First, this is a long-awaited meeting of the market, which timely guides the future development direction at a time when the society is full of confusion. As usual, the Political Bureau of the CPC Central Committee will hold a meeting in mid and late April every year to analyze and study economic work and set the tone for the next stage of economic work. Since March, a new round of epidemic and the crisis in Ukraine have continued to ferment, but these effects have not been reflected when the two sessions were held. The economic situation has become more complex and severe, and the society is full of confusion about how to deal with new challenges. This meeting has timely guided the future development direction, which can be said that the market has been looking forward to for a long time. In the past, the full draft of the meeting was generally released at night. This time, it was rarely released at noon, which also reflects the strong warmth of protecting the market at the policy level.
Second, the meeting affirmed the economic work in the first quarter, but pointed out that the complexity, severity and uncertainty of China's economic development environment have increased. At the end of last year, the central economic work conference put forward the "triple pressure of demand contraction, supply shock and weakening expectation". This conference did not directly mention the "triple pressure", but pointed out that "the complexity, severity and uncertainty of China's economic development environment have increased", and the economic pressure has actually further increased. The reason, according to the central government, is that "the covid-19 pneumonia epidemic and the crisis in Ukraine lead to increased risks and challenges". Based on this, the central government put forward for the first time the "new challenges of three stabilities", that is, "new challenges to stabilize growth, employment and prices" - steady growth, which corresponds to the increased impact of the epidemic on the economy, and the intensity of steady growth needs to be further strengthened; Stable employment, corresponding to the rise of urban survey unemployment rate and prominent employment pressure under the impact of the new round of epidemic; Stabilizing prices corresponds to the obvious rise in global food and energy prices under the Ukrainian crisis. Relevant ministries and commissions have specially held expert seminars to discuss countermeasures.
Third, in response to the dispute between "coexistence" and "zeroing" of social concern, the meeting once again stressed "adhering to dynamic zeroing", and the central government has made a clear strategic choice on the policy of epidemic prevention. At the meeting of the Standing Committee of the Political Bureau of the CPC Central Committee on March 17, it has been proposed to "adhere to dynamic clearing", which continues to be emphasized at this meeting. "Dynamic clearing" is determined by China's basic national conditions, but also by the epidemic prevention concept of "people first and life first" that China has always adhered to. China has 267 million people aged 60 and over, and more than 250 million children. The "one old and one small" group is large, which determines that it is very necessary for China to achieve "dynamic zeroing". The meeting also stressed that the epidemic should be prevented, the economy should be stable and development should be safe, which is the clear requirement of the Party Central Committee. This means that the three aspects of epidemic prevention, economy and development are integrated, and none of them is indispensable.
Fourth, in response to social concerns about whether to maintain the 5.5% growth target, the meeting clearly called for "striving to achieve the expected goal of economic and social development throughout the year", stabilizing market expectations. Under the influence of the new round of epidemic and the crisis in Ukraine, China's GDP growth recorded 4.8% in the first quarter, which was significantly lower than the annual growth target. The base was high in the second quarter, and the time affected by the epidemic was longer than that in the first quarter. There was still downward pressure on the economy in the second quarter, and the difficulty of achieving the annual target was objectively increasing. Therefore, there has also been a dispute on whether to maintain the growth target of 5.5% in the market recently. At this meeting, the Central Committee gave a clear answer, strengthened policies and worked hard to achieve the annual goals. At a time when the market is confused, this statement will undoubtedly play a very important role in stabilizing and boosting market expectations.
Fifth, in response to social concerns about how to further promote steady growth, the meeting put forward a package of policy measures covering stock policy and incremental policy, with thoughtful and detailed policy deployment. In terms of stock policy, it is required to speed up the implementation of the determined policies. In terms of incremental policy, it is required to grasp the planning of incremental policy tools, strengthen camera regulation, and grasp the advance and redundancy of policies under the guidance of objectives. In response to the problems of poor transportation and logistics and unstable industrial chain supply chain in some areas under the impact of the epidemic, in early April, the State Council issued the notice on effectively doing a good job in ensuring the smooth transportation and logistics of freight logistics. This meeting made detailed deployment again, requiring that "we should adhere to a game of chess throughout the country to ensure the smooth transportation and logistics and the normal operation of key industrial chain supply chains, anti epidemic and supply guarantee enterprises and key infrastructure."
