Key investment points:
The economy is facing triple pressures, and efforts to stabilize growth have been intensified
From December 8 to 10, 2021, the central economic conference was held in Beijing, setting the tone and making arrangements for next year's economic work. From the full text of the release, we believe that the central government judges that there is great downward pressure on the economy and requires great efforts to stabilize economic growth. At the same time, macro policies should be stable and effective to prevent and resolve risks.
1. Triple economic pressure. The meeting pointed out that "China's economic development faces the triple pressure of shrinking demand, supply shock and weakening expectation". We believe that it is unlikely that the GDP growth target in 2022 will be lower than 5%. However, GDP growth has fallen to 4.9% in the third quarter of this year and may be lower in the fourth quarter. There is a lot of pressure to keep the economy running within a reasonable range.
2. Steady growth. The meeting pointed out that "stability comes first and progress is sought in stability", which is consistent with the meeting of the Political Bureau. The meeting demanded that "all regions and departments should shoulder the responsibility of stabilizing the macro economy, all parties should actively launch policies conducive to economic stability, and the policy force should be appropriately advanced". Therefore, (1) requiring all regions and departments to bear the responsibility of stabilizing the economy will better mobilize the enthusiasm of all parties, and the measures to stabilize growth may exceed expectations. (2) policies to promote economic growth may increase, and policies affecting growth may decrease, so as to reduce risk matters. (3) there may be some positive measures at the end of this year and the beginning of next year.
3. Fiscal policy. The meeting pointed out that "we should ensure the intensity of fiscal expenditure and speed up the progress of expenditure" and "carry out infrastructure investment moderately in advance". This year's deficit rate is 3.2%, and the scale of special debt is 3.65 trillion yuan. Next year may not be lower than this year's level. The growth rate of infrastructure investment may be higher than this year, and the start-up time may be earlier. Energy reform and affordable housing construction may be the focus. "Resolutely curb the new implicit debt of local governments", and the financing of local urban investment platforms may still be limited.
4. Monetary policy. The meeting pointed out that "prudent monetary policy should be flexible and appropriate, and maintain reasonable and sufficient liquidity", and deleted "maintain the basic matching between the growth rate of money supply and social financing scale and economic growth, and maintain the basic stability of macro leverage". The overall wording is similar to that of last year, but it is estimated that the actual operation level will be loose. Next year, the reserve requirement and interest rate may be reduced, and the macro leverage ratio has a certain room to rise.
5. Structural policies highlight supply side reform and manufacturing upgrading. The meeting pointed out that "to deepen the supply side structural reform, we should focus on unblocking China's great cycle and breaking through the blocking point of supply constraints", "we should grasp the timing effect in adjusting policies and promoting reform, adhere to standing first and breaking later, and fight steadily", "we should unswervingly promote carbon neutralization to reach the peak, but it is impossible to accomplish its work in one battle". The supply side constraints may be relaxed next year, the possibility of power and production restrictions again is low, the possibility of maintaining tight supply balance is high, and there may still be structural opportunities for cyclical products.
6. Based on the basic national conditions dominated by coal. In terms of energy supply, "based on the basic national conditions dominated by coal, pay attention to the clean and efficient utilization of coal, increase the consumption capacity of new energy, and promote the optimal combination of coal and new energy". Coal is still an important energy supply in the short term. It is estimated that coal production and supply will not be compressed in the short term, and coal and energy prices are expected to remain relatively stable.
7. The tone of housing and housing remains unchanged, and the policy turns to marginal easing. The meeting pointed out that "we should adhere to the positioning that houses are used for living, not for speculation", indicating that "real estate is not fried" is still an unshakable bottom line, and the overall policy tone of the real estate industry will not change. The meeting called for "supporting the commercial housing market to better meet the reasonable housing needs of buyers, and promoting the virtuous circle and healthy development of the real estate industry due to urban policies". It emphasizes to better meet the reasonable housing demand, further defines the policy orientation of marginal easing of real estate policy, and has a significant shift compared with the previous contraction of real estate policy.
8. Five correct understandings and grasps. The meeting put forward five correct understandings and grasps on the five aspects of "common prosperity, capital market, primary product supply, risk prevention and carbon neutralization". It defines the strategic objectives and practical ways to achieve common prosperity. First make a big cake, and then cut and divide the cake. We should set up "traffic lights" for capital, give play to the positive role of production factors and curb the negative role, and clearly put forward the full implementation of the stock issuance registration system. In terms of primary product supply, we should give priority to saving and implement a comprehensive saving strategy, which also refers to actions such as the revitalization of the seed industry. Grasp prevention and resolve major risks, and risk prevention will still coexist with steady growth.
