On December 8, 2023, the Politburo held a meeting to analyze and study the economic work in 2024. The term "first break and then break" was mentioned at this meeting, which was different from the traditional expression of "first break and then stand", and also aroused Xi and discussion from all walks of life in the market. This paper argues that as an important tone of macroeconomic policy, the connotation of the term has been extended from the traditional "dual carbon" field to all fields of the national economy, and it is a hot word to focus on in macroeconomic, industrial economy and industrial policy in 2024. This term proposes to pay attention to the relevant issues in the process of converting the old and new kinetic energy of China's economy, fully consider the current special social and economic environment, financial situation, financial risks, people's livelihood, economic growth and other issues, and correct and correct the past movement-style "first break and then stand" approach, and provide a guiding ideology for the national economy and various industries to find a high-quality, sustainable, scientific and pragmatic development path. It also plays a very important guiding role in various economic policies, ensuring that all departments adhere to the correct line, are more cautious in "breaking", and more pragmatic in "establishing", so as to ensure the health of the basic economic growth. While guiding the expected good development, we will consolidate the good development momentum of China's economic rebound.
From the perspective of the healthy development of China's real estate industry, this paper systematically Xi and researches the term "first establish and then break" from the perspectives of industrial transformation, development momentum, and policy adjustment and optimization. The report mainly starts from the perspectives of policy expression, concept, background, etc., and at the same time understands and recognizes the real estate field from 11 dimensions, and finally puts forward relevant strategic suggestions based on the goal of healthy development of the real estate industry. According to the report, the idea of "establishing first and then breaking" has clarified a scientific route for policy formulation and the healthy development of the industry, which will help promote the healthy and stable development of the real estate industry in 2024.
One. The expression of "first establish and then break" in previous meetings
This is not the first time that the term "establish first and then break" has been mentioned this year, but its connotation and related policy requirements are expanding and evolving, which is more in line with the current economic and social development needs. We have sorted out the expressions of the term "first establish and then break" in previous meetings, and treat the relevant history and reform ideas of this term more directly.
Politburo meeting in July
The Political Bureau of the Communist Party of China held a meeting on July 30, 2021 to analyze and study the current economic situation and deploy economic work in the second half of the year. The meeting made it clear that it is necessary to do a good job in carbon peak and carbon neutrality in an orderly manner, introduce an action plan for carbon peaking before 2030 as soon as possible, adhere to a national game of chess, correct the movement of "carbon reduction", establish first and then break, and resolutely curb the blind development of "two high" projects. It can be seen from this that the concept of "first establish and then break" was mentioned for the first time in this meeting, and it was mainly carried out from the perspective of carbon peak and carbon neutrality, which mentioned the erroneous mention of "correcting sports carbon reduction".
Economic Work Conference in December
The 2021 ** Economic Work Conference was held in Beijing from December 8 to 10. The meeting made it clear that we must persist in seeking progress while maintaining stability, grasp the timeliness and effectiveness of adjusting policies and promoting reforms, and insist on establishing first and then breaking down, and making steady and steady progress. It is necessary to strengthen overall planning and coordination and adhere to the concept of systems. At the same time, the meeting made it clear that it is necessary to correctly understand and grasp carbon peak and carbon neutrality. Achieving carbon peak and carbon neutrality is an intrinsic requirement for promoting high-quality development, and it must be unswervingly promoted, but it cannot be accomplished in one go. It is necessary to adhere to the principles of national overall planning, saving priority, two-wheel drive, internal and external smoothness, and risk prevention. The gradual withdrawal of traditional energy should be based on the safe and reliable substitution of new energy. The term "establish first and then break" was mentioned again at this meeting, and it has been derived from the traditional perspective of carbon peak and carbon neutrality to policy adjustment and reform. Among them, "the gradual withdrawal of traditional energy should be based on the safe and reliable substitution of new energy", this sentence is very vivid and vivid, which helps us understand the relationship between "old and new", "tradition and innovation", "broken establishment" and so on. At the same time, the meeting also mentioned "timeliness". Among them, "time" refers to timing and rhythm, "degree" refers to strength and proportion, and "effect" refers to effect and effectiveness. The idea of "establishing first and then breaking" has gradually risen to the level of responding to risks and challenges and high-quality development.
