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The current economic situation demands the adoption of a multi-pronged strategy to achieve stable growth and stable price levels. National leaders stress that prudent monetary policy must maintain flexibility and a proper degree of precision to ensure a reasonable abundance of liquidity. At the same time, it’s necessary to ensure that the scale of social financing and the money supply can match the anticipated targets for economic growth and price levels. This not only supports the financing needs of the real economy but also helps to promote the recovery of the economy and price levels.
The government report also highlights the importance of a smooth monetary policy transmission mechanism to avoid the ineffective circulation and accumulation of funds. Moreover, enhancing the intrinsic stability of the capital market and maintaining the exchange rate of the renminbi at a reasonable and balanced level have been designated as priorities.
To further support the economy, the government will strengthen both overall quantity and structural adjustments, activate the existing stock of funds, enhance financial efficiency, and particularly increase the financing support for strategic major projects, key areas, and weak links.
While promoting stable and declining financing costs, monetary policy will remain moderately loose and consistent with expansionary fiscal policy to ensure steady and healthy economic development.
The report further predicts five major development directions for financial policy, namely: technology finance, green finance, inclusive finance, pension finance, and digital finance. The development in these areas will adopt a series of optimization measures, such as financing credit enhancement, risk sharing, and information sharing, especially providing better financing support for micro, small and medium enterprises.
Additionally, it is expected that new structural credit instruments will be introduced to promote the objectives of monetary policy that focuses on both quantity and structure, enhancing the efficiency of credit increment.
As for the consistency of macro policy, it will focus on the overall development, strengthening the coordination of fiscal, monetary, employment, industrial, regional, technological, and environmental policies. Non-economic policies will also be integrated into the assessment of macro policy orientation to enhance the overall effect of policies and ensure that various policies work in the same direction, forming a joint force.
Finally, the government will endeavor to research reserve policies, enhance the foresight of policies and the diversity of tools, while also maintaining a certain degree of redundancy, so that effective policy measures can be timely introduced when needed.
In the process of formulating China’s economic policy, enhancing the coordination and unity of all macroeconomic policies is essential.
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