China Media Group: 

My question is: what is the current state of macro leverage ratio? In addition, following the change of macro leverage ratio in recent years, what has been the effect of macro-control policies? Thanks.

Chen Yulu:

Thanks. The change of macro leverage ratio is an important indicator to measure the effect of macro-control. In recent years, the PBC has constantly improved the financial macro-control system as well as innovated and optimized the way of macro-control. Given the generally stable macro leverage ratio, the PBC has supported the development of the real economy and effectively ensured China's national economy operates within an appropriate range.

Chronologically, China's macro leverage ratio was 272.5% by the end of 2021, up 23.9 percentage points from the end of 2016, or an average annual increase of about 4.8 percentage points in the five years. Between 2016 and 2021, China's annual growth of GDP was about 6%, and that of CPI about 2 percent, with more than 13 million new urban jobs being created per year. In other words, the growth of China's moderate and controllable macro leverage ratio has supported an optimal combination of "higher growth, lower inflation, and more jobs," achieving great results in macro-control.

From a horizontal perspective, since the outbreak of COVID-19, China has supported the rapid recovery of the economy with relatively few new debts, and the increase in the macro-leverage ratio was significantly lower than in other major economies. After the outbreak of the pandemic, countries have generally adopted ultra-loose stimulus policies to deal with the recession, causing a substantial increase in the macro-leverage ratio. At the end of 2021, the average level of the leverage ratio of all reporting countries was 264.4%, 18.3 percentage points higher than at the end of 2019, according to the Bank for International Settlements. In comparison, China's figure is 16.5 percentage points, which reflects our macro policy orientation of not resorting to a deluge of strong stimulus policies, not over-issuing currency, and not over-drafting the future. While stabilizing the leverage, China's economic performance continued to lead, and inflation was generally under control. From 2020 to 2021, the average two-year growth rate of China's economy is 5.1%, which is 4.1, 6.6, and 5.7 percentage points higher than that of the United States, Japan, and the euro area, respectively. The inflation level is also significantly lower than that of major developed economies.

Therefore, in general, China's macro-control policies in recent years have been powerful, measured, and effective. The macro-leverage ratio has generally achieved stability as our top priority, ensuring that the national economy operates within a reasonable range, and has also made positive contributions to global economic growth, becoming an important power source and stabilizer for the global economy.

Thank you.