Macroeconomic focus reflects priorities

The State Council recently issued a notice on adjusting the composition of the Monetary Policy Committee of the People’s Bank of China, the country’s main advisory and deliberative body for the formulation of monetary policy.

All of the new members of the committee are experts in macroeconomic development and economic reform, who have long been engaged in research on macroeconomic development and economic reform. They have worked in multiple macroeconomic departments and policy research departments conducting in-depth research on issues related to rural development, agriculture, national wealth distribution, poverty reduction, the aging population, employment, supplyside structural reform, innovation and regional economic transition.

The adjustment reflects the higher requirements for monetary policymaking for the advancement of economic and social development in the 14th Five-Year Plan period (2021-25).

The world economy is still being affected by the long tail of the 2008 global financial crisis, and flexible and accurate monetary policy is central to macroeconomic control and economic restructuring.

Over the 14th Five-Year Plan period, China needs to implement its new development paradigm, resolve its unbalanced development, optimize its economic structure, improve people’s livelihoods and enhance its overall development quality. Thus it needs its monetary policy to play its role in macro-control.

While maintaining the overall stability of the leverage ratio and reducing the government’s debt, monetary policy must better support the development of the real economy, guarantee employment and promote the low-carbon transition.

Institutional reforms are required to improve the level of financial services and management, further ease the financing difficulties of smalland micro-sized enterprises, and continuously improve the inclusiveness and quality of financial services.

As a “master valve” of liquidity, the Monetary Policy Committee of the PBOC should play up its strengths in macroeconomic research and base monetary policy on the practical needs of the economy and the society. Monetary policy must maintain its continuity, avoid sharp turns, and create conditions conducive for the development and reform of the financial system.