event:
The central economic work conference was held in Beijing from December 8 to 10. Xi Jinping deliver an important speech at the meeting, summarize the economic work in 2021, analyze the current economic situation and deploy the economic work in 2022. In his speech, Li Keqiang made specific arrangements for next year's economic work and made a concluding speech.
comment:
1. Under the triple pressure of the economy, steady growth will increase
The meeting pointed out that "China's economic development is facing triple pressures of shrinking demand, supply shock and weakening expectations" and that "the external environment is becoming more complex, severe and uncertain". The above statements reflect the central government's judgment that the downward pressure on China's economy is prominent. Among them, the contraction of demand mainly corresponds to the current weak consumer demand in China affected by the epidemic, the decline in the growth rate of real estate sales and investment, and the weak growth rate of infrastructure investment; Supply shock corresponds to the repeated impact of the epidemic on industrial production and commercial operations outside China, as well as the impact of long-term policies such as carbon emission reduction on the supply side; The weakening of expectations is also related to the uncertainty caused by the epidemic, which limits consumption and investment, and the low willingness of enterprises to finance adds resistance to credit expansion.
At the same time, this year's meeting is the earliest since 2010, which may also reflect the current grim situation, indicating that the central government hopes that relevant policies will be deployed and implemented as soon as possible.
Under such circumstances, the meeting proposed that "adhering to the requirement that economic construction is the party's basic line, and the whole party should concentrate on its implementation, promote the steady improvement of the quality and reasonable growth of the economy", "strive to stabilize the macro-economic market, keep the economic operation within a reasonable range, maintain the overall social stability, and welcome the victory of the 20th National Congress of the party", "Next year's economic work should be stable and seek progress while maintaining stability. 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." and "cross cyclical and counter cyclical macro-control policies should be organically combined".
Based on the above statements, we believe that the meeting released a clear and clear counter cyclical regulation overweight signal. It is emphasized again that "adhering to economic construction as the center" means that the weight of steady growth has been significantly increased and will become the focus of policies next year. The "appropriate policy force" shows that the relevant policies for steady growth from now to the first quarter of next year are expected to be implemented one after another, The policy mix may include: moderately liberalizing the currency, accelerating the issuance of government bonds, accelerating infrastructure investment expenditure, a new round of tax reduction and fee reduction, a new round of consumption to the countryside, etc.
2. Steady growth will be mainly based on the acceleration of fiscal policy, supplemented by moderately loose monetary policy, and in line with the guidance of industrial policy
In terms of fiscal policy, Proposed by the meeting "The proactive fiscal policy should improve efficiency and pay more attention to accuracy and sustainability. We should ensure the intensity of fiscal expenditure and speed up the progress of expenditure. We should implement a new policy of tax reduction and fee reduction, strengthen support for small, medium-sized and micro enterprises, individual industrial and commercial households, manufacturing and risk resolution, and carry out infrastructure investment moderately ahead of schedule. Party and government organs should adhere to tight living. We should strictly enforce financial discipline. We should be firm We will never curb the new implicit debt of local governments. "
The above statement clearly released the signal that fiscal expenditure will accelerate. This year, due to the low base effect caused by the epidemic, there is less pressure to complete the annual economic growth target, and the fiscal policy can recuperate. The cumulative year-on-year growth rate of public financial expenditure in the first 10 months of this year was 2.4%, which was far lower than the cumulative year-on-year growth rate of income of 14.5%. The cumulative balance of fiscal revenue and expenditure in the first 10 months of this year was -1.85 trillion yuan, and the level of fiscal deficit was also significantly lower than that in the same period of 2020 and 2019. The data show that the fiscal expenditure force this year is actually weak. Next year's economic growth will return to the potential growth level, and there is even a risk of falling below. Under the condition of steady growth in policy intention, the strengthening of fiscal expenditure will not be absent. Next year's fiscal policy will be more active than this year, and the growth rate of fiscal expenditure is expected to exceed that of revenue. The new round of tax reduction and fee reduction and infrastructure investment will be the two major directions of fiscal power. The former releases the endogenous growth power of the economy, and the latter is expected to be not limited to the traditional railway and public machine, and the new infrastructure is expected to become a key investment field. In addition, the meeting also stressed the containment of new local government implicit debt, indicating that the prevention and control of government debt leverage and related risks will not be relaxed.
