Based on the "new normal", the central government believes that the source of China's economic problems lies in major structural imbalances, and has established the main line of economic work through supply-side structural reforms. This year, as the risk of the escalation of the Sino-US trade war is increasing and the US interest rate hike and balance sheet shrinking push the peripheral interest rate center higher, "deleveraging" has become a major issue that is urgent to resolve China's economic risks. This is the economic and macro policy background of this round of monetary policy. To achieve structural deleveraging, a prudent and neutral monetary policy needs to be considered. The ability to deleverage is affected by the growth rate of M2 and the increment of social financing, and reducing the willingness to deleverage is mainly to reduce the leverage preference of sectors that would otherwise be deleveraged. Therefore, entering this year, the monetary policy of "tight credit + loose currency" has been put into practice. The economic situation in the first half of this year showed "four falls and two rises." The "four falls" are: the decline in economic growth rate, industrial products prices, manufacturing efficiency, as well as the operating difficulties of small and medium-sized manufacturing enterprises; the "two rises" is the increase of economic complexity caused by the choking of technical factors and the risk of trade war escalation.It is predicted that although China's future economic growth rate will continue to decline, it will not fall below 6.2%, and will not be lower than 6.5% for the whole year. On the whole, the overall growth target of a moderately prosperous life in 2020 will be achieved, and there will be a moderate upward trend in prices. The inflation target of less than 3% reported by the government will also be controlled.
