Main points:
Event: on April 29, 2022, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation and economic work, and review the national talent development plan during the 14th Five Year Plan period.
The core conclusion of this meeting is that China has a strong and positive attitude towards many shares. That is, under the new challenges, we should firmly set the 5.5% target, pay more attention to implementation and have an attitude, and the attitude itself is a result; We should pay attention to the policy of reducing the temperature of the epidemic and the direct relief of real estate enterprises, and pay attention to the policy of reducing the temperature and pressure of the epidemic; The introduction of policies will be accelerated and may be increased in the future, focusing on expanding infrastructure and stabilizing real estate, considering promoting consumption and stabilizing foreign trade. On the whole, this meeting will help boost market confidence. If the epidemic does not deteriorate significantly, the second quarter may be an economic low, and the follow-up will gradually improve. Maintain the previous judgment, that is, recommend stable growth sectors in the second quarter, such as infrastructure and real estate; In the second half of the year, the structural price increase opportunities of recommended consumption and the "dilemma reversal" opportunities of some industries. In addition, the meeting made comprehensive arrangements for epidemic prevention and control, steady growth and other policies, with important highlights in risk prevention and control, loose real estate supply and demand, stable capital market and normalized supervision of platform economy.
What did the Politburo meeting say in general and why are you firmly optimistic about China?
This meeting is a meeting with attitude, temperature and strength. We firmly believe in China.
1) first of all, have an attitude: in the complex situation of changes in a century and the superposition of epidemic situations in a century, under the new challenges of conflicts between Russia and Ukraine outside and repeated epidemic situations inside, and in the face of interwoven and overlapping situations such as big country game, geo war, overseas tightening, repeated epidemic situations, climate change and energy reform, China still adheres to the growth target of 5.5%, and requires the implementation of policies, which reflects the policy attitude, The attitude itself is a result, that is, the economy will not be too bad at the end of the year.
2) Secondly, there is temperature: under the pressure of repeated epidemic and real estate downturn, the policy focuses on helping enterprises to rescue, reducing taxes and fees, ensuring market players and stabilizing employment, monetary policy focuses on direct and consequential credit, industrial policy focuses on ensuring supply and stable price, and development focuses on the safety of all parties, which reflects the temperature of the policy;
3) finally, there is strength: that is, we should not only do a good job in the determined policies and speed up the introduction, but also pay close attention to the planning of incremental policy tools, that is, after the epidemic situation improves, the policies may be increased, focusing on expanding infrastructure and stabilizing real estate. At the same time, we also mentioned the aspects of normalized supervision of platform economy, promoting consumption and stabilizing foreign trade, which reflects the strength of the policies.
On the whole, we believe that this meeting will help boost market confidence. If the epidemic does not deteriorate significantly, the second quarter may be an economic low point, and the follow-up will gradually improve. Maintain the previous judgment, that is, recommend stable growth sectors in the second quarter, such as infrastructure and real estate; In the second half of the year, the structural price increase opportunities of recommended consumption and the "dilemma reversal" opportunities of some industries.
The general tone of the policy: a century of changes, internal and external disturbances, and the economy is facing new challenges, but stability is the key, and the policy should be implemented in place.
1. Increased difficulties and challenges: the meeting pointed out that "in the face of the complex situation of the superposition of Centennial changes and century epidemics, the achievements have not come easily", "the covid-19 pneumonia epidemic and the Ukrainian crisis have led to increased risks and challenges, the complexity, severity and uncertainty of China's economic development environment have increased, and new challenges are faced in stabilizing growth, employment and prices", which basically continued the tone delivered by the March 29 standing committee meeting, That is, "the current international situation is becoming more complex and severe, China's development is facing new challenges, and the downward pressure on the economy is further increasing". Since the beginning of the year, the conflict between Russia and Ukraine has continued to heat up, the political game has become more complex, and exacerbated global stagflation; The Fed's interest rate hike and contraction accelerated, causing disturbance to the exchange rate and capital market of emerging market economies; Since the end of February, China's epidemic has been sporadic and turned to massive aggregation in April, which has a comparable impact on some provinces and cities. In the first quarter of 2020, it will cause great downward pressure on the economy in the second quarter of this year. Looking back, the 20th National Congress of China will be held in the second half of the year, and the United States will usher in the mid-term election, which will have a certain impact on the two countries' political and foreign policies. Economic and social development is facing "new challenges" due to the interweaving and superposition of big country game, geopolitical war, overseas tightening, repeated epidemic, climate change and energy reform.
2. Stabilize the word, boost confidence and implement it in place. We should not only prevent the epidemic, but also stabilize the economy. The meeting pointed out that "it is very important to do a good job in economic work and effectively protect and improve people's livelihood. We should strengthen confidence, overcome difficulties and ensure that the major policies and principles of the CPC Central Committee are implemented in place", aiming to boost growth confidence and ensure the implementation of policies. In addition, the meeting stressed that "the epidemic situation should be prevented, the economy should be stable and development should be safe", pointing out that future policies should pay attention to the balance of the triple relationship between epidemic situation, economy and development.