Annual ** work report
The ** work report on March 5, 2022 mentioned that the work of carbon peak and carbon neutrality will be promoted in an orderly manner. Implement the action plan for carbon peaking. Promote the energy revolution, ensure energy quality, based on resource endowment, adhere to the first establishment and then break, overall planning, and promote low-carbon energy transformation. The meeting mainly mentioned the word from the perspective of new energy, but also added a new word, that is, "overall planning". It is a very good inspiration for us to enhance the systematization and overall situation of our economic work.
Boao Forum
On March 29, 2023, at the "Carbon Neutrality: Dilemma and Breakthrough" forum of the Boao Forum for Asia Annual Conference 2023, the country said that after a series of lessons and careful research, China has come to the conclusion of "establishing first and then breaking". The so-called first establishment and then breaking, that is, "the gradual withdrawal of traditional energy should be based on the safe and reliable substitution of new energy". This point of view is very easy to understand, that is, there needs to be a premise for withdrawing some old mechanisms. The condition is that the new mechanism needs to be safe and reliable, and have a completely fungible foundation.
Politburo meeting in December
The Politburo of the Communist Party of China (CPC) held a meeting on December 8, 2023 to analyze and study the economic work in 2024. The meeting made it clear that next year, we should persist in seeking progress while maintaining stability, promote stability through progress, establish first and then break down, strengthen counter-cyclical and cross-cyclical adjustment of macroeconomic policies, and continue to implement a proactive fiscal policy and a prudent monetary policy. Here, the status of "first establishing and then breaking" has risen significantly, and it has been upgraded from an industrial structure term to an economic base term. It is clear that on the basis of "seeking progress while maintaining stability" and "promoting stability with progress", it will do a good job of "establishing first and then breaking down". The outline and direction of the word are clear, which has aroused Xi and discussion from all walks of life in the market, and also fully shows that it is in line with the voices of all walks of life in the current national economy.
Two. The concept and meaning of "first establish and then break".
1. The difference between it and "breaking first and then standing".
By definition, there is a difference between two words, namely "first break and then stand" and "first stand and then break". From the perspective of "breaking first and then standing", it mainly expresses the need to break the old fixed model before creating a new oneThe meaning of going through some failures and tribulations before moving towards success is "breaking first". Conversely, "erect before breaking" refers to building it first and then dismantling it. It means that some ideas, concepts or rules must be established, and then adjusted, optimized or changed to achieve the most desirable results. The focus of the work has been adjusted, that is, the work of "breaking" should be put on the back burner, or it should be built on the basis of the conditions of "standing up first," and there should be no hasty, arbitrary, and rash work of "breaking."
2. Expressions of similar words
There are three words with similar meanings to the word "first establish and then break". By understanding these words, one can better understand the tone and essence of "first establish and then break". First, "you can't do it all at once." The meaning is to do what should be done in several steps at one time, that is, not to rush, but not to forget the old roots, step by step. Second, "it can't be done overnight". The development of things follows certain objective laws, which need to be gradual and cannot be achieved overnight. Many things need to be accumulated over time, and rushing to achieve results and one-day sudden reform can only be futile and contrary to success. Third, "don't pick up the sesame seeds and lose the watermelon", resulting in small losses and losses outweigh the losses. Losing one over the other tends to lose some of the most basic things. To sum up, we believe that these words all express that the work should be considered in many ways, and the relationship between the existing conditions and the planning goals should be actively handled. Combined with the phrase "establish first and then break", we believe that similar economic transformation work cannot be achieved overnight. Rigidly "breaking" not only loses the old foundation, but also violates the law of economic development. The quality of their work is naturally not high, and it is prone to all kinds of new risks.
