Wu Xiaoling: We cannot expect the central bank to support the economy with a looser monetary policy

In the context of slowing domestic economic growth, moderately loose monetary policy will undoubtedly bring short-term economic growth, but the more direct result of monetary easing is rising real estate prices . In the past two years, the level of housing prices in first-tier cities has far exceeded the purchasing power of the working class.

At the 2016 Peking University HSBC Finance Forum held on June 18-19, Wu Xiaoling, former deputy governor of the central bank, deputy director of the National People's Congress Financial and Economic Committee, and dean of Tsinghua University PBC School of Finance, said that if the structure and development of the real economy itself are in trouble, printing money and expanding credit alone will not solve the problem. Therefore, whether from a global or Chinese perspective, we cannot focus all our attention on the central bank and cannot expect the central bank to support economic development with a more relaxed monetary policy. Instead, we should work harder on the structure of the economy, the way of economic development, and the mechanism of operation.

At present, central banks of various countries have tried their best to implement quantitative easing, and some countries have even entered the era of negative interest rates. However, Wu Xiaoling said that objective conditions show us that it is not the case that the economy will develop if credit is expanded too much. Currency is only a condition for economic development, and currency and finance are only tools to serve the economy.

Wu Xiaoling said that the efficiency of the central bank's loose monetary policy is decreasing. She gave a set of figures: from the founding of the People's Republic of China to 2008, China issued 30 trillion yuan in credit funds, but from 2009 to 2015, a total of 63 trillion yuan in loans were issued. In other words, we issued more than twice the amount of credit in the first 60 years in 7 years.

She said that so far, China's money supply and credit injection cannot be said to be small. Although the price of consumer goods has not risen much due to the very strong supply capacity of production, the high prices of assets such as real estate have caused housing prices to become a very headache for many young people to stay in big cities.

Wu Xiaoling said that we can see a phenomenon: in recent years, when the stock market is good in China, it is likely that housing prices will rise more slowly; when the stock market is not so good, the housing market will rise faster. When the stock market and the housing market are both relatively sluggish, anything else that can be hyped will be hyped, such as Pu'er tea , garlic and ginger. Now there are also people speculating in Bitcoin , and illegal fundraising. In the past, illegal fundraising of millions or tens of millions of yuan was a major case. Now, once an illegal fundraising case breaks out, it can be as little as tens of millions or hundreds of millions of yuan, or as much as hundreds of billions of yuan. This shows that we have too much money, and too much money is wandering in the market, and we can't find good projects.

"A very big problem with China's economy now is that there is too much money and it is expensive, and too much money and it is difficult to raise funds ." Wu Xiaoling said, so the current bottleneck of China's economic reform and economic development is not the amount of funds, but our mechanism.