In terms of monetary policy, the meeting proposed that "prudent monetary policy should be flexible and appropriate and maintain reasonable and sufficient liquidity", which is basically consistent with the "prudent monetary policy should be flexible, accurate, reasonable and appropriate" and "maintain reasonable and sufficient liquidity" proposed by the central bank in the third quarter monetary policy implementation report, and there is no incremental information, At the same time, the meeting proposed to "guide financial institutions to increase support for the real economy, especially small and micro enterprises, scientific and technological innovation and green development", indicating that monetary policy continues to focus on orientation, and it is expected that structural tools and aggregate tools will be used together.
In comparison, the expression of fiscal policy released a clear marginal overweight signal, and the formulation of monetary policy basically maintained the previous tone. However, the meeting proposed that fiscal policy and monetary policy should be coordinated and linked, which means that monetary policy should also be relaxed to a certain extent in conjunction with fiscal policy.
When the policy of ensuring supply and stabilizing prices achieved phased results, the meeting did not mention inflation pressure and price control, or showed that the central government's judgment on next year's inflation situation is relatively optimistic, which provides conditions for moderate easing of monetary policy. We expect the PPI to decline year-on-year next year, and the inflationary pressure in the industrial sector will be significantly lower than this year. At present, the upstream inflation has shown signs of spreading to the middle and lower reaches, and the increase of CPI next year will increase. At present, the market expects the average year-on-year CPI for the whole year next year to be 2.1%, significantly higher than this year, but still lower than 3%. This level will not bring the pressure of monetary policy tightening.
In addition, the meeting continued to emphasize the "implementation of the strategy of expanding domestic demand", combined with the previous Politburo meeting's "implementation of the strategy of expanding domestic demand, promoting the sustained recovery of consumption, actively expanding effective investment and enhancing the endogenous driving force of development", which shows that there may be more incentive policies at the industrial level to promote consumption and investment, in which financial subsidies will play an important role. Considering the direction of China's economic transformation and key development areas, the incentive policies may mainly focus on new infrastructure, high-end manufacturing, green related investment and consumption.
In conclusion, it is expected that the steady growth next year will focus on the acceleration of fiscal policy, supplemented by moderately loose monetary policy, and strive to keep pace with steady economic growth and structural optimization with the guidance of industrial policy.
3. Face social problems and vigorously promote various structural policies
In view of the problems in the current economic development, the meeting put forward many directions and policies for structural reform. For example, in terms of industrial structure optimization and upgrading, the meeting proposed "to enhance the core competitiveness of the manufacturing industry, start a number of industrial infrastructure reconstruction projects, stimulate the emergence of a large number of" specialized and special new "enterprises", "implement the three-year action plan for the reform of the scientific and technological system", "improve and optimize the ecology of scientific and technological innovation", etc, This further defines the firm determination of made in China to build a country and promote scientific and technological innovation. High end manufacturing, military industry, new energy, new materials and other fields are expected to maintain a high momentum for a long time. At the same time, the meeting proposed "accelerating the formation of a safe and efficient logistics network with internal and external connectivity, accelerating digital transformation and promoting the upgrading of traditional industries", which also pointed out the direction of the focus of social resources in the future and the investment opportunities in the capital market.
In terms of real estate, the meeting continued to emphasize "no speculation in real estate", indicating that the regulation of the real estate market is at the strategic level. Next year, the probability will continue to adhere to this tone and there will be no direction change. However, at the same time, the meeting proposed to "promote the construction of affordable housing, support the commercial housing market to better meet the reasonable housing needs of buyers, and promote the virtuous cycle and healthy development of the real estate industry due to urban policies", which also gives some room for flexible adjustment of real estate regulation. It is expected that the financial sector is expected to increase financing support for reasonable investment and development and house purchase demand in the real estate sector next year, It will provide some help to broaden credit and steady growth. However, it is expected that house prices are still constrained. If a new round of upward risk of house prices is triggered, the policy of marginal loosening will face the risk of withdrawal.
In terms of common prosperity, the meeting proposed that we should correctly understand and grasp five major theoretical and practical issues in the new development stage, of which common prosperity ranks first, which reflects that promoting common prosperity will be a main line to be considered in future policy-making. The meeting proposed that "to achieve the goal of common prosperity, we should first make the 'cake' bigger and better through the joint struggle of the people of the whole country, and then cut and divide the 'cake' through reasonable institutional arrangements". The expression of "first... Then..." further defines the weight relationship between efficiency and fairness. In the future, China's development will pay more attention to fairness and improve distribution, but development and efficiency are still in a higher priority. Common prosperity is to pursue "common prosperity" on the premise of "prosperity". On November 24, vice premier Liu He's signed article "we must achieve high-quality development" published in the people's daily clearly stated that "we will not engage in equalitarianism, kill the rich to help the poor and kill the rich to cause poverty". In addition, the meeting proposed that achieving the goal of common prosperity "is a long-term historical process, and we should move steadily towards this goal", which means that the policy will be gradual and not too radical in the short term. The above statements will help stabilize the expectation of social capital and enhance the confidence of enterprise development.
