Let’s quickly summarize how much China’s policy has loosened up this time:
- Targeted liquidity injection into the stock market: 800 billion (and can be increased)
- Flow to consumption: 1.2 trillion, including 1 trillion special government bonds + 15 million interest cost reduction from existing mortgage loans
- Flooding: 1 trillion, RRR cut by 100bps
- Flowing to real estate: ?? The down payment for the second set of housing is reduced from 20% to 15%, which is difficult to estimate
- Local debt: 1 trillion, especially national debt, but this only counts as debt replacement and is not included in monetary easing.
Summary: The overall monetary easing was about 3 trillion yuan, of which 2 trillion yuan was social leverage and 1 trillion yuan was government leverage.
Effect evaluation:
- The stock market is 73 trillion yuan, 800 billion yuan will have an immediate effect
- Housing market: Without real money, the effect is estimated to be average. This is also true. I have always said that it is best to let the bullet fly for a while in the real estate market.
- Consumption: 1.2 trillion, averaging 1,000 yuan per person, not much, maybe it has a slight effect
- Flooding: 1 trillion is not bad
The above is just the first step. If the effect is not good, it is obviously necessary to ➕.
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detailed:
1/ Stock market: 800 billion, including 500 billion for securities firms to pledge stocks to the central bank, and 300 billion for targeted repurchase loans to listed companies
2/ Flooding: After lowering the deposit reserve ratio (RRR) by 0.5 percentage points in February this year, Pan Gongsheng said that the RRR will be lowered by another 0.5 percentage points in the near future, which is equivalent to releasing about RMB 1 trillion of funds into the market;
3/Existing mortgage loans: In the near future, commercial banks will be guided to reduce the interest rates of existing mortgage loans to the interest rate level of newly issued mortgage loans, with an average reduction of about 0.5 percentage points. The total amount of household interest expenditure will be reduced by about 150 billion yuan - this part of the money will be given to consumers
4/One trillion yuan of the 2 trillion yuan special bonds launched by the Ministry of Finance of China will be used to stimulate consumption as market concerns grow over the weak economic recovery after the epidemic. Specific spending methods include: increasing subsidies for replacing home appliances, subsidies for equipment upgrades for large enterprises, and providing a monthly allowance of about 800 yuan per child (except the first child) to families with two or more children.
5/ Local debt: Insiders also said that another 1 trillion will be used to help local governments solve their debt problems. According to data from the Chinese government website, as of the end of 2023, the balance of local government debt is about 40 trillion yuan. However, according to estimates by international investment bank Goldman Sachs, China's local government debt has reached 94 trillion yuan (about 13 trillion US dollars).
6/Real Estate: Reduce the minimum down payment ratio for second home loans from 25% to 15% at the national level, and unify the minimum down payment ratio for first and second home loans