1) PMI analysis in December: the economic momentum is further weakened, but enterprises are expected to improve gradually. We use the new orders index minus the finished goods inventory index to measure the economic momentum. In December, the value further weakened to a new low for the year. However, enterprises are expected to strengthen, and the expected index of production and operation activities has rebounded for two consecutive months. The effect of ensuring supply and stabilizing price was further demonstrated. In December, the purchase price index and ex factory price index of main raw materials further fell, especially the purchase price index of raw materials, fell 4.8% below the boom and bust line, and the decline was higher than the ex factory price (3.4%). The pressure on small enterprises has increased. In December, the PMI of large enterprises rose, the medium-sized enterprises stabilized, and the prosperity of small enterprises fell sharply. Different from the downward trend of manufacturing PMI, high-tech manufacturing, equipment manufacturing and strategic emerging industries all performed well. Compared with November, high-tech manufacturing PMI increased by 0.8% to 54%, strategic emerging industries PMI increased by 2.9% to 54.2%, and equipment manufacturing PMI only decreased by 0.1% to 51.6%, indicating that emerging industries continued to perform well despite the great downward pressure on the current economy.
2) Intensive policies were issued at the end of the year. First, the policy of expanding domestic demand has gradually become clear. Under the triple influence of shrinking demand, supply shock and weakening expectation, the economy is facing downward pressure in the short term. Given that consumption is the main driving force (investment is the key marginal determinant), it is clear that this policy will not be absent. From the current situation, the consumption of automobiles, household appliances, furniture and home decoration, which account for a large proportion, will become the focus of stimulation. In terms of investment, new infrastructure has become the focus of planning. But overall, the main focus used to hedge the decline in real estate is still traditional infrastructure. Although the development of infrastructure at the end of the year is not obvious, with the implementation of the actual workload at the beginning of the year, it is optimistic about the performance of infrastructure investment in the first quarter. Second, the tax reduction and fee reduction policies were partially implemented. The executive meeting of the State Council decided to continue the implementation of some preferential policies for individual income tax, which is expected to reduce 110 billion yuan a year. The national financial work video conference in 2021 mentioned that it is expected that the new tax cuts and fees will reach 1 trillion yuan in 2022. Based on the downward pressure of the economy in 2022, the fiscal tax reduction and fee reduction continued. Reducing taxes and fees will help further consolidate the basic economic situation. Preferential policies for individual income tax will help to increase residents’ disposable income and stabilize consumption from the income level. According to the questionnaire survey results of urban depositors in the fourth quarter of the central bank, although the income perception index and employment perception index have increased, and the proportion of consumption has also increased to a certain extent, the proportion of savings is also further increasing, indicating that the willingness to save is still strong.
