Reading between the lines to analyze policy signals

The annual Central Economic Work Conference has always been regarded as the vane of economic development and policy direction. Although the duration of this year is shortened to two days compared with three days in previous years, we can feel that the information density and policy intensity released by this year’s conference are no less than those in previous years from the detail that the number of words in conference press releases is basically kept above 4,700 words. So, what policy signals are particularly worthy of attention?

A general tone: strive for progress in stability

The general tone is very important, which provides strategic thinking and methodology for doing a good job in economic work. It is often said that "governing a big country is like cooking a little fresh food", and the overall tone is to manage the whole, and it must have enough continuity and stability, so it cannot be changed. The general tone of this year’s Central Work Conference is still "Striving for Progress in Stability". Looking back, we will find that since 2012, the general tone of central economic work has been "Striving for Progress in Stability", and the practice of the new era for ten years has fully proved that China’s economy has indeed been "Striving for Progress in Stability" and has really achieved "Striving for Progress in Stability".

"Two unwavering"

"Two unwavering" is not a new formulation, but it puts forward new ideas.

It can be said that since the reform and opening-up, Chinese’s understanding of this issue has been deepened, and its position and expression in the central policy documents have become increasingly clear and gradually strengthened. At the 19th National Congress of the Communist Party of China, "unswervingly consolidating and developing the public sector of the economy, unswervingly encouraging, supporting and guiding the development of the non-public sector of the economy, and ensuring that all sectors of the economy use production factors equally in accordance with the law, participate in market competition fairly, and enjoy equal legal protection" was clearly written into the basic strategy of adhering to and developing Socialism with Chinese characteristics in the new era, which was further determined as a major policy of the party and the state. In November 2018, the General Secretary of the Supreme Leader emphasized at the symposium of private enterprises: "In the new journey of building a well-off society in an all-round way and building a socialist modern country in an all-round way, China’s private economy can only grow and cannot be weakened, not only can it not’ leave’, but also move towards a broader stage." These voices, full of a thorough understanding of China’s economy, are still ringing in my ears. Now, when China’s economy is facing extremely complicated and severe pressures and challenges, at such a heavyweight meeting as the Central Economic Work Conference, it is clearly declared that "we must be clear and unambiguous about the incorrect discussion on whether we adhere to the’ two unwavering’ in society." This attitude is rare and unprecedented in strength. I believe that this simple and powerful discourse will inject strong confidence into the state-owned enterprises that are facing the storm and the private economy that is struggling against the current.

Three "stability": stable growth, stable employment and stable prices.

China’s economic policy has always been pragmatic, so it has always emphasized "keeping the word steady", and this year is no exception. However, if we look closely at the press release of this Central Economic Work Conference, we will find that the "six stabilities" put forward since 2019, that is, "stabilizing employment, finance, foreign trade, foreign investment and expectations", have not appeared. The new expression is: "Focus on stabilizing growth, employment and prices". Xu Hongcai, deputy director of the Economic Policy Committee of China Policy Science Research Association, interpreted the spirit of the Central Economic Work Conference for the first time for many years. He told reporters that generally speaking, macroeconomic policies focus on several important goals, namely, economic growth, full employment, price stability and balance of payments. Internally, it is mainly the first three. At this year’s Central Economic Work Conference, special emphasis was placed on "stable growth, stable employment and stable prices", and these three stabilities were grasped. It should be said that the focus of the work has become more prominent. In addition, various economic indicators interact with each other. If these three indicators are stable, other aspects will naturally increase the possibility of stability.

According to the reporter’s observation on the report of the Central Economic Work Conference for many years, the ranking of the three "stabilities" is also very particular. Under the triple impact, the downward risk pressure on the economy has increased, and it is most urgent to push the economic growth back to a reasonable range as soon as possible. "Stable growth" naturally ranks first, and employment is the foundation of people’s livelihood, which involves the lives of thousands of people, and it is necessary to protect it closely. The international inflation level is high this year, and it has remained rare in China under the policy measures of all parties to ensure supply and stabilize prices.

Four Persistences: Seeking truth from facts, respecting laws, systematic concept and bottom line thinking.

The central economic work conference has programmatic significance for guiding the economic work in the second year, so every word contains profound meaning. After adhering to the general tone of striving for progress while maintaining stability this year, four words were used in succession, namely, "Insisting on seeking truth from facts, respecting laws, systematic concept and bottom line thinking", and taking practice as the standard to test the effectiveness of various policies and work, which can be said to have a clear realistic orientation and pertinence. Luo Zhiheng, chief economist and dean of the research institute of Yuekai Securities, was deeply touched by this. In his view, the Central Economic Work Conference faced the problem directly, frankly and honestly, made a full estimate of the severe challenges of the situation next year, and made a very decisive and direct response and deployment to the key issues of market and social concern, such as epidemic period, boosting development confidence, supporting platform economy, resolving real estate risks, and incorrect arguments about the private economy in society, which fully reflected the Communist Party of China (CPC)’s emphasis on ". Dong Yu, executive vice president of Tsinghua University China Planning Institute, has worked in the Central Finance Office and the Central Financial and Economic Committee for a long time, and participated in the drafting of documents of the Central Economic Work Conference many times, which is more comprehensive and profound. He said that every year’s press release contains a regular understanding of economic work, which is particularly practical this year. Seeking truth from facts means not being false and exaggerated, but aiming at formalism; Respect for the law means that you can’t rush forward without reality, and it is aimed at grasping the work by sports; The systematic concept is that you can’t make a sudden advance alone, and it is aimed at fallacy of composition; The bottom line thinking is that you can’t live without safety awareness, and it is aimed at blind optimism.Taking practice as the standard to test the effectiveness of various policies and work means that we should act in accordance with economic laws and put more emphasis on results-oriented, and we should resolutely fight against formalism and bureaucracy in our work, which embodies a highly pragmatic spirit.