Specific policy arrangements: adhere to dynamic clearing of the epidemic situation; Strive to achieve the annual goal; Macro policies should be accelerated; Steady growth is more focused on investment.
1. The epidemic policy is still dynamically cleared, but the expression is more positive. In April, the epidemic gradually shifted from multi-point spread and wide-ranging and frequent occurrence in March to local aggregation, with fluctuations and downward trend across the country. As of April 29, 18781 newly confirmed cases had been added in the whole country (excluding Shanghai), with a month on month decrease of 51.7%, of which 73.3% of the provinces had improved compared with the previous month, and 43821 asymptomatic infections had been added in the whole country (excluding Shanghai), with a month on month increase of 38.6%. In the first quarter, Jilin, Guangdong and other regions with severe epidemic situation were better controlled. At the same time, the clean-up battle in Shanghai has achieved initial results. The "quantity" is still high, but the inflection point has emerged.
In terms of epidemic situation, the meeting called for "adhering to external defense input and internal defense rebound, adhering to dynamic zeroing, protecting people's life safety and health to the greatest extent, and minimizing the impact of the epidemic on economic and social development"; On April 11, the joint prevention and control mechanism of the State Council selected eight cities such as Shanghai, Suzhou, Ningbo and Guangzhou as pilot areas to partially loosen the isolation policy; On April 29, the Health Commission pointed out that "the fight against Omicron does not mean that it must be the whole city's nucleic acid detection, let alone the whole city's global sealing and control". Both point to the overall policy of "dynamic clearing", but the follow-up policies will better deal with the balance between anti epidemic and economic development, further promote the resumption of work and production of enterprises, and ensure the stable operation of employment and economy.
2. Strive to achieve the annual economic target, and still focus on the target of 5.5%. The meeting demanded that "we should strengthen macro policy regulation, stabilize the economy, strive to achieve the expected goal of economic and social development for the whole year, and keep the economic operation within a reasonable range". On the one hand, it means that we should still strive to achieve the annual development goal of 5.5%, and respond to the market's concerns about weakening the goal; On the other hand, the epidemic has had a great impact on the economy of some provinces and cities in the short term. From the perspective of high-frequency indicators, since April 2022, the congestion delay index of 100 cities has decreased by 3.77% on average year-on-year, the passenger volume of 10 cities has decreased by 44.83% on average year-on-year, and the cement delivery rate in East China has increased significantly, which will significantly drag down the GDP in the second quarter. Therefore, given that the disturbance of the epidemic situation is still large and the target is 5.5%, there can be some room for the actual results.
3. Macro policies will be accelerated.
1) accelerate the launch of the determined policies. The meeting pointed out that "we should speed up the implementation of the determined policies, implement the policies of tax rebate, tax reduction and fee reduction, and make good use of various monetary policy tools", which means that the implementation of the macro policies that have been considered forward should be accelerated, which may include more advance of special bonds (accelerating the issuance in the second quarter, accelerating the use in the second and third quarters, and forming support for infrastructure); Implement tax rebate, tax reduction and fee reduction (under the disturbance of Russia Ukraine conflict and epidemic situation, the profits of industrial enterprises in the first quarter showed an obvious pattern of "strong country and weak people", "rising in the upper and middle reaches and falling in the lower reaches", while private enterprises and downstream manufacturing and consumer enterprises are the main force to stabilize employment, so tax rebate, tax reduction and fee reduction should be implemented well); Make good use of various monetary policy tools (rather than emphasizing certain monetary policy tools).
Since the Federal Reserve may raise interest rates continuously from May to June, the speed is fast before and slow after, the interest rate spread between China and the United States is facing inversion, and China's liquidity is still reasonably abundant, it is difficult to comprehensively cut interest rates or reduce reserve requirements in the short term. The subsequent central bank policies may focus on direct access and credit relief, such as increasing the implementation of structural monetary policy tools such as refinancing, using small refinancing to support agriculture and two carbon reduction tools, transportation and logistics, scientific and technological innovation There is still the possibility of reducing LPR in tools such as Pratt & Whitney pension refinancing, which aims to increase the policy's efforts to help enterprises rescue, enhance the direct access, and contribute to the realization of credit relief. 2) The policies that have not been issued are expected to be launched. The meeting pointed out that "we should pay close attention to planning incremental policy tools, strengthen camera regulation, and grasp the advance and redundancy of policies under the goal guidance". It is pointed out that after the epidemic situation is gradually alleviated, the policy strength may still be increased, so as to strive to achieve the goals of the two sessions, such as 5.5% of GDP. The policy focuses on more advance (advance) and greater efforts (redundancy). For example, greater investment in infrastructure construction, including special treasury bonds and consumer bonds, is still within the range of options in the toolbox, although it is difficult to launch in the short term.
