset price bubbles, and limit the development of shadow banking, all without increasing the cost of capital excessively or slowing economic growth.
• Tools Used:
  • Macroprudential policies: Including required reserves for banks and borrowing limits.
  • Interest rate management: The central bank can raise short-term rates but must avoid increasing long-term rates to prevent dampening growth.
• Data Highlight:
  • Credit growth has been a major concern (Chart 1A and 1B).
  • Real estate prices have shown significant increases (Chart 2).
  • Shadow banking has grown substantially (Table 1).

2. Developing Domestic Financial Markets

• Challenge: China's financial markets are underdeveloped and not very liquid, which limits the ability of non-residents to invest in Chinese assets and forces Chinese savers to hold large portions of their savings in bank deposits.
• Consequences:
  • Capital outflows increase when controls are relaxed (Chart 6B).
  • The renminbi's internationalisation depends on the ability to attract global savings and retain domestic savings.
• Data Highlight:
  • M2 money supply is high relative to nominal GDP (Chart 6A).
  • Capital flows are significant when controls are lifted (Chart 6B).

3. Improving the Efficiency of Savings Usage

• Challenge: China's high national savings rate is not efficiently channelled into productive investments, leading to excess liquidity and real estate investment.
• Need for Change: Savings must be redirected towards more efficient sectors such as new technologies and growing companies.
• Data Highlight:
  • High savings are invested in money-market assets and real estate, contributing to inefficiencies (Chart 7 and Chart 8).

Conclusion

The PBoC has a clear "road map" for addressing these challenges:

• Macroprudential tools will be used to manage credit and asset price bubbles.
• Market development is essential for the renminbi to become an international reserve currency.
• Efficient allocation of savings is necessary to drive long-term economic growth and productivity.

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Summary of Key Information