On November 28th, Pan Gongsheng, President of the People's Bank of China, stated at the high-level meeting of the Hong Kong Monetary Authority and the Bank for International Settlements that looking ahead, China has advantages such as strong innovation capability, broad market, complete infrastructure, complete industrial chain, and abundant and high-quality human resources. In addition, a series of policy effects introduced earlier have gradually emerged, and it is believed that the Chinese economy will maintain healthy and sustainable growth in 2024 and beyond.

01 Interpretation 1 | Regarding the Chinese Economic Situation: The trend of sustained recovery and overall recovery of the Chinese economy is becoming more apparent. In the first three quarters, China's GDP grew by 5.2% year-on-year, and it is expected to successfully achieve the economic growth target of 5% throughout the year. Recently, the International Monetary Fund has raised China's economic growth forecast for this year to 5.4%, which is leading among major economies worldwide. From the perspective of the main components of GDP, the contribution rate of consumption to economic growth continues to rise, and the service industry performs well. In October, the total retail sales of consumer goods continued to rebound, with a year-on-year growth of 7.6%. In terms of investment, from January to October this year, investment in the manufacturing industry increased by 6.2% year-on-year, and private project investment excluding real estate development investment increased by 9.1% year-on-year. Investment in high-tech industries continued to grow rapidly, with a year-on-year increase of 11%. In terms of foreign trade, in October, the import and export volume denominated in RMB stopped falling and rebounded, with a year-on-year increase of about 1%. The import and export freight volume, which reflects the physical quantity, maintains a growth of about 10%. Meanwhile, Pan Gongsheng stated that there have also been some positive changes in PMI. The manufacturing PMI continues to improve and has shown an overall upward trend since May. The service industry PMI has been in an expansion range since the beginning of this year. In Pan Gongsheng's view, analyzing the Chinese economy requires attention to two perspectives: firstly, the current total GDP of China has exceeded 120 trillion yuan, approximately 18 trillion US dollars. The huge base makes it difficult for the Chinese economy to maintain a high-speed annual growth rate of 8% -10% as before. Secondly, China is undergoing a transformation of its economic growth model. The traditional growth model overly relies on infrastructure and real estate investment, which may achieve higher growth rates in the short term, but it can also solidify structural contradictions and damage the sustainability of growth. High quality and sustainable development are more important, and we must pay more attention to economic structural adjustment and cultivate new growth points. This is a necessary path of transformation.

02 Interpretation 2 | About the High Level Opening up of the Financial Industry: Steadily promoting the high-level opening up of the financial industry is an important part of implementing the spirit of the Central Financial Work Conference. Pan Gongsheng emphasized that firstly, we will orderly promote the opening up of the financial services industry. Cancel restrictions on foreign shareholding in the banking, insurance, and securities sectors. Steadily expanding institutional openness in the financial sector, including rules, regulations, management, and standards, to attract foreign financial institutions to come and develop in China. The second is to steadily and prudently promote the high-level opening up of the financial market to the outside world. China has become the second largest bond market in the world. Chinese A-shares and treasury bond are included in MSCI, FTSE Russell, Bloomberg Barclays, JPMorgan Chase and other global mainstream indexes. At present, overseas institutions hold 3.3 trillion yuan of Chinese bonds, with an average annual growth rate of about 30% in recent years. Thirdly, the renminbi has been widely used in international trade and financial transactions. In recent years, the People's Bank of China has continuously improved the arrangements for the cross-border use of the RMB and the construction of financial infrastructure in response to market demand. The international currency functions of the RMB, such as cross-border payments, investment and financing, and reserves, have steadily strengthened. Overall, the RMB has initially gained the network effect of international use, providing more diversified currency choices for domestic and foreign entities, facilitating cross-border trade and investment and financing activities, reducing exchange rate risks and exchange costs. In Pan Gongsheng's view, the world is currently entering a new period of turbulence and change, and the global governance system is also in a critical period of adjustment and change. In recent years, the People's Bank of China has actively participated in global financial governance and policy coordination through global governance platforms and mechanisms such as the G20, the International Monetary Fund, and the Bank for International Settlements. Pan Gongsheng stated that in the next step, the People's Bank of China will continue to practice multilateralism, contribute Chinese wisdom, and demonstrate the responsibility of major central banks. One is to strengthen international macroeconomic policy dialogue and coordination, jointly promote global economic growth, and maintain financial stability. The second is to firmly promote global financial governance reform, promote the improvement of the governance structure and representativeness of the International Monetary Fund, and build a fair and efficient global financial governance pattern. The third is to work together with countries around the world to maintain the stability and smoothness of global industrial and supply chains, and promote the development of economic globalization towards a more open, inclusive, balanced, and win-win direction.

03 Interpretation 3 | Regarding Monetary Policy: Supporting the Development of the Real Economy Since the beginning of this year, the People's Bank of China has comprehensively utilized various policy tools, including lowering the reserve requirement ratio, lowering policy interest rates, and driving down market interest rates such as the Loan Quotation Rate (LPR). The above measures have created a favorable monetary and financial environment for high-quality development. In October, the stock of M2 and social financing increased by 10.3% and 9.3% year-on-year, respectively. In September, the weighted average interest rate for corporate loans was 3.8%, the lowest in history. At the same time, we will leverage the role of structural monetary policy tools and increase support for key areas such as small and micro enterprises, green development, and technological innovation. At the end of the third quarter, the balance of structural monetary policy instruments was about 7 trillion yuan, accounting for about 15% of the balance sheet size of the People's Bank of China. In the next stage, the People's Bank of China will continue to implement a prudent monetary policy to support the development of the real economy. END