Minimalist 5 to understand the signal of this meeting

An important meeting has been held, and it is time to learn Xi policy and comprehend the spirit

The Political Bureau of the Communist Party of China held a meeting on December 8 to analyze and study the economic work in 2024. This also set the framework and tone for the upcoming economic work conference.

Looking back on this year, the meeting argued:

This year is a year of economic recovery after the three-year transition of new crown epidemic prevention and control, withstanding external pressure, overcoming internal difficulties, focusing on expanding domestic demand, optimizing the structure, boosting confidence, preventing and resolving risks, China's economy has rebounded for the better.

Looking ahead to next year, the meeting noted:

Next year, it is necessary to persist in seeking progress while maintaining stability, promoting stability through progress, establishing first and then breaking down, strengthen counter-cyclical and cross-cyclical adjustment of macroeconomic policies, and continue to implement a proactive fiscal policy and a prudent monetary policy.

The proactive fiscal policy should be moderately strengthened, improve quality and efficiency, and the prudent monetary policy should be flexible, moderate, precise and effective.

It is necessary to enhance the consistency of macroeconomic policy orientation, and strengthen economic propaganda and guidance.

Although many meetings are held every year, the two meetings at the end of the year have a bearing on the direction and intensity of next year's economic policy, and it is necessary to pay close attention to them.

Don't be aesthetically fatigued, and look at the minimalist 5 we have summarized.

1. "Promote stability by progress, establish first and then break", indicating that next year's counter-cyclical policy may be strengthened.

The core signal of this meeting is that it has put forward directional instructions for future economic work to "promote stability with progress" and "establish first and then break down".

This is obviously different from the tone of the December meeting last year, which insisted on "taking the lead in stability and seeking progress while maintaining stability".

It's just that what kind of "entering" method is this "entering"?

Is it a strong stimulus to release water?

Or do you want to be bold in terms of system and mechanism?

If the former is the case, it is clear that fiscal and monetary policies should be strengthened. If the latter is the case, it is the second time to open the test field.

I wrote "It's Time to Turn Around" the other day:

The first is to attract investment in California and reassure foreign investment

The second is to try out unilateral visa exemption for France, Germany, Italy, the Netherlands, Spain and Malaysia

Third, Beijing suddenly announced several major "opening up" measures;

Fourth, it is necessary to clean up the unreasonable differential treatment between domestic and foreign capital

Fifth, Shanghai has fully aligned with international high-standard economic and trade rules, and steadily expanded institutional opening-up such as management and standards.

You can look forward to.

Anticipation is also a strength.

2. Also, what does it mean to "stand first and then break"?

The consensus that has always been seems to be "not broken, not standing".

Break before standing, first break and then stand.

However, it is easy to cause problems when it is all broken all at once, and even lead to the situation being unstable and untenable.

Then, it is a scientific method to first set up a new framework and then break down the old paradigm individually.

At a time when new momentum has not yet been formed and a new model has not yet been established, it is not appropriate to rush into the old momentum, but to balance the short-term and medium- and long-term goals.

For example, in the field of risk prevention, it means:

It is necessary to first guard the bottom line of no systemic financial risks, and first protect the capital chain of real estate companiesThen we will build a new model represented by the "three major projects".

With regard to local government bonds, we will first convert hidden debts into explicit debts, and continue to issue special refinancing bonds to ensure the normal operation of local governmentsThen there is the issue of establishing a management mechanism.

3. The actual strength of next year's policy is likely to exceed that of this year.

It was noted that:

"Strengthen counter-cyclical and cross-cyclical adjustment of macro policies".

The proactive fiscal policy should be moderately strengthened, and the quality and efficiency should be improved."

This is also consistent with the tone of "promoting stability through progress".

What is counter-cyclical and what is trans-cyclical.

To put it simply, the countercyclical policy is to push up when the economy is down, and press down when the economy is hotCross-cyclical refers to policies that can be implemented for a long time, regardless of the current economic situation – such as structural adjustment, carbon emission reduction, green energy, credit support for small and micro enterprises, financial support for scientific and technological innovation, etc.

When we talk about counter-cyclicality here, we mean lifting.

The fiscal deficit in the first three quarters of this year shrank year-on-year, and in late October, an additional 1 trillion yuan of government bonds was issued, which began to expand, and the adjusted general budget deficit ratio for 2023 increased to 38%。

What about next year?The deficit rate is likely to reach 3 in 2024About 2%. Combined with the 500 billion treasury bonds issued in 2023 to be carried forward to 2024, the actual fiscal strength in 2024 will exceed that in 2023.

The next economic work conference will also continue the policy tone of "fiscal easing".

As for monetary policy, the meeting pointed out that "a prudent monetary policy should be flexible, moderate, precise and effective".

It's still very reserved.

Because, inflation may pick up slightly in 2024, which will psychologically suppress the room for monetary easing more than this year. On the whole, although the monetary policy in 2024 will not be tightened, the easing may be smaller than in 2023.

4. In terms of industry, it is proposed:

"Promote high-level scientific and technological self-reliance and self-reliance".

In other words, of course, it is the field of scientific and technological innovation such as chips and artificial intelligenceThis is a hurdle that cannot be bypassed in the three aspects of science and technology, economy, and security.

But when it comes to paying attention:

This kind of scientific and technological innovation is completely different from the fiscal policy and monetary policy mentioned earlier. It is true that economic policy can play a hedging role, but scientific and technological innovation has its own laws and is not subject to will.

5. Consolidate the basic market of foreign trade and foreign investment

It was noted that:

"It is necessary to expand high-level opening up to the outside world and consolidate the basic market of foreign trade and foreign investment."

FDI also has outflow pressure.