Breaking News! Full Analysis of the Central Economic Work Conference (with Infographics)

　　The Central Economic Work Conference was held in Beijing from December 11 to 12. The meeting required that next year we adhere to seeking progress while maintaining stability, promote stability through progress, establish before breaking, and introduce more policies conducive to stabilizing expectations, growth, and employment. It emphasized being proactive in transforming development methods, adjusting structures, improving quality, and increasing efficiency, continuously consolidating the foundation for steady and positive progress.

　　It can be seen that, from emphasizing "stability" to placing more emphasis on "progress" and "establishment," this meeting conveyed a more positive policy signal. China Minsheng Bank's Chief Economist Wen Bin analyzed that, the so-called "promote stability through progress" means establishing more appropriate goals and introducing more unified policies to solve stability issues through development. "Establish before breaking" means properly managing the connection and transition between old and new driving forces and development models, avoiding blind haste or a "one-size-fits-all" approach.

　　According to ICBC International's Chief Economist Cheng Shi, "promote stability through progress, establish before breaking" emphasizes three dimensions: First is high-quality development. This year's meeting particularly emphasized the importance of high-quality development, especially in technological innovation and cultivating endogenous momentum. Second is the coordinated effort of macro policies. This year's policy tone pays more attention to the coordination and consistency among macro policies. Through the combination of fiscal and monetary policies, it aims to stabilize market expectations and boost confidence among market participants. Third is the importance of effectively expanding demand. Leveraging the fundamental role of consumption and the key role of investment to promote a virtuous cycle between consumption and investment, effectively offsetting potential external demand contraction through internal circulation synergy.

　　Macro policies will maintain continuity and stability.

　　Against the backdrop of the current economic recovery, the direction of macro policies next year is the focus of market attention. Regarding the macro policy orientation for 2024, the meeting required continuing to "strengthen macro-control efforts," meaning macro policies will maintain continuity and stability, which will help improve social expectations and boost market confidence.

　　At the same time, the meeting required that " strengthen counter-cyclical and cross-cyclical macro policy adjustments". Wang Qing, Chief Macro Analyst at Orient Securities, analyzed that this means macro policies will pay more attention to balancing short and long terms, firmly avoiding excessive liquidity injections to prevent future high inflation and financial risks. This corresponds to the emphasis on "moderation" in both fiscal and monetary policies.

　　The meeting required continuing to implement proactive fiscal policies and prudent monetary policies, strengthening innovation and coordination of policy tools. Among them, proactive fiscal policy should moderately increase efforts and improve quality and efficiency. Wen Bin analyzed that "moderately increasing efforts" means fiscal policy will timely and appropriately expand policy efforts based on economic conditions to consolidate the foundation for economic stabilization and improvement. "Improving quality and efficiency" focuses on optimizing structure and strengthening management to further improve policy implementation mechanisms and effectively enhance policy effectiveness and fund efficiency.

　　Regarding monetary policy, the meeting emphasized that prudent monetary policy should be flexible, moderate, precise, and effective. Maintain reasonably ample liquidity, with social financing scale and money supply matching economic growth and price level expectations. In this regard, Dong Ximiao, Chief Researcher at Zhaolian, analyzed that monetary policy in 2024 should increase implementation efforts while maintaining a prudent tone, being more forward-looking, effective, and precise. First, increase cross-cyclical and counter-cyclical adjustment efforts, conduct forward-looking pre-adjustments and fine-tuning to help smooth macroeconomic cycle fluctuations and external shocks; Second, ensure reasonably ample liquidity in total volume and moderately reduce the comprehensive social financing cost in price; Third, make good use of existing structural monetary policy tools, create new tools if necessary, and guide and support financial institutions to do the "five major tasks" well.

　　In addition, the meeting also emphasized enhancing the consistency of macro policy orientation. Strengthen coordination among fiscal, monetary, employment, industrial, regional, technological, and environmental policies, include non-economic policies in the consistency assessment of macro policy orientation, strengthen policy coordination, ensure efforts are aligned, and form synergy.

　　"Especially, make good use of the combination of proactive fiscal policy and prudent monetary policy to more precisely, powerfully, and effectively boost consumption and increase investment, fully leveraging the fundamental role of consumption and the guiding role of government investment on private and foreign investment," said Dong Ximiao.

　　Promoting industrial innovation through technological innovation.

　　Compared with last year's Central Economic Work Conference, this meeting made "leading the construction of a modern industrial system through technological innovation" the first key task, reflecting the national level's high emphasis on technological innovation and industrial development.

　　"If the 2023 industrial policy emphasized filling gaps, strengthening domestic substitution, and improving safety levels; then the focus in 2024 is technology leadership and forward-looking layout." said Luo Zhiheng, Chief Economist at Yuekai Securities.

　　From the specific policy orientation, this meeting clearly mentioned important tasks such as "developing new quality productive forces" and "promoting new industrialization." Gao Ruidong, Chief Economist at Everbright Securities, analyzed that the core idea is to use original and disruptive innovation as the underlying support, improve the safety level of industrial and supply chains, strengthen industrial digitalization and intelligent transformation, thereby promoting the construction of a modern industrial system.

