The State Council Finance Committee Meeting to Study the Current Situation and Respond to Market Concerns

　　On March 16th, the State Council Financial Stability and Development Committee held a special meeting to study the current economic situation and capital market issues. Affected by this, A shares immediately rose across the board. As of the close of the day, the Shanghai Composite Index rose 3.48% to 3,170.71 points; Shenzhen Component Index rose 4.02% to 12,000.96 points; The GEM index rose 5.20% to 2,635.08 points.

　　Experts believe that at present, the global political and economic situation is complicated and changeable, unstable and uncertain factors are increasing, and the fluctuation of international financial market is intensifying. The the State Council Financial Committee held a meeting to respond to the hot spots and key issues concerned by the market in time, sending a clear signal of stable economy, stable market and stable growth, showing the bright background of China’s strong economic resilience and sufficient policy space, and effectively stabilizing market expectations.

　　Firmly support the development of the real economy.

　　The meeting called for coordinating epidemic prevention and control and economic and social development, keeping the economy in a reasonable range and keeping the capital market running smoothly. With regard to macroeconomic operation, we must implement the decision-making arrangements of the CPC Central Committee, effectively revive the economy in the first quarter, take the initiative to respond to monetary policy, and maintain moderate growth in new loans.

　　"The meeting released a signal that the central government attaches great importance to stable and healthy economic development, indicating that steady growth is still the current policy focus." Zhou Maohua, a macro researcher in the financial market department of China Everbright Bank, said that the meeting clarified the implementation path of macro policies. Next, the policy force should be appropriately advanced, and the reserve policy tools should be used in time to ensure the smooth operation of the economy.

　　"Monetary policy should seize the time window, be more proactive and aggressive, and timely use various monetary policy tools such as RRR cuts and interest rate cuts to make accurate efforts." Dong Ximiao, chief researcher of Zhaolian Finance, said that at present, the weighted average deposit reserve ratio of financial institutions in China is 8.4%, and there is still room for RRR reduction; The convenient operating interest rate for medium-term lending has remained unchanged for two consecutive months, and it is necessary and possible for policy interest rates and market interest rates to continue to decline. At the same time, it is necessary to further unblock the transmission mechanism of monetary policy, increase positive incentives for financial institutions, and inject liquidity into the real economy more efficiently and accurately.

　　When conveying the spirit of the meeting of the Learning Finance Committee, the People’s Bank of China said that monetary policy should take the initiative to respond, new loans should maintain moderate growth, support small and medium-sized enterprises vigorously, firmly support the development of the real economy, and keep the economy running in a reasonable range.

　　"It is expected that a prudent monetary policy will exert moderate efforts in 2022, promote the moderate expansion of credit, guide financial institutions to increase their support for the real economy, especially small and medium-sized enterprises and technological innovation enterprises, further reduce the financing cost of the real economy, and effectively hedge the downward pressure on the economy." Chen Li, chief economist of Chuancai Securities, said.

　　In the face of the impact of the epidemic, it is urgent to "release water to raise fish", enhance the willingness of enterprises to invest and produce, and stimulate the vitality of market players. This requires active fiscal policies to improve efficiency and help enterprises bail out. Tian Lihui, dean of the Institute of Financial Development of Nankai University, said that on the one hand, it is necessary to implement the annual tax rebate and tax reduction target of about 2.5 trillion yuan as soon as possible, focusing on supporting key industries such as small and medium-sized enterprises, individual industrial and commercial households and manufacturing industries, and enhancing the vitality of market players; On the other hand, we should actively expand effective investment, focus on the country’s major strategic deployment and the "14 th Five-Year Plan", moderately advance infrastructure investment, continuously optimize the investment structure, and effectively play the role of steady growth of investment.

　　"While giving full play to their respective advantages, fiscal policy and monetary policy should also strengthen coordination in terms of policy direction, action time and policy intensity to enhance policy effectiveness." Tian Lihui said that policies such as employment, industry and investment should also be coordinated to maintain the forward-looking, timeliness and stability of macro policies and escort China’s economic stability.

　　Keep the capital market running smoothly.

　　Recently, A-shares have undergone a round of substantial adjustment due to the superposition of multiple factors such as the continuous spread of the global epidemic and the geopolitical conflict between Russia and Ukraine.

　　The meeting of the Finance Committee stressed that relevant departments should earnestly shoulder their responsibilities, actively introduce policies that are beneficial to the market, and prudently introduce contractive policies. Any policy that has a significant impact on the capital market should be coordinated with the financial management department in advance to maintain the stability and consistency of policy expectations.

