Opinion leader .

China’s economy was re-opened in 2023 as the epidemic was smoother. The central economic work session at the end of 2022 focused on “three-smoking” efforts to effectively guard against major risks, promote overall improvement in the functioning of the economy, propose greater macro-regulation, positive fiscal policies to be effective and sound monetary policies are strong. This paper is intended to reflect on China’s monetary policy of 2023, in conjunction with macro-policy comparisons over three years and beyond.

The medium- and long-term response to the epidemic has been focused and well-performing.

In the impression, the third year of the epidemic, China’s macro-policies, have shown restraint. However, despite the absence of negative interest rates and quantification of laxes, a deficit monetization operation was not implemented, and in some quantitative indicators, the policy response to this public health crisis in China was weaker than the major developed economies.

In 2020, the share of general government debt in GDP in developed economies rose by 18.9 per cent on average, and in the United States by 24.8 per cent; China by only 9.7 per cent. However, by the end of 2022, government leverage in developed economies had increased by 8.4 per cent on average compared to 2019, with the United States rising by 12.9 per cent; China by 16.7 percentage points (see figure 1).

In 2020, the United States, Japan, the euro zone M2 jumped to 19.3, 24.3 and 16.6 percentage points, respectively, and China increased by 14.4 percentage points. However, by the end of 2022, the United States and the euro zone had risen by 12.1, 11.6 percentage points, by 18.8 percentage points, by the end of 2019, and by Japan by 31.5 percentage points (see figure 2).

The persistence of the epidemic in the century and the blocking of the economic cycle have exposed market agents to both liquidity and solvency pressures. IMF had suggested that initiatives such as low-interest loans and extensions of repayments could be considered in response to liquidity problems, while government subsidies and direct transfers were required to address repayment pressures. Although these two “pharmonists” are used in each country, the focus is slightly different. China’s macro-policies are mainly market players on the supply side, dominated by liquidity support, while the developed economies, led by the United States, are direct stimulus to end demand and focus on improving solvency. As a result, during the three-year period of the epidemic, Chinese consumption resumed slowly, significantly lower than the level of the first three years of the epidemic, while the nominal increase in the developed economies led to a sharp rise (see figure 3).

While the main offshore central banks have consistently pushed inflationary responsibilities into supply-side factors such as the disruption of supply chains, geopolitical conflicts and labour contraction, excessive stimulus has not been contested and the shaming of modern monetary theory (MMT) has been completely eroded. Most of the central banks of developed economies are now forced to contract radically, plunging into a “triggering option” of stable prices, steady growth (employment) and stable finance.

The Chinese model does not allow inflation to be out of control, but also places of care. On the one hand, the long chain of transmission of investment-led employment, raising labour income and promoting consumption makes it difficult to quickly fill the “blank” of the downturn in income; on the other hand, the consumption of the population is an enterprise income, with more productive private enterprises experiencing weak consumer growth, and investment and job creation are more prudent. The inadequate overall demand under the low inflationary table and the damage to the balance sheet are the “collateral effects” of the epidemic that China is facing, which are related to the progress and quality of economic rehabilitation in China after the epidemic.

This year’s monetary policy has been further enhanced by a steady growth rate.

At the end of the year of China’s economy, the leadership of the People’s Bank read a sound monetary policy that is robust, sufficient, structured, and that emphasis on the monetary policy in aggregate cannot be less than 2022, while avoiding large capital prices. At the launch of the new office in early March 2023, he further stated that it would be less water-borne and less expensive to maintain normal monetary policies, maintain positive interest rates and upward yield curves.

Financial data have been overestimated since 2023. At the end of March, M2 grew by 12.7 per cent on the same scale, at a high level since May 2016; the social melting stock grew by 10 per cent, a 0.4 percentage point higher than at the end of 2022. A quarter of a year, a new yuan renminbi was increased by $230 million over the same period, with a new increase in size. On 17 March, the People’s Bank was “unforeseen” and a smooth growth policy was pre-emptive and timely. At the same time, the central bank’s structural monetary policy instrument balance was increased by a quarter by a total of 375.4 million yuan renminbi, mainly from the carbon emission reduction support tool of the phased instrument, support for the clean and efficient use of special re-financing and scientific and technological innovation re-financing, and a combined increase of 264.8 billion yuan renminbi, contributing 71 per cent of the additional balance. Despite the further expansion of macro liquidity, inter-bank liquidity management has returned to normality. On 28 April, the 15-day movement of DR007 increased by 29 basis points from the end of 2022, retrieving the 7-day repurchase interest rate of 2.0 per cent, but falling back to four basis points at the end of February, maintaining a state of “unset” and reducing the risk of financial flight.

China’s economy is functioning well, with a combination of policies that continue to guard and control the epidemic. In the first quarter, real economic growth was 4.5 per cent, higher than market expectations of 4.0 per cent. Investment remains a solid domestic demand trap, with a high contribution of 34.7 per cent to economic growth in the form of quarterly capital. In the first three months, fixed-asset investments increased by 5.1 per cent, the same year as in 2022; infrastructure investment grew by 10.8 per cent, a decrease of 0.7 per cent over the full year of 2022; real estate investment declined by 5.8 per cent, a narrowing of 4.2 per cent over the year 2022. Consumption and services began to recover. The contribution of final consumption expenditures to economic growth was 66.6 per cent during the season. In the first three months, the number of social workers increased by 5.8 per cent on the same scale, by 1.9 percentage points higher than the combined average increase of 2020 to 2022, and by 13.9 per cent on the same increase in catering income, by 14.4 percentage points. During the same period, the service sector production index increased by 6.7 per cent, by 1.35 per cent, and the third industry increased by 5.4 per cent in real terms and 3.1 per cent in ring. Among them, opportunistic, concentrated wholesale retail trade, transport