The money printing machine roared constantly, and trillions of funds poured into the market like a torrent. Are you wondering where this flood of money is going? Why is the salary stagnant, while the purchasing power of the money in hand is quietly declining? Today, let's unveil this mystery together.
The data is always the most convincing. Back in July 2023, the number on the central bank's balance sheet was still stuck at 40.8 trillion yuan, however, time flies, and by the end of the year, this figure has surged to 45.6 trillion yuan. Why? The answer lies in the clever use of China's version of quantitative easing (QE). In the changing global economic environment, the central bank flexibly adjusted its balance sheet, injecting new vitality into the weak economy.
You may have wondered: "Whenever you hear the sound of printing money, why don't you see my purse bulging?" As everyone knows, behind the policy, there is a deep economic logic. China's version of QE is coming like timely rain at a time when the market is sluggish and the economy is sluggish, aiming to build a solid barrier for the overall economy.
So, where exactly does all this huge money go? Could it be that they are hidden in the boudoir of the central bank? This is not the case. These funds, through monetary policy tools such as the Medium-Term Lending Facility (MLF) and reverse repo, have quietly flowed into the blood of the banking system. Banks, on the other hand, are like industrious gardeners, irrigating the water of these funds to the hearts of enterprises and individuals, helping the real economy to thrive.
It is worth mentioning that a considerable part of this money also goes to local governments. Under the haze of the downturn in the real estate market, many local finances are stretched. To alleviate this dilemma, local governments have issued bonds, which are backed by banks. This move not only skillfully resolved the risk of local debt, but also injected a steady stream of vitality into the local economy.
Not to be outdone, the central government is not to be outdone. In order to stabilize economic growth, the central government has resolutely increased the issuance of treasury bonds for post-disaster reconstruction and strong support from local governments. These treasury bonds have also been vigorously subscribed by banks, further promoting a virtuous cycle of funds.
At this moment, you may be more curious, what areas will be poured into the end of these funds? The government work report has pointed out the direction for us: scientific and technological innovation, urban-rural integration, regional coordination, food and energy security, and high-quality population development will become hot spots for investment. These areas not only carry the hope of the country's future, but also an important engine of economic development.
As for the buyers of these Treasury bonds? There is no need to worry, the central bank will work hand in hand with the Ministry of Finance to inject a steady stream of liquidity into the market through indirect purchases and other means to ensure the smooth and healthy development of the economy.
Finally, let's go back to the starting point of the question: can your boat of wealth ride the wind and waves under the central bank's release? The answer may not be obvious, but this series of policies has undoubtedly injected a strong impetus into the economy. With the flood of capital and the gradual implementation of policies, we are expected to witness a more prosperous market and more employment opportunities. So let's stay acute, and wait and see how this economic feast unfolds!
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