3. The characteristics of "standing first and then breaking".
The term "first set up and then break" has several important characteristics. Clause.
First, it belongs to the transformation of old and new kinetic energy, industrial structure adjustment of important words, but also involves the content of industrial policy. In the process of not establishing or establishing new production capacity and new mechanisms, the old kinetic energy and mechanism should still be valued and protected, rather than completely denied, otherwise it will cause the problem that the old and new kinetic energy cannot be effectively connected. Clause.
Second, it is necessary to reduce some unscientific operations in the form of movements, which lead to the elimination of some existing systems and conditions in advance in the process of promoting the establishment of the new system, and then cause the problem of "the lack of the old mechanism and the lack of adaptation of the new mechanism". Clause.
Third, we must straighten out the rhythm of work, do our best, do what we can, and not simply "stand first" for the sake of "standing first". It is necessary to scientifically adjust and optimize policy measures, not to make a 180-degree policy turn, and prevent unstable policy expectations or a weak foundation. Clause.
Fourth, it is necessary to sort out the relationship between "establishment" and "breaking". It is necessary to have a cautious and humble attitude towards the work of "breaking". If you don't find a very stable way to "stand", don't easily "break". Otherwise, breaking first and then standing will lead to the destruction of the basic disk and the breaking of the old equilibrium, but it is very difficult to build a new equilibrium point.
Three. Background situation of "first standing and then breaking" is proposed
1. The need for further consolidation of economic recovery
The current mention of the phrase "first establish and then break" is based on the need for economic recovery and further consolidation of development. On the one hand, the economy is generally developing for the better. The meeting mentioned that "withstanding external pressure, overcoming internal difficulties, focusing on expanding domestic demand, optimizing the structure, boosting confidence, preventing and resolving risks, China's economy is rebounding." On the other hand, the strings of consolidation need to be tightened. The meeting mentioned that "effectively enhance economic vitality, prevent and resolve risks, improve social expectations, consolidate and enhance the positive trend of economic recovery, and continue to promote the economy to achieve qualitative and effective improvement and reasonable quantitative growth". The terms "consolidation" and "strengthening" have been clarified here, and the requirements for the precision of economic policies in 2024 have been significantly improved. There are two examples of the need for similar work. The first is that the PMI (Manufacturing Purchasing Managers' Index) fell in November and is below the critical point of expansionary contraction. Second, in the process of stabilizing the real estate sales market, supply-side indicators such as real estate development investment are generally deteriorating. To sum up, the current economy is coming out of various shocks and adjustments, gradually repairing and gaining momentum, but the foundation for recovery still needs to be consolidated, especially the need to pay attention to the issue of "recovery momentum".
2. Risk prevention has entered the stage of "high-level security".
The Politburo meeting mentioned the coordination of two tasks, namely "coordinating high-quality development and high-level security". The term "high-level security" is relatively new, indicating that risk prevention is entering a new stage. At the same time, the meeting mentioned that "it is necessary to continue to effectively prevent and resolve risks in key areas, and resolutely adhere to the bottom line of no systemic risks". The words "resolute" and "bottom line" are clarified here, and their qualitative harshness and clear attitude are clear. We believe that it is precisely because of the elevation of such terms that there is a need for a deeper understanding of the momentum of economic growth and economic policy work, and blindly "breaking first" and rushing to "break first" is inconsistent with the overall work requirements of current risk prevention.
3. The consistency of policy orientation needs to be enhanced
The meeting mentioned that "it is necessary to enhance the consistency of macroeconomic policy orientation, strengthen economic propaganda and guidance". This formulation is very crucial, and goes beyond the traditional "pessimistic expectations" and "stable expectations" to the "synthetic fallacy". The term was first proposed by Samuelson, which means that what is right in the part will be considered in the whole as a whole, but it will lead to wrong conclusions, which will lead to problems such as duplicate production, waste of resources, and single supply and demand. From the perspective of the "first break and then stand" approach of the industrial economy, some new and innovative policies are correct from their own fields, but when they are enlarged to this market, they will produce many problems, and some economic goals cannot be achieved as scheduled.