Sixth, on monetary policy, the meeting called for "making good use of all kinds of monetary policy tools". There were few statements on monetary policy at this meeting, only the sentence "make good use of all kinds of monetary policy tools" and put it under the requirement of "accelerating the implementation of the determined policies". Therefore, the future focus of monetary policy may be to give full play to the effectiveness of the determined policies and measures. Recently, the regulatory authorities have focused on the introduction of monetary policy measures such as reducing the reserve requirement, reducing the provision and reducing the floating ceiling of deposit interest rate. By making good use of these tools, we expect to guide the reduction of LPR quotation next month, so as to effectively reduce the comprehensive financing cost of society.
Seventh, with regard to the incremental policy, the meeting requested that "we should pay close attention to the planning of incremental policy tools, strengthen camera regulation, and grasp the advance and redundancy of policies under the guidance of objectives". The growth target set by the two sessions in 1998 was 8%, but the impact of the Asian financial crisis on China that year far exceeded expectations. There was also a flood, and the growth rate in the first half of the year was far lower than 8%. Later, the central government made major decisions in a timely manner, adjusted the budget, issued additional treasury bonds, and used the raised funds for infrastructure construction. As a result, the economy rebounded strongly in the second half of the year, reaching 7.8% in the whole year, close to the predetermined target. It is speculated that the fiscal policy of 1998 may be used for reference to further complete the fiscal policy objectives.
Eighth, with regard to infrastructure policies, the meeting called for "to fully expand China's demand, give full play to the key role of effective investment, strengthen the guarantee of land, energy use and environmental assessment, and comprehensively strengthen infrastructure construction". On April 26, the central finance and Economic Commission meeting set the tone to comprehensively strengthen infrastructure construction, which was emphasized again at the Politburo meeting. In fact, in the face of the downward pressure of the economy, the effect of promoting consumption is relatively slow, and it is difficult and limited to promote exports. The key is to promote investment, and infrastructure investment is indeed one of the few quick effects. Combined with the above-mentioned formulation of "planning incremental policy tools", we speculate that incremental tools will also focus on infrastructure investment, and a new round of stable growth of infrastructure is imminent.
Ninth, with regard to the real estate policy, the meeting continued to emphasize "no speculation in housing", but put forward the new requirements of "supporting all localities to improve the real estate policy from the local reality, supporting the rigid and improved housing demand, optimizing the supervision of commercial housing pre-sale funds, and promoting the stable and healthy development of the real estate market". The real estate industry is related to the overall situation of macroeconomic stability. Considering stable growth, employment and credit, we need to stabilize the real estate industry chain. At the end of last year, the central economic work conference proposed to "implement policies for the city to promote the virtuous cycle and healthy development of the real estate industry". This conference went further, clearly supported all localities to improve real estate policies based on local conditions, and put forward specific measures to "optimize the supervision of commercial housing pre-sale funds". Under the guidance of this spirit, it will be natural and natural for all localities to further relax the real estate regulation and control policy.
Tenth, on the whole, we believe that this meeting is clearly beneficial to the composition of a shares. Since the beginning of the year, affected by a series of factors such as the Fed's interest rate hike, the crisis in Ukraine and a new round of epidemic in China, A-Shares have experienced a wave of significant adjustments. At the current time point, the Fed's expectation of raising interest rates has been fully reflected, the peak of the crisis in Ukraine has passed, the epidemic in Shanghai has eased significantly, and the negative factors tend to weaken. The meeting of the Political Bureau of the CPC Central Committee solved a series of concerns of the market, made practical and effective policy arrangements, and stabilized and boosted market expectations. With the introduction and implementation of the follow-up package of policies and measures, the plight of enterprises will be significantly alleviated, the macro-economy is expected to bottom up, and the stock market will also usher in a long lost allocation opportunity.
Risk tip: the deterioration of the epidemic situation increases the downward pressure on the economy, and imported inflation leads to policy adjustment.
