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Will China's auto industry see the effect when the Federal Reserve lowers interest rates to zero and the Central Bank lowers RRR?
On March 16, the Bank of China announced that the directional reduction of the deposit reserve ratio that day released 550 billion yuan of long-term funds. On the same day, the Federal Reserve cut interest rates to zero and launched a quantitative easing program of 700 billion US dollars (nearly 5 trillion RMB).

The two poles of the world economy issued financial policies at the same time for almost the same reason: to deal with the impact of the COVID-19 epidemic.

The difference is that the RRR cut by the Bank of China promoted the liquidity of the capital market after the staged victory in the fight against the epidemic, while the Fed cut interest rates during the outbreak to avoid social and economic damage.

However, what is embarrassing is that after the Fed cut interest rates urgently, the market risk aversion rose, the price of gold and silver strengthened, and the US stock futures weakened sharply, triggering the fuse mechanism, and the financial market did not seem to actively interpret it.

It must be said that the judgment and understanding of the epidemic situation between China and the United States is increasing the uncertainty of the world industrial economy.

Differences between Chinese and American financial markets

The adjustment of the policies of the Bank of China and the Federal Reserve indicates the coming of the great era of financial markets.

Professionals believe that China is superior to the United States in epidemic situation, economic growth and policy space. As far as epidemic prevention and control is concerned, China has entered a benign stage, while the United States has doubts, so China's influence is less than that of the United States in dealing with different situations.

From this perspective, China's consumption contusion is limited and controllable, while the industrial sector is in the process of bottom recovery, and the impact on the United States increases the risk of deflation and debt. According to Wall Street's prediction, the American economy will fall into recession in the first half of this year. In its latest report, Goldman Sachs pointed out that due to the COVID-19 epidemic, the GDP growth rate of the United States is expected to be only 0.4% in 2020, and the GDP growth rate of the United States will be reduced from 0.7% to 0 in the first quarter, while the economy will shrink by 5% in the second quarter.

In addition, the Fed's sharp interest rate cut again has also brought panic, making the market think that the Fed's follow-up policy space may be limited. Insiders believe that once the US financial market stops falling, it will be an opportunity for China to start again.

China's new energy automobile industry welcomes good opportunities.

Lu Zhengwei, chief economist of Industrial Bank and Hua Fu Securities, said that due to the low valuation of China's stock market and bond market, and the global easing including the Federal Reserve, once the panic in the international financial market subsides slightly, a considerable amount of funds will flow to China.

This is obviously good for China's real economy, especially those high-end manufacturing industries driven by high technology. The external capital injection and capital release brought by the RRR cut by the Bank of China are of great and far-reaching significance.

At present, it is an important window for a new round of industrial technology upgrading and a key stage for the further evolution from "informatization" to "intelligence". A large number of new technologies, new models and new applications have just entered the growth stage, and these emerging real economies are bound to become the focus of capital concern and capital flow.

Effective capital inflow and support are of great significance to the growth of these emerging industries and entities. History has proved time and time again that the conscious watering of emerging industries by capital is very likely to bring amazing development to a country or even an era.

Just as electrification was to Germany in the second half of the19th century, and information technology and IT industry were to the United States in the 1990s, the historical opportunity of "intelligent" industry has been placed in front of China. If we seize it bravely, our national economy can bypass the so-called "trap of moderately developed countries" and continue to drive smoothly in the fast lane of healthy development.

As a member of the "intelligent" industrial real economy, China's new energy automobile industry is bound to be the beneficiary of this round of national active economic policies. Especially in this new energy vehicle policy recession and product delivery overlap time node, the national macro-level policies are favorable, and the encouragement to industry morale and confidence is no less than the influx of real money and silver to some extent.

With the liberalization of the financial market, the investment and financing costs of new energy vehicles will be greatly reduced, which will undoubtedly encourage and promote new energy vehicles relying on the capital market.

The automobile consumption space was further released.

Generally speaking, lowering interest rates and RRR is actually a means for the state to stimulate consumption, which means low loan interest, low financing cost and lower deposit interest. Simply put, it is better to save money than to spend it now.

Take the United States as an example, its economic growth is mainly driven by private consumption. People buy more expensive products, such as cars, which effectively promotes economic growth.

In China, at present, consumers' confidence in the automobile market and financial market is weak. At this time, the central bank's targeted reduction of the deposit reserve ratio is not only a support for automobile product finance, but also a boost to the confidence in automobile market consumption and financial market investment.

Ye Shengji, deputy secretary-general of China Automobile Industry Association, believes that from the market point of view, with the end of the epidemic, the competition of automobile enterprises will come back, and it is very likely that a price war will be launched, and the preferential strength of automobile credit and finance for automobile enterprises is unprecedented. "Many mainstream car companies have introduced three-year interest-free or two-year zero interest rate concessions, which are already very strong compared with the past, so it is difficult to say whether there is any possibility of overweight."

It is worth mentioning that the central parity of RMB was raised by 15 points to 7.00 18 as soon as the Fed cut interest rates, which means that China consumers can buy imported products with less money, which may be an opportunity for imported cars to expand their markets in China.

The epidemic is still going on, and China automobile needs to strengthen its automatic power.

Of course, the interest rate cut by the central bank RRR and the consumption release brought by the interest rate cut by the Federal Reserve are only "good opportunities" for the smart car industry, and the financial guarantee is only a "necessary condition" rather than a "sufficient condition". The development of automobiles in China still needs to strengthen automation.

For consumers in China, consumers are more willing to accept direct price reduction and more intuitive promotion than financial policy support. Therefore, for more consumers who just need it, RRR's interest rate cut may promote consumption, but its promotion effect may not be immediate when the awareness of credit consumption has not been significantly improved. In contrast, for dealers with high inventory pressure and tight capital chain, it is likely to increase the use of auto finance.

Under the current circumstances, the global epidemic may continue for some time. How to make use of this time point, reduce the risk of enterprises, and promote the confidence of automobile consumption, maybe China automobile needs more thinking. (Text/car is wise? Wang)

This article comes from car home, the author of the car manufacturer, and does not represent car home's position.