On April 29, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation and economic work. We interpret the following key points of this meeting:
I. in terms of situation judgment, the meeting clearly pointed out that the current "increased risks and challenges".
We believe that there are three main factors leading to increased downward pressure on the economy and increased uncertainty. First of all, since March, Shanghai, Jilin and other places have reappeared a new round of aggregated epidemic, which has affected the whole country, second only to the epidemic in Wuhan in early 2020. This round of epidemic has directly disturbed steady growth and brought certain pressure to the job market. This trend has been reflected in the second half of the first quarter, but the second quarter may be the main pressure stage. Secondly, the Ukrainian crisis broke out on February 24, with a sharp rise in international oil and food prices, making the global situation of high inflation worse, and the risk of imported inflation faced by China increased. Third, after the Spring Festival, China's property market has not yet warmed up, and real estate investment and housing related consumption are under pressure. In particular, the risks of some leading real estate enterprises are still exposed, which has become a risk point requiring key control.
Second, in terms of policy deployment, the meeting required to strengthen macro policy adjustment, including two aspects: first, the implementation of the determined policies should be accelerated; second, it was clearly proposed for the first time that "we should pay close attention to planning incremental policy tools, strengthen contingent regulation, and grasp the advance and redundancy of policies under the guidance of objectives."
We believe that the accelerated implementation of existing policies mainly includes: the pace of tax rebate, tax reduction and fee reduction will be further accelerated. It is expected that most of the 2.5 trillion tax rebate this year will be completed by the middle of the year. In the context of the impact of the epidemic and the high price of industrial products, these fiscal policies can directly improve the cash flow of enterprises and play a key role in ensuring the main body of the market and stabilizing jobs. Second, the pace of fiscal expenditure will also be ahead of schedule. The originally scheduled new local government special bonds "will be issued before the end of May, and the amount issued this year will be issued before the end of September" may be further advanced. This will provide a strong financial guarantee for infrastructure investment. We expect that the growth rate of infrastructure investment (excluding electricity) in the second quarter may reach about 10.0%, further 1.5 percentage points higher than that in the first quarter, directly driving the growth rate of GDP by about 1 percentage point.
In terms of monetary policy, it mainly means that banks should make full use of the incremental funds brought by the RRR reduction in April to speed up credit supply; At the same time, the implementation of structural monetary policies, including small agricultural support refinancing, scientific and technological innovation and pension refinancing, carbon emission reduction support tools, will be strengthened to provide precise support for weak economic links and key areas such as small and micro enterprises, scientific and technological innovation and green development, and boost the growth of total financial volume such as credit and social finance.