4. Steady growth is more focused on investment.
The main focus of steady growth is investment. The meeting pointed out that "we should make every effort to expand China's demand, give full play to the key role of effective investment and comprehensively strengthen infrastructure construction". Combined with the meeting of the central financial and Economic Commission on April 26, it was emphasized that "we should comprehensively strengthen infrastructure construction and build a modern infrastructure system". New and old infrastructure should make concerted efforts, and the certainty of high growth of infrastructure should be further enhanced. In addition, the meeting also mentioned giving play to the leading role of consumption, stabilizing the market players, doing a good job in the relief and assistance of the epidemic, ensuring the supply and price of energy and preparing for spring ploughing. It pointed out that during the epidemic period, ensuring the market players and helping enterprises to rescue is still the focus, and ensuring food security; The post epidemic consumption stimulus policy is still expected to be introduced; Under the disturbance of the conflict between Russia and Ukraine, we should continue to ensure the supply and price of energy; In addition, special emphasis was placed on the stability of people's livelihood, employment and supply chain during the epidemic period, so as to ensure the operation of urban core functions and maintain the stability of the overall social situation. Combined with the above "development should be safe", it should mean that the overall security and stability of the overall social situation should be achieved before the 20th National Congress.
What are the highlights of the meeting? The important highlights of the real estate market include the loosening of economic supply and demand platforms and the normalization of capital supply and control.
1. Hold the risk bottom line. The meeting pointed out that "to effectively control key risks and hold the bottom line of no systemic risks", we should stabilize internal and external, epidemic, social, economic, financial and other risks at the upcoming 20th National Congress.
2. The marginal loosening of real estate continues, and the supply and demand levels may be improved in the future. The meeting continued the general tone of "no speculation in housing", but put more emphasis on the implementation of policies due to the city, and alleviated the downward risk of real estate from the demand and supply side, such as "supporting all localities to improve real estate policies based on local conditions, supporting rigid and improved housing demand, and optimizing the supervision of pre-sale funds of commercial housing". Combined with the decline of real estate investment in March and the expansion of the decline in the opening and completion of land acquisition sales; The relief effect of financial pressure on the financing side is still not obvious. We maintain our previous view that since the beginning of spring, more than 70 cities have issued loose real estate policies, mainly in the third and fourth tier cities, and the regulatory measures are gradually comprehensive. However, in the short term, it is difficult to recover the sales - financing - investment chain, and the policy of "stabilizing real estate" still needs to be further strengthened.
3. Stabilize the capital market. The meeting was first released in the form of television at noon, and the release pointed out that "we should respond to market concerns in a timely manner, steadily promote the reform of the stock issuance registration system, actively introduce long-term investors and maintain the smooth operation of the capital market", aiming to stabilize the capital market. Recently, affected by the conflict between Russia and Ukraine, the US Federal Reserve raising interest rates, the upside down of China US interest rate spread and the repeated epidemic in China, there is a certain risk of capital outflow, and the confidence of China's capital market is under pressure. 3.16 the meeting of the finance committee pointed out that "actively introduce policies beneficial to the market and carefully introduce contractive policies", the introduction of the early pension system to guide long-term funds into the market, and the statement of the Politburo meeting will help stabilize the confidence of the capital market and promote the long-term healthy development of the capital market.
4. Normalized supervision of platform economy, with neutral and slightly positive expression. For the platform economy, it was required last year to "oppose monopoly and prevent disorderly expansion of capital". This year's two sessions pointed out that "we should correctly understand and grasp the characteristics and behavior laws of capital, support and guide the standardized and healthy development of capital", that is, we should focus on support and guidance. The Politburo meeting further proposed to "promote the healthy development of the platform economy, complete the special rectification of the platform economy, implement normalized supervision, and introduce specific measures to support the standardized and healthy development of the platform economy", pointing to the possible transformation of the platform economic management from rectification to normalized supervision, focusing on guiding its healthy development.
Other points
Focusing on me, "we should adhere to running our own affairs and speed up the construction of a new development pattern"; Stabilize foreign trade and foreign investment under the disturbance of Russia, Ukraine and the epidemic, that is, "actively respond to the demands of foreign-funded enterprises for convenience in doing business in China, and stabilize the basic market of foreign trade and foreign investment"; Pay attention to the implementation of the policy, that is, "leading cadres at all levels should have a sense of responsibility of 'always worrying' in their work, act as, be realistic and pragmatic"; Short term interference should not evolve into growth risk, that is, "prevent all kinds of 'Black Swan' and 'grey rhinoceros' events"; For other matters, prepare the national talent development plan during the 14th Five Year Plan period and firmly establish the talent strategy.
Risk tips
The economic downturn was faster than expected, and the implementation of policies was less than expected.