Five major policies: finance, currency, industry, science and technology, and society.

This year’s Central Economic Work Conference particularly emphasized the strengthening of macro-policy control. This statement is not surprising, but the next five major aspects of key deployment make people clearly see the policy framework of economic control and understand the focus of future policy efforts. Namely, the five major policies of finance, currency, industry, science and technology and society.

Specifically, a proactive fiscal policy should be strengthened to improve efficiency. The key word is "afterburner". Zhang Lianqi, an economist, has served as a management accounting consultant for a long time in the Ministry of Finance. He told reporters that this means that the fiscal policy will maintain the necessary expenditure intensity next year, optimize the tools such as portfolio deficit, special debt and discount interest, and ensure fiscal sustainability and controllable local government debt risks while effectively supporting high-quality development. In addition, the central government’s transfer payments to local governments will also increase, which will promote the sinking of financial resources.

A prudent monetary policy should be precise and powerful, and the word eye lies in "precision". It is necessary to maintain a reasonable and sufficient liquidity, keep the growth rate of broad money supply and social financing scale basically matching the nominal economic growth rate, and guide financial institutions to increase support for small and micro enterprises, technological innovation, green development and other fields.

Industrial policy should be developed simultaneously with safety. Pay close attention to the transformation and upgrading of traditional industries and the cultivation and growth of strategic emerging industries, focus on strengthening the weak links in the industrial chain, and forge new industrial competitive advantages in the process of implementing the goal and task of carbon neutrality in peak carbon dioxide emissions.

Science and technology policy should focus on self-reliance and self-improvement. It is necessary to vigorously coordinate education, science and technology and talent work. Arrange and implement a number of major national science and technology projects, improve the new national system, improve the quality and ability of independent training of talents, and accelerate the introduction of high-end talents.

Social policy should firmly grasp the bottom line of people’s livelihood. Implement the policy of giving priority to employment, and put the promotion of youth employment, especially college graduates, in a more prominent position. We will improve the policy system of birth support, implement the policy of gradually delaying the statutory retirement age in a timely manner, and actively respond to the aging of the population. It can be said that every policy is problem-oriented, focusing on the prominent contradictions in the actual economic operation.

Six "overall plans": forming a joint force to promote high-quality development

General Secretary of the Supreme Leader has always attached importance to overall planning. In an exclusive interview with Russian TV station in Sochi, Russia in 2014, he said: "As a leader in China, we must make overall plans, balance comprehensively, highlight key points and drive the overall situation. Sometimes we should grasp the big and put the small, and sometimes we should take the small with the big and see the big with the small. To put it figuratively, we need to play the piano with ten fingers." This year’s Central Economic Work Conference put forward six "better plans" for the first time, that is, to better plan epidemic prevention and control and economic and social development, to better plan the effective improvement of economic quality and reasonable growth of quantity, to better plan the supply-side structural reform and expand domestic demand, to better plan economic policies and other policies, to better plan the domestic and international circulation, and to better plan the current and long-term development. This shows that with the increasingly severe and complicated situation at home and abroad, there are more and more factors that need to be considered as a whole. The timely proposal of "six overall plans" by the Central Committee is actually an initiative and a positive response. If we borrow the metaphor of the general secretary playing the piano, China’s economy will face a more difficult score next year. Naturally, it also needs more superb fingering and a more concentrated response.

Judging from the specific contents of the "six overall plans", in addition to coordinating the epidemic situation and economic development, the central government proposed to better coordinate the effective improvement of economic quality and the reasonable growth of quantity. In this regard, Wang Jun, director of the China Chief Economist Forum, said that it is more urgent to put "quality" before "quantity" and the requirement of "quality" is "effective" improvement. The rising importance of "quality" also means that grasping economic quality is the main direction in the future. Wu Sa, deputy director of the Economic Research Institute of China Macroeconomic Research Institute, said that the current domestic demand for investment and consumption is generally weak and there is a risk of further decline. There is great uncertainty in international global economic growth, and even the risk of recession, which will inevitably affect the growth of China’s imports and exports. Efforts should be made to expand domestic demand and give priority to restoring and expanding consumption. This is to make preparations and plans in advance. In the future, we should adhere to the strategic basis of expanding domestic demand, and at the same time pay more attention to deepening supply-side reform, improving supply capacity and quality, and form a higher level dynamic balance of "demand pulls supply, and supply creates demand".

How to do economic work next year? The central economic work conference has set the tone, and the press release also highlighted the sentence that economic work is complicated. We should proceed from the overall strategic situation, improve social and psychological expectations and boost development confidence, and do a good job with an open mind. The central authorities are very accurate, and the steady progress of the economy cannot be achieved without the confidence and determination of all Chinese, the spirit of striving for success and the sense of responsibility of "always worrying". Say a thousand words and ten thousand, a happy life is a struggle, let’s roll up our sleeves and go for it!(Reporter Zhang Qin Yue Qun Wu Yongjun)