In terms of carbon neutralization at the carbon peak, the meeting straightened out the development relationship between traditional industries and green industries, stressed that we should not pursue success in one battle, and made it clear that "the gradual withdrawal of traditional energy should be based on the safe and reliable substitution of new energy" and "to ensure energy supply, large enterprises, especially state-owned enterprises, should take the lead in ensuring supply and stable price". The above statement once again clarifies the correction of the previous radical policies and measures. In the future, the supply of traditional energy is of great significance to the stable operation of the economy. The development direction of green industries such as new energy is still clear, but some restrictions and constraints on traditional industries are expected to ease.
In terms of regulating capital, the meeting proposed that "we should set up 'traffic lights' for capital, strengthen the effective supervision of capital according to law, and prevent the barbaric growth of capital." We believe that this should not be interpreted as a policy to curb the development of capital. On the contrary, the pessimistic expectation of future capital development needs to be corrected. On the one hand, the meeting did not deny the role of capital, but proposed that "there will be various forms of capital in the socialist market economy, and we should give full play to the positive role of capital as a factor of production", which actually affirmed the rationality and necessity of the existence of various capital. On the other hand, setting traffic lights and traffic regulations is to make road traffic more orderly and smooth, while setting traffic lights for capital is also to standardize capital for better development. Under the condition of clear rules and clear boundaries, more optimistic expectations should be given to the long-term and healthy development of capital.
4. Next year, the comprehensive registration system will be implemented with a high probability, and the A-share market may continue to make breakthroughs and continue to grasp structural opportunities
In terms of the reform and development of the capital market, the meeting proposed to "pay close attention to the pilot of comprehensive reform of market-oriented allocation of factors and fully implement the stock issuance registration system", which means that the reform of the registration system will be carried out in the whole market next year, and the capital market reform will take another important step forward. The reform of registration system is an important part of the reform of market-oriented allocation of factor resources. Increasing the proportion of direct financing is the direction of China's financing structure adjustment. It matches the needs of scientific and technological innovation and development. The rapid promotion of comprehensive registration system reform reflects the central government's attention to the A-share market. On the one hand, more high-quality innovative enterprises are expected to accelerate their development by entering the A-share market for financing, On the other hand, the industry structure of the A-share market will also be optimized, and the proportion of emerging industries will continue to increase, providing more investment opportunities for the market, which is conducive to attracting domestic and foreign capital and continuing to increase the allocation of the A-share market.
In view of the performance of the A-share secondary market and based on the above analysis, the central economic work conference further defined the direction of stable growth of follow-up policies. The end of the policy has been realized. In the future, the counter cyclical policy will be overweight, and the probability of wide currency and wide credit cashing will be increased. Historical experience shows that the policy bottom is ahead of the market bottom. The probability in the subsequent stage of the policy bottom is accompanied by the rise of a shares. The gradual realization of wide credit will provide good conditions for the rise of a shares. At the same time, although the market has begun to reflect the expectation of wide credit, it is still in the preliminary stage. At present, the market has not fully increased the subsequent counter cyclical policy of pricein. Therefore, we are optimistic about the future A shares. The decline of discount rate caused by the overweight of counter cyclical adjustment policy in the future and the subsequent stabilization of EPS are expected to raise the price of equity assets, and the market may continue to break through upward.
Structurally, since there will be no flood irrigation and the overall rise promoted by the substantial easing of liquidity is difficult to achieve, it is suggested to still focus on seizing structural opportunities, such as high-end manufacturing, military industry Green areas (long-term prosperity is determined, but we need to be vigilant against the risk of periodic correction caused by high valuation); consumer areas corresponding to the narrowing of ppi-cpi scissors difference and the overweight of promotion fee policy; infrastructure areas corresponding to the strength of fiscal policy, etc. in addition, we can also pay attention to the areas where the sad expectation correction is expected to drive the valuation repair under the guidance of policy, such as Internet, education, etc.