　　The meeting proposed "improving the new national system, implementing high-quality development actions for key manufacturing industry chains, strengthening quality support and standard guidance, enhancing the resilience and safety of industrial and supply chains," and also required "extensive application of digital intelligence and green technologies, accelerating the transformation and upgrading of traditional industries." According to Luo Zhiheng, this means that at the critical point of old and new momentum conversion, policies will further support key industries to enhance global influence and promote traditional industry transformation, which will also bring technological renovation investment, helping stabilize the economic fundamentals.

　　It is worth noting that, in terms of policy guarantees, this meeting mentioned "encouraging the development of venture capital and equity investment." Luo Zhiheng analyzed that traditional fiscal funds are difficult to adapt to the development demands of emerging industry enterprises, while the mechanism of venture capital and equity investment sharing risks and benefits can provide stable long-term funds for related enterprises, facilitating a virtuous cycle of "technology-industry-finance." It is expected that support for venture capital will be further increased next year. On one hand, more leniency will be given in investment scope, investment strategy, leverage applicability, and duration; on the other hand, more convenience will be provided in investment exit and other aspects.

　　Form a virtuous cycle of mutual promotion between consumption and investment

　　Since the beginning of this year, efforts to restore and boost domestic demand have made some progress, but the growth momentum is still unstable, and insufficient demand continues to constrain economic recovery. In response, the meeting proposed under "focusing on expanding domestic demand" that "potential consumption should be stimulated, effective investment expanded, and a virtuous cycle of mutual promotion between consumption and investment formed." Compared with previous statements, it emphasizes "potential," "effective," and "virtuous cycle."

　　Wen Bin believes that linking consumption and investment in this meeting means that policies will no longer stimulate consumption and investment in isolation but will look to the long term, balancing the improvement of market economic operation efficiency, striving to achieve a virtuous cycle of mutual promotion between investment and consumption, pursuing a policy effect of "1+1>2," and enhancing the sustainability of domestic demand growth.

　　Gao Ruidong also expressed a consistent view. In his opinion, the meeting's proposal to "form a virtuous cycle of mutual promotion between consumption and investment" means that future consumption and investment will achieve closer coordination, breaking domestic circulation bottlenecks. On one hand It is necessary to strengthen supply-side structural reform with "effective investment," improve supply quality to meet the continuously expanding consumption demand of residents, and stimulate "potential consumption"; On the other hand In the process of expanding investment, it will also effectively drive an increase in residents' income through chains such as goods or service purchases. In addition, optimizing the income distribution structure and expanding the middle-income group will also help enhance the overall social consumption willingness, which in turn promotes investment growth.

　　In Luo Zhiheng's view, expanding domestic demand in 2024 still needs to focus on two main aspects: On one hand To boost consumption, it is necessary to address two key issues: insufficient resident consumption capacity and weak consumption willingness. On the other hand While expanding investment, the benefits of investment must be comprehensively considered, allocating more funds to support major national strategies, promote industrial structure upgrading, and improve people's livelihood and address shortcomings.

　　From the perspective of promoting a virtuous cycle, Wen Bin believes that next year's investment direction will focus on supporting key livelihood areas that match final demand, such as charging piles and battery swap stations, elderly care and childcare facilities, and rural logistics systems. The demand expansion brought by consumption development will also drive investment in related fields, thereby achieving supply-demand matching and a virtuous cycle.

　　Continuously and effectively prevent and resolve risks in key areas

　　The meeting proposed "continuously and effectively preventing and resolving risks in key areas," which, compared with last year's meeting statement of "effectively preventing and resolving major economic and financial risks," emphasizes "continuous" and "key areas," meaning that risk prevention work must continue to be strengthened.

　　Wen Bin analyzed that the meeting emphasized the need to "coordinate the resolution of risks in real estate, local government debt, and small and medium-sized financial institutions," indicating that one of the key points for continuously and effectively preventing and resolving risks in key areas in the future is to comprehensively consider the interrelationships among this key "risk triangle."

　　Among them, the meeting paid considerable attention to actively and prudently resolving real estate risks, proposing to "actively and prudently resolve real estate risks, treat the reasonable financing needs of real estate enterprises of different ownership equally, and promote the stable and healthy development of the real estate market. Accelerate the construction of affordable housing, 'dual-use' public infrastructure, and urban village renovation, the 'three major projects.' Improve related fundamental systems and accelerate the construction of a new real estate development model," continuing to implement from the supply side, demand side, and new model aspects.

　　Real estate is a pillar industry in China, and the real estate market is linked to many upstream and downstream industries. Its virtuous cycle is of great significance to economic recovery and development. Promoting a virtuous cycle between finance and real estate is not only necessary for the healthy and stable development of the real estate market but also for preventing and resolving financial risks. Industry experts believe that as the effectiveness of the real estate policy "combination punches" becomes more apparent, market expectations are expected to gradually recover.