Recently, the escalation of geopolitical conflicts and the rise of international oil prices have not only reduced the risk appetite of the global market, but also exacerbated the concern of the economy moving towards stagflation. The market’s expectations of future economic and corporate profits have weakened, the stock markets of various countries have fluctuated sharply, and the A-share market has also been affected Everbright Securities Company Limited(601788) chief macroeconomic economist Gao Ruidong said in an interview with China Securities Journal on March 7 that the impact of this geopolitical conflict on A-Shares is quite limited both from the perspective of economic fundamentals and inflation. A series of steady growth policies this year are promoting the formation of a “joint force for development”.
China’s assets are attractive
Specifically, according to Gao Ruidong’s analysis, on the one hand, the government work report submitted to the general assembly for consideration on March 5 put forward the expected target of annual economic growth of about 5.5%, taking multiple measures to stabilize growth, which means that the steady expansion of total demand throughout the year is expected.
On the other hand, China’s resident price index is still low, the increase of production price index continues to fall, the RMB exchange rate continues to be strong, and the range of macro policies since the outbreak is appropriate, but there is still a lot of room. This is the biggest chip for China’s fiscal policy expansion and monetary policy to adhere to autonomy and independence.
“At the same time, we also see that China continues to promote the all-round and higher-level opening-up process, and the attraction of Chinese assets to international investors is rising.” Gao Ruidong said.
positive policies and clear objectives
In Gao Ruidong’s view, the steady growth policy is positive and has clear objectives, which is promoting the formation of a joint force for economic development.
He said that the growth rate of about 5.5% is a challenging goal. This year, the introduction of macro policies will be more orderly and form a joint force to promote development. In terms of “dual control” of energy consumption, it is emphasized to make overall planning; In terms of improving the fertility policy, substantive tax incentives are put forward; In terms of negative export tax rebate and opening-up measures, etc. It can be expected that this year’s policy will be more positive and pragmatic in taking into account economic growth and building a new development pattern.
“The economic growth target of about 5.5% will not only consider the needs of stabilizing employment, ensuring people’s livelihood and preventing risks, but also boost the confidence of market players in economic growth. Looking ahead, the policy of stabilizing growth will continue to work to ensure the smooth operation of the economy.” Gao Ruidong said.
In Gao Ruidong’s view, fiscal policy will be the main driving force for steady growth. On the one hand, we will make greater efforts to increase expenditure and reduce income, including tax rebates and reductions of about $2.5 trillion throughout the year and new fiscal expenditure of $2 trillion. On the other hand, increase the guarantee of energy consumption and other factors of major projects. For example, the energy consumption of major national projects is listed separately.
From the perspective of monetary policy, the formulation of “strengthening the implementation of prudent monetary policy” is more positive. In the future, the people’s Bank of China is expected to comprehensively use a variety of policy tools to continue to guide the decline of financing interest rates and reduce the financing costs of the real economy, so as to stimulate effective demand and further repair. “In view of this, we believe that there is room for interest rate and reserve requirement reduction, and promoting the reduction of real loan interest rate is still the main goal of the policy; the pace of force will also be advanced appropriately, and sufficient time will be reserved for the implementation and effectiveness of the policy.” Gao Ruidong said.
