Report on the implementation of the 2014 plan for national economic and social development and on the 2015 draft plan for national economic and social development (10)

We will implement a prudent monetary policy that is neither too loose nor too tight. This year, the money supply M2 is forecasted to grow by around 12%, but may be adjusted to a higher level to meet practical needs. We will carry out fine-tuning at an appropriate time and to an appropriate degree; strengthen targeted regulation, coordinated supervision, and management of expectations; and maintain reasonably ample liquidity. Our monetary policy priorities will be as follows:

First, we will effectively lower financing costs in the real economy. We will apply a combination of quantitative and price-based regulatory tools to guide financial institutions toward lowering their interest rates on loans, so that interest rates in the market move toward an appropriate level.

Second, we will support economic restructuring, transformation, and upgrading. We will use a combination of monetary policy tools to guide financial institutions in increasing their credit support for small and micro businesses, agriculture, rural areas, and farmers, the central and western regions, and SOE mergers and reorganizations. We will give stronger support to enterprise debt restructuring by applying policies tailored to their specific situations and types of debt.

Third, we will effectively prevent, control, and defuse financial risks. We will tighten oversight over the real estate market, local government debt, shadow banking, mutual guarantee and guarantee chains, and cross-market financial products, and ensure that no systemic or regional financial risks occur.

Fourth, we will steadily liberalize interest rates and improve the mechanisms for determining RMB exchange rate. We will allow the pricing of more debt products of financial institutions to be market-based and improve the central bank’s framework of adjusting interest rates. We will allow the RMB exchange rate to float more freely, while keeping it basically stable at an appropriate, balanced level.

We will ensure our policies are well coordinated and function together to create synergy. We will manage supply and demand with equal importance, link together industrial and competition policies, fully allow fiscal and monetary policies to play their role as major tools for economic adjustment, and better coordinate policies for consumer spending, investment, industries, pricing, regions, land, and environmental protection.

First, we will carry out all the policies and measures for expanding consumer spending and getting it to fully play the fundamental role in driving economic growth, stimulate reasonable increases in personal income, nurture and expand growth areas in consumer spending, and improve the environment for consumer spending.

Second, we will improve the system of government public investment, optimize where and how government investment is used, enhance coordination and cooperation between budgetary investment on the one hand and developmental and policy-backed finance, bonds, funds, and insurance on the other, and use government investment to attract and guide nongovernmental investment.

Third, in order to raise the core competitiveness of our industries, we will attach greater importance to giving inclusive incentives, removing obstacles, and strengthening regulation; improve industrial distribution and strengthen guidance through plans; improve quality, standards, and brand-building; establish a sound mechanism for assessment and exit of production capacity; and improve our institutions and mechanisms to be conducive to the development of a modern industrial system.

Fourth, we will accelerate price reform, significantly narrow the scope of government-set pricing, and get prices to fully play a leveraging role. We will explore ways to improve the pricing mechanism for agricultural products by carrying out the trial reform of guaranteed base prices, and we will implement policies of differentiated and tiered pricing. We will strengthen price supervision and intensify law enforcement efforts to counter monopolistic pricing in order to ensure fair competition between market players.

Fifth, we will improve our system of regional policies and arrange policies on a smaller geographical scale so that they are more precise and more tailored to specific local situations. We will strengthen interaction between regions, improve the system of providing assistance to less developed regions by pairing them with more developed regions, ensure basic public services are more equitably available between regions, and make development between regions more balanced.

Sixth, we will strengthen planning and management of land utilization, make innovations in policies and institutions, make good use of the existing land designated for construction, and continue implementing still stricter systems for protecting arable land and ensuring more economical and intensive use of land.

Seventh, we will set unified standards for market access in terms of energy, land, and water conservation, environmental impact, technology, and safety; strengthen evaluations of energy efficiency and environmental impact; offer more financial and policy support to areas of energy conservation and environmental protection; and keep improving the quality of the ecosystem and environment.