4. "Do what you can" emphasizes practicality
The meeting made it clear that "we must insist on doing our best and doing what we can to effectively protect and improve people's livelihood". For example, the expression of fiscal policy is "active fiscal policy should be moderately strengthened", that is, "moderation" is emphasized. In other words, some excessively drastic and hasty practices of "breaking first and then establishing" do not coincide with the current overall situation in terms of economic, social, and financial resources, and naturally need to be corrected. Some industrial policies should not only take into account the issue of transformation, but also from the perspective of ensuring the improvement of people's livelihood and stabilizing the fundamentals.
Four. Inspiration in the real estate sector
The Politburo meeting did not directly mention the relevant expressions of real estate, which shows that the work of real estate is very mature and stable, that is, it is necessary to continue the overall spirit and deployment since the second half of the year, including supporting reasonable housing consumption demand, promoting the construction of three major projects, and promoting the virtuous cycle development of finance and real estate. The idea of "establishing first and then breaking" is very enlightening for understanding the overall spirit and requirements of the economy, and it also has important guiding significance for the related fields of the real estate industry. We make an analysis based on the relevant problems of the real estate market in recent years.
1. The problem of high leverage of real estate enterprises
In 2020 and the first half of 2021, three major policies were introduced, including the "three red lines", "housing loan concentration", and "centralized land supply". The goal of such policies is to innovate traditional models such as the "three highs" of real estate enterprises and pave the way for real estate enterprises to build a long-term development mechanism. An important manifestation is that some banks have rapidly tightened financing policies, resulting in greater difficulties in the liquidity of real estate companies. Later, it included the phrases "to meet the reasonable financing needs of real estate enterprises under different ownership systems without discrimination" and "three not less than", which actually corrected such excessive and strict management of the "three highs". This example shows that the "high-leverage model of breaking real estate enterprises" is necessary, but not primary. In the case of major changes in the relationship between real estate supply and demand and the debt pressure of real estate enterprises, it is necessary to first do a good job in "stabilizing the cash flow of real estate enterprises". Only when real estate companies explore a mature and stable financing model can they control problems such as high leverage of real estate enterprises.
2. The development of affordable housing
At present, all localities are actively promoting the construction of affordable housing, which fully reflects the orientation of "the market belongs to the market and the security belongs to the security". Of course, there is a lot that must be considered to crack the old housing model. This includes: how to digest the affordable housing in the stage of commercial housing surplus, how to circulate the affordable housing that has been held for five years, and whether the talent housing needs to be injected into the placement type of affordable housing. Such problems need to be deeply considered in the process of "establishment" in order to explore a road for the development of affordable housing that is in line with the national conditions and the market. Otherwise, simply "breaking" will cause chaos in the market, resulting in damage to the market and security functions. This is the content that all localities should pay attention to when actively exploring the development model of affordable housing.
3. The problem of existing house **
In the last two years, buyers have been concerned that off-plan properties are prone to unfinished, so they want to have more existing homes**. But do we have to come up with a policy because of this, that is, all localities should immediately, immediately, and fully implement the sale of existing homes?Clearly not possible. Completely rejecting the off-plan model, that is, "breaking first", will also create a lot of problems. Here are two examples. Clause.
1. Wenzhou has recently introduced a "quasi-existing house" policy, which allows quasi-existing houses to be pre-sold in advance to return funds faster. Clause.
Second, the Hainan Sanya urban village project allows the pre-sale system of off-plan housing, the purpose of which is to speed up the development of the first house. These two examples illustrate that it is impossible to "run" into the existing home mode overnight. In the case that there are still many problems in the existing housing model, the "breaking" of the off-plan housing system should not be rushed. When the existing housing model is gradually explored and matured, that is, the "establishment" meets the requirements, and the "break" is natural and natural.