　　"The capital market is closely related to the development of the real economy, to the vital interests of hundreds of millions of ordinary investors, and to financial stability and social stability." Dong Ximiao said that it is very timely and necessary for this meeting of the Finance Committee to explicitly demand the stability of the capital market.

　　Stabilizing the capital market is inseparable from stabilizing market players. Chen Li said that due to the epidemic, China’s real economy is facing many difficulties, and it is necessary to increase support for the real economy, especially small and medium-sized enterprises. On the one hand, support policies need to be more targeted, and financial institutions should thoroughly study the needs of different enterprises, especially the characteristics of financial needs of small and medium-sized enterprises, to ensure that credit funds are smoothly invested in the real economy; On the other hand, it is necessary to further improve the efficiency of market resource allocation and fill the shortcomings of the capital market in serving small and medium-sized enterprises and technological innovation enterprises.

　　When conveying the spirit of the meeting of the Learning Finance Committee, the China Securities Regulatory Commission said that the next step would be to push forward the reform of the stock issuance registration system in an all-round way, improve the bond financing support mechanism of private enterprises, and promote the development of venture capital.

　　"Promoting the registration system in an all-round way can effectively alleviate the financing difficulties of enterprises, strongly support the development of innovative and entrepreneurial enterprises, and accelerate the transformation and upgrading of China’s industry." Tian Lihui said that it is necessary to continuously improve the construction of the basic system of the capital market, including setting up a market stability fund, optimizing the short-selling trading mechanism, improving the supervision ability and level, and establishing a delisting system that matches the registration system, so as to better serve the full implementation of the registration system.

　　Maintaining the stability of the capital market is a systematic work. "The Finance Committee meeting emphasized that policies that have a significant impact on the capital market should be coordinated with the financial management department in advance. Only in this way can individual rationality be prevented ‘ Fallacy of composition ’ To maintain the stability and consistency of the policy. " Dong Ximiao said that relevant departments should also introduce more targeted policies and measures, provide "real money and silver" to support the healthy development of the capital market, introduce more long-term funds and institutional investors, and enhance the stability of the capital market.

　　Strong economic resilience and sufficient policy space

　　Market participants believe that the meeting of the Finance Committee released a positive signal of stable expectations and steady growth, which further highlighted the background of China’s strong economic resilience and sufficient policy space.

　　"Since the beginning of the year, the downward pressure on China’s economy has increased, overseas epidemics have continued to spread, international geopolitical conflicts have escalated, energy and commodity prices have risen, policies in developed economies have turned, and global financial markets have been turbulent. At the same time, domestic demand is still in the recovery stage, the imbalance of industry recovery is very prominent, and the operation of small and medium-sized enterprises still faces challenges, which have affected market expectations. " Zhou Maohua said.

　　Stabilizing the market must first stabilize expectations. The meeting of the Finance Committee was decisive and effective, which responded well to market concerns, boosted market confidence and stabilized development expectations.

　　"The A-share market has sprung up, and the stock prices of Hong Kong stocks, especially Internet companies in Hong Kong stocks, have risen sharply, sweeping away the gloom of the decline in the past few days and giving a strong boost to market confidence." Yang Delong, chief economist of Qianhai Open Source Fund, said.

　　Chen Li believes that A-shares may continue to be disturbed in the short term due to negative factors such as the Russian-Ukrainian conflict, the Fed’s interest rate hike, and the spread of the epidemic. However, in the medium and long term, with the coordinated efforts of fiscal policy and monetary policy, domestic liquidity is guaranteed and economic development has long-term resilience. At the same time, new infrastructure, new energy, high-end manufacturing and other industries will release new growth momentum for China’s economy and help the A-shares to continuously enhance their resilience.

　　"There should be enough confidence in the follow-up performance of the A-share market." Tian Lihui said, first of all, the Chinese government attaches great importance to economic development and has a rich policy toolbox, and will continue to introduce strong support policies in due course. Secondly, China’s A-shares are moving towards high-quality development, and a number of "little giant" enterprises are emerging, and investment opportunities in the capital market are constantly emerging, attracting global investors to increase the allocation of the A-share market. Thirdly, China’s market players, institutions and investors are maturing, and the concept of value investment is gradually taking shape.

　　At present, China’s national economy continues to recover, the main macroeconomic indicators are running in a reasonable range, and the performance of listed companies is stable and good, laying a good foundation for the annual economic performance. Experts said that with the active deployment of the Finance Committee meeting, it is expected that the steady growth policy will continue to exert its strength in the future, escorting China’s stable economy and the healthy and stable development of the capital market.