For the restart of the special treasury bonds, Li Zhan believes that the probability of this special treasury bond issue focuses on the short-term and long-term impact of the epidemic on the economy, structural impact on the capital market trend. To the extent that the short-term impact on epidemic prevention supplies, medical equipment and drug research and development, and long-term favorable transportation, new infrastructure, medical and public **** health and other industries.
Preparing to deal with dollar overshooting
China Securities Journal: the United States recently launched a 2 trillion U.S. dollar fiscal stimulus plan, which will have what impact on China's economy?
Li Zhan: The U.S. $2 trillion fiscal stimulus plan, coupled with the recent Fed's unlimited easing policy, is expected to provide $6 trillion in liquidity to the global market this year, and the extent of its impact on China's economy depends on the duration of the epidemic. If the U.S. epidemic is brought under control in the next 2 months, the impact of the U.S. stimulus package on China will be brought about mainly by the flood of dollar liquidity.
China has two options to deal with the dollar overshooting: one is to keep the yuan exchange rate firm, but Chinese exports will be affected; the other is to put a certain scale of yuan into the market and keep the yuan-dollar exchange rate within a controlled range, but too much domestic yuan liquidity may lead to domestic asset price bubbles or price rises.
If the U.S. epidemic lasts more than three months, the U.S. existing policy stimulus is estimated to be still insufficient to cope with the impact of the epidemic, may trigger a global economic crisis, which will have a greater impact on the Chinese economy. At present, due to the degree of external shock caused by the epidemic, the main should be based on the evolution of the situation at home and abroad, timely adjustment of the rhythm and intensity of policy regulation.
The need for a comprehensive interest rate cut is not great
China Securities Journal: In view of the current global economic situation, China's monetary policy can be taken which targeted operations?
Li Zhan: China after the early deleveraging and financial supply-side reforms, compared to other countries around the world, has won valuable monetary policy space. In March, the Fed cut interest rates and increase QE background, China's monetary policy to maintain a high degree of determination, did not take the "flooding" approach, mainly in order to stabilize growth, inflation control and risk prevention to maintain a delicate balance between stabilizing market expectations. It is expected that China's monetary policy in the future is still dominated by me, according to the actual needs of the domestic market to operate.
In terms of balancing internal and external demand, the first is to use interest rate cuts, quota cuts and open market operations to maintain a reasonable abundance of market liquidity; the second is to use structural policy tools such as asymmetric interest rate cuts, targeted quota cuts, universal quota cuts, and special funds to guide the flow of funds to the real economy and reduce the cost of financing for the real economy; and the third is to push forward the popularization of Internet technology in financial services to facilitate enterprises and residents to get a better service experience, and more fully meet the financial service needs of different customers; fourth is to further promote the market-oriented reform of the exchange rate, increase the flexibility of exchange rate fluctuations, reduce policy intervention, and at this stage it is more important to maintain the stability of foreign exchange reserves.
China Securities Journal: at present the necessity of a full-scale reduction of the quota and interest rates has increased?
Li Zhan: The central bank has been conveying to the market the signal that the domestic monetary policy is dominated by me. At present, China's epidemic than other countries to take the lead in getting effective control, the resumption of work and production is being promoted in an orderly manner, the monetary policy regulation should not be too aggressive, the current need for a comprehensive interest rate cuts and rate cuts is not urgent.
Taking into account the global spread of the epidemic may have a secondary impact on China's economy, the current reserved policy "ammunition" may have to wait until after the second quarter, depending on the circumstances of some of the release, the probability of this year's monetary policy window of significant adjustments in the second quarter.
Restarting the special treasury bonds at the right time
China Securities Journal: in the process of a variety of monetary policy tools play a role in the process, how to prevent the possible existence of financial risks, such as government and corporate debt leverage?
Li Zhan: Recently, the central bank and other ministries and commissions launched a series of measures to deploy against the financial risks that may arise in the enterprise capital chain due to the epidemic. In the short term, these policies are conducive to easing the liquidity constraints of enterprises and avoiding the deterioration of bank asset quality and the triggering of systemic risks as a result of widespread defaults on corporate debts. In the long term, to improve corporate solvency or to rely on the resumption of work and production to bring the repair of corporate operating cash flow. In the epidemic has been effectively controlled, the resumption of production continues to promote as well as policy combinations continue to launch the background, I believe that enterprises in the current temporary difficulties after the restoration of the order of production and life, the financial situation of enterprises should be significantly improved.
As for government debt, there is still room for the central government to increase its leverage. Under the premise of the epidemic shock and the "six stabilizers", fiscal policy needs to be more active, and consideration can be given to appropriately liberalizing the government's deficit ratio and raising the limit of special bonds.
China Securities Journal: What impact will the restart of special bonds have on the A-share market?
Li Zhan: The epidemic is spreading globally and the downward pressure on China's economy has increased. In response to this reality, steady growth policy hedging efforts need to be increased, the issuance of special treasury bonds is one of them. The issuance of special treasury bonds is mainly through the central government to expand demand by way of leverage, to hedge the impact of the epidemic. In addition, the special national debt into the government fund budget, but not included in the target deficit rate, subject to relatively less constraints.
The special national debt is expected to have a certain structural impact on the A-share market trend. In terms of degree, the short-term impact on epidemic prevention supplies, medical equipment, and pharmaceutical research and development, etc., and the long-term favorable to the development of transportation, new infrastructure, medical and public **** health and other industries.