4. The use of pre-sale funds
The change in the regulatory policy of pre-sale funds is a very vivid example of the shift from "breaking first and then standing" to "standing first and then breaking". Under the debt risk of real estate enterprises, in the first half of 2023, various localities will significantly upgrade the supervision of pre-sale funds, that is, "break" some reasonable financing channels first. As a result, the financial situation of real estate enterprises has deteriorated further. In the second half of the year, all localities adjusted their work ideas, "first established and then broken", and paid full attention to the liquidity of real estate enterprises, including encouraging bank guarantees to replace pre-sale funds, and reducing the withdrawal process of non-key regulatory funds. The change in this model shows that there is no problem in implementing strict capital supervision for real estate companies, but the most basic liquidity guarantee must be available. If it cannot be guaranteed, then "breaking first" needs to be cautious, that is, you need to think twice before acting.
5. The problem of fine decoration
Under the working idea of carbon peak and carbon neutrality, all localities have actively implemented the requirements of fine decoration in terms of land supply, construction and delivery, and changed the traditional housing construction mode. However, blindly "breaking first and then standing" has led to many problems, such as the increase in the construction cost of real estate enterprises and the increase in financial pressure. In recent years, when the financial situation of real estate companies has encountered problems, it is bound to resist such practices. Therefore, the starting point of "breaking first and then standing" is very good, but the heat is not yet yet. If the financial situation of the follow-up real estate enterprises has improved and the demand for high-quality housing has been released, then there will naturally be a market for finely decorated products. At that time, it will be easier to break the old construction and renovation standards, and the old system and the new system can form a very natural connection.
6. The problem of school district housing
The education issues involved behind the school district housing are of great concern to the people, and the speculation of the school district housing is also a relatively big problem. However, in the past, there was too much emphasis on issues such as "cracking down on speculation degree school districts", which also produced many new situations, such as the fact that school education facilities could not be mentioned in marketing at all, resulting in opaque information and chaotic transaction order. This is the problem caused by "breaking first and then standing". Recently, some places have made innovations, which are worthy of recognition. For example, when some cities provide land, it is clear that educational resources and degrees should be publicized. This practice is "standing first". If the work of distributing similar educational resources is in place, there will be fewer problems of overheating in natural school districts, and it will be easier to break the old school district housing model.
7. The problem of urban villages
The construction of urban villages is a hot word this year, and it is also necessary to have the idea of establishing first and then breaking down. For example, if the transformation of urban villages is positioned as the idea of "breaking first", then all urban villages must speed up demolition, reconstruction, and resettlement. But obviously, this is not in line with the current economic situation and local financial resources. Therefore, our current policy formulation is, "one urban village project is mature, and one is launched". This practice embodies the idea of "standing first". Only by finding out the law of the development of urban villages in megacities and megacities can we do a good job in relevant work. Otherwise, it is too much, and it is easy to produce the problem of half-pull engineering.
8. The problem of rectification of insurance real estate enterprises
Some thunderstorm real estate companies, the financing and operation behind them do have a lot of improper operations, and even suspected illegal content. The attitude towards such real estate companies, if according to the idea of "breaking first", then all operations should be stopped and comprehensively rectified. However, this is very unrealistic in practice. Blindly "breaking first" will directly lead to the paralysis of business operations, and the delivery of real estate is unmanaged, which ultimately damages the legitimate rights and interests of buyers. Therefore, the main idea is to "establish first", especially to establish a list and a white list system of systemically important real estate enterprises to ensure the safety of liquidity. Only after gradually exploring a new regulatory model can other relevant work be truly touched and carried out.
9. The problem of the new development model
The new development model is in line with the law of market development. But do you want to do it all in one step and abolish all the old models in one day?This is obviously not possible. As far as the current situation is concerned, the sales data is generally at a low level, and the liquidity risk of real estate companies is still large, and these problems are not properly handled, and it is easy to expand and spread the risk. So the lesson for us is to be cautious in reform. Only by actively exploring the work of "establishing first" and not emphasizing the work of "breaking later" can we truly promote the smooth transition from the old model to the new model. Otherwise, the adjustment scale is too large, and the adaptability of the market and enterprises will not be so strong.
