Financial operation: healthy and stable

The People's Bank of China declared on July 13 that the country's macro-control measures in the financial sector has shown evident effects for the first half of the year. At present, the growth of money supply has slowed down and credit on fast track has been put under control. The financial operation is healthy and stable.

The growth of both broad money and narrow money was well below the 17 percent, a warning line set by the central back and is felling back steadily. By the end of June, the balance of broad money (M2) posted 23.8 trillion yuan, up 16.2 percent over the same period of last year. But the increase is 4.7 percent, 3.4 percent, 2.9 percent and 1.3 percent lower than the same period of last year, the end of last year, the end of the first quarter of this year and the end of May respectively.

The narrow money stocked a balance of 8.9 trillion yuan, again 16.2 percent higher than the same period of last year. This forward step was geared down by 4.1 percent, 2.5 percent and 2.4 percent compared with the same period of last year and the end of the first quarter, the end of last year and the end of May respectively.

Credit was reigned in effectively. By the end of June, financial institutions recorded credit balance of 18.1 trillion yuan in terms of home and foreign currencies, 16.7 percent more than the first half of last year. RMB loans stood at 17 trillion yuan, climbing 16.3 percent compared with the same period of last year on the comparable basis. This upward movement was 6.8 percent, 4.8 percent, 3.8 percent, and 2.3 percent slower than last June, the end of last year, the end of the first quarter and the end of May this year respectively.

From January to June this year, 1.43 trillion of new yuan loans was extended, 350.1 billion yuan less than the same period of last year when 1.78 trillion yuan loans was newly added, 951.1 billion yuan more than the same period of the previous year. 239.6 billion yuan slash took place in June.

By the end of June, financial institutions held 24.2 trillion yuan of deposits in terms of RMB and foreign currencies, up 17.1 percent compared with the figure by the end of the same month last year. Yuan deposits registered 22. 97 trillion yuan, a rise of 18.2 percent over the same period of last year.

By the end of June, the state had kept 470.6 billion USD on its foreign exchange book, jumping 35.8 percent over the same period of last year. Out of the 470.6 USD forex reserve, 67.3 billion USD was created in the first six months of this year. The increase was 7.2 billion USD than the same period of last year. At the end of June, the RMB exchange rate, remaining stable, was 8.2766 yuan against a dollar.

Prices down

The report released by the People's Bank of China showed that in June products of enterprises were 0.3 percent cheaper than that in May, the second monthly decline in a row, but 9.3 percent dearer than the same month of last year.

In June, investment product prices went down by 0.2 percent over the last month and up 9.3 percent over the same period of last year. Prices of consumer goods were 0.4 percent lower than last month but 9.2 percent higher than last June.

Prices of preliminary products dropped 0.3 percent over last month but jumped 18.2 percent over last June. Intermediate products fell by 0.2 percent over May but went up 7.8 percent over last June. End products were down by 0.4 percent over May but picked up 7.7 percent over last June.

In June, prices of agricultural products lost 0.8 percent over May but gained 17.4 percent over the same month of last year. Oil, coal and power maintained the up trend by 1.4 percent over the previous month and 13 percent over the same period of last year.

Tax revenue geared down in overheating sectors

The latest tax revenue data showed that tax collection in the second quarter from steel, construction materials and relevant items did not grew as aggressively as that in the first quarter of the year.

Specifically, compared with the first quarter, the increase of tax revenue from steel and iron decelerated by 27.5 percent, construction materials by 10.6 percent and construction installation business by 3.7 percent.

Pundits think the downturn of revenue generated by overheating sectors like steel and iron proved the government's macro-control efforts have paid off.

Insiders view the use of economic tools like tax to leverage the macro-economy is a "highlight" in this macro-control campaign. Officials from State Administration of Taxation promised recently to step up clearing up the taxation order in overheating sectors like steel and iron, launch a check-up campaign to the appropriateness and implementation of favorable tax policies in various development zones, guarantee no default for tax rebates and make sure favorable tax policies for farmers are carried out.

Deepening of reform urged

The State Development and Reform Commission confirmed on July 13 that the macro-control efforts have harvested remarkable returns.

The Commission stressed that concrete results of the macro-control can only be achieved through deepening reform and improving the socialist market economy system. The market subjects need a regime where they play a leading role in developing, investing, making decisions and shouldering risks. The administrative intervention from the government, on the other hand, should be erased from the investment, production and operation activities of micro-subjects. Reform should be accelerated on government functions which should be more efficiently focused on offering good market services, information guiding, market access standards and a healthy environment for competition. More innovations should be made on the systems of taxation, finance, state-owned commercial banks and land so that a real turnaround will be seen in terms of economic structural adjustment and the way of economic growth.

A quarterly press release is scheduled on July 16 where the National Statistics Bureau will present a panoramic picture of the situation of China's national economy.

By People's Daily Online