At the meeting of the Political Bureau of the CPC Central Committee, the "six stabilities" and "six guarantees" were put forward again, and it was clearly put forward that "next year's economic work should be stable and seek progress while maintaining stability." It indicates that China's macro policy is tilting from "risk prevention" to "stable growth", and "stable growth" will be the main line for some time in the future.
With regard to the current economic situation, the statements made at this meeting did not emphasize the problem of "instability and imbalance" in the economy as in previous meetings, but affirmed the optimization of the economic structure. We believe that this does not mean that the current economic situation is better than in the past. The reason for this expression is to stabilize the confidence of market players and to show that considerable achievements have been made in the transformation of economic structure. It is also reasonable to focus on "stable growth" in the next period of time. The full text of this meeting did not involve the expression of "risk prevention", and we can also see the change of policy tendency. At present, the prosperity of the real estate industry has fallen sharply, and China's overall economic pressure is great. It is not surprising that the main line of the policy is switched to "stable growth", but the strength and rhythm of the policy are beyond expectations. Due to the existence of the central economic work conference in December, the meetings of the Political Bureau in early December are mostly warm-up for the central economic work conference. In contrast, the contents involved in this meeting are more comprehensive and the policy shift is more obvious, indicating that the policy shift is highly urgent under the current situation. At the same time, on December 6, the central bank also announced a comprehensive RRR reduction, which is only a weekend away from Premier Li Keqiang's mention of RRR reduction, which also shows that the current pace of policy implementation is fast. We believe that under this idea, the relevant policies for stable growth in the future are expected to accelerate.
Different from previous meetings, the policy statement on real estate at this meeting did not mention "real estate is not fried". The meeting pointed out that "we should promote the construction of affordable housing, support the commercial housing market, better meet the reasonable housing needs of buyers, and promote the healthy development and virtuous cycle of the real estate industry." This shows that, on the one hand, affordable housing construction will be used to hedge the downward pressure of real estate investment in the future; On the other hand, it will support the reasonable needs of buyers to hedge the downward pressure on commercial housing sales. The correction of real estate regulation policies has begun, and it is expected to accelerate the implementation in the future. We believe that commercial housing sales and real estate investment are expected to stabilize and recover at the beginning of the second quarter of next year.
Although the focus of the policy has shifted from risk prevention to steady growth, it does not mean that it will return to the old road and flood irrigation. The meeting mentioned that "the proactive fiscal policy should improve efficiency, pay more attention to accuracy and sustainability. The prudent monetary policy should be flexible and appropriate, and maintain reasonable and abundant liquidity." We believe that the "sustainability" of fiscal policy means that the management goal of local government debt has not been completely abandoned; "Prudent" monetary policy means that there will be no flood. We believe that the probability of interest rate reduction after RRR reduction is not high, and the increase point of LPR may change, but the MLF policy interest rate reduction should not be expected too much. In terms of industrial policy, the real estate policy shift is for the stable and healthy development of the real estate market, but the driving force of the future economy will still be scientific and technological innovation and high-end manufacturing. The meeting pointed out that "we should speed up the implementation of science and technology policies, continue to tackle key core technologies, strengthen national strategic science and technology forces, strengthen the dominant position of enterprises in innovation, and realize a virtuous cycle of science and technology, industry and finance." From the central bank's measures such as setting up special support tools for carbon emission reduction, it can be seen that the policy support for new technologies will not be weakened, and the investment growth rate of high-end manufacturing industry is expected to remain high.
On the whole, the current economic situation is somewhat similar to that at the end of 2018. The downward pressure on the economy drives the transformation of policies from "risk prevention" to "stable growth". In the case of economic recession and accelerated policy, the "spring agitation" market may also come in advance.
Risk tips: 1. Untimely implementation of policies leads to deep recession in the real estate industry; 2. The Fed accelerated tightening to restrict China's monetary easing space.