10. Innovative content of REITs
The hot word this year is REITs, especially the expansion of the underlying assets of the asset package, from rental housing to commercial plazas, which fully reflects the important function of REITs in revitalizing real estate stock assets. But even so, we can't blindly reinvent the old financing model. At least in the past two years, some places have been cautious about promoting the reform of REITs in terms of promoting the construction of rental housing and the transfer of industrial land. This is the embodiment of "first standing", and only by exploring the model of REITs step by step and making steady progress can we gradually break the old financing model. This step-by-step reform approach, which is not presumptuous, will help the old financing model to play a role, and the new financing model can be actively explored.
11. The issue of real estate tax
The real estate tax reform affects the hearts of the people, and its reform needs to have the idea of "establishing first and then breaking". If the traditional "break first and then establish" model, then the current established tax policies can be withdrawn, including value-added tax, individual income tax and deed tax. But if you don't clearly find a way to "stand first", don't break it easily. At least for now, tax policies such as value-added tax and individual income tax have played a positive and stable role in flexibly adjusting the cost and income of house purchases. The functions of such tax policy tools are sound, and there is no such thing as "breaking first".
Five. How to do a good job of real estate first and then breaking
1. We must do a good job of "breaking down" under the premise of "steady progress".
When continuing the tone of "seeking progress while maintaining stability", the Politburo meeting proposed for the first time to "promote stability with progress". This shows that under the condition of "stabilizing" in 2023, it is necessary to make appropriate changes at present and actively implement "promoting stability through progress". Only by doing a good job in the work of "stability" and "progress", can the work of "establishment" and "breaking" have a market environment for smooth development. The real estate industry should make full use of various policy contents, including the flexible monetary policy, moderate fiscal policy, and the overall planning of new urbanization and rural revitalization, which are all places where real estate can actively borrow. Only by boosting the entire real estate industry and industry can we better study the work of "establishment" and "breaking". In other words, only in an active, stable and sustainable market, the work of "first establishment" and "later breaking" can be smoothly connected.
2. It is necessary to systematically consider all kinds of new problems
It is necessary to systematically demonstrate the problem and make thinking, otherwise it is easy to fall into a one-sided quagmire. Clause.
First, real estate can not simply stay at the level of structural optimization, and its total amount of boosting work also needs to be paid attention to. Clause.
Second, it is necessary to balance growth, prevent and defuse risks, and other work. If such issues are considered comprehensively, the relevant policies and company policies will be more pragmatic. Clause.
Third, it is necessary to systematically integrate short-term problems with medium- and long-term problems, as well as problems of supporting the bottom line and development planning. Clause.
Fourth, it is necessary to find a balance and turning point in "breaking" and "standing", and then grasp the initiative and gradually pay attention to key issues such as "kinetic energy conversion - industrial transformation - enterprise innovation".
3. It is necessary to explore the connection between the conversion of old and new kinetic energy
Whether it is a local government, a real estate company or a consumer, etc., they need to understand the connection between the transformation of new and old kinetic energy. The idea of "establishing first and then breaking" actually includes underlying thinking, risk prevention thinking, systematic thinking, truth-seeking and pragmatic thinking, etc., which has a great inspiration for us to change our work ideas and adjust strategies. At present, all localities are promoting a new model of "people, real estate, and money", which can be dismantled, and then analyze its old kinetic energy and new kinetic energy individually. At the stage when the old kinetic energy can still play a positive role and the new kinetic energy is not yet mature, it is necessary to make full use of the old kinetic energy. Once the follow-up new kinetic energy can fully undertake the related work of the old kinetic energy, then it is necessary to do a good job of connecting the work and promote the effective transformation of the new and old kinetic energy.
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Article**: E-House Research Institute