Regarding the global economic and financial situation, the global supply side and demand side are facing downward pressure in 2022, and the growth rate of industrial production, business investment, household consumption and international trade is very slow, especially in the second quarter, global inflation remains at a high level, and the risk of economic stagnation is also greatly increased. In the context of the Russian-Ukrainian conflict and the epidemic, China, as the only country that insists on zeroing out the epidemic, is facing problems such as the outbreak of COVID-19 in many places, the regional policy conflicts, and policy shifts in advanced economies. In the first half of 2022, China's supply and demand have shown a downward trend, and market expectations have deteriorated. In the second half of the year, some experts predict that from the perspective of stabilizing economic development from a macro perspective, the complexity of the external environment will form a situation in which China's economy relies more on internal demand to replace external demand.
Financial stability is important in improving the country's financial governance capacity and ensuring financial security and health. Under the trend of greater financial risks, China's banking industry will continue to take a stable and prudent route, including continuing to increase support for the real economy, consolidating measures to achieve wealth balance, preventing the risk of non-performing loans and assets, and strengthening the governance of financial institutions. In addition, the securities industry should highlight and improve the multi-level capital market system, optimize market functions, crack down on violations of laws and regulations, closely track changes in overseas markets, and expand the opening of international financial products. In terms of insurance, we will increase the popularization of science and perfect supervision of disease insurance, attach importance to the insurance industry's legal compliance, and optimize insurance funds’ use with greater efforts.
2022 will be a year of monetary and fiscal easing. China's Central Economic Work Conference proposed that macro policies should be stable and effective, and should be practiced on the basis of stimulating internal demand. At the same time, vice governors such as the Central Bank of China have also publicly stated that they will further maintain the stability of monetary aggregates through monetary policy tools to avoid credit collapse. Moreover, fiscal policy should be effective in improving accuracy and sustainability and supporting modest infrastructure investments that are ahead of the curve. In short, fiscal and monetary policies will pay more attention to coordinated development and jointly stimulate market vitality.
China's economic situation deviated from the normal growth trajectory in the first half of 2022, with problems such as great pressure on real estate debt repayment, difficulties in the operation of small and medium-sized enterprises, and disorder in the industrial chain supply chain. However, China's economic development has strong resilience and broad prospects for development, and the conditions to support economic development are also sufficient. Therefore, the Chinese market has great confidence that it can rebound in terms of enterprises, investment and stock markets, and the long-term positive development route of the economy has not changed.
Edited and reviewed by Tanish Bagga.