"Steady word" is the premise and guarantee of high-quality development

□ High-quality development requires economic growth to be maintained within a reasonable range, and building a new development pattern requires maintaining a reasonable economic growth rate, and the two complement and complement each other. The main task of future economic work is to achieve "high-quality development" under the premise of ensuring "steady growth."

□ The most important thing to stimulate the vitality of market players is to increase the rescue and support for small and medium-sized enterprises. While continuing and implementing the institutional tax reduction and tax mitigation policy, it is necessary for governments at all levels to study new institutional tax reduction and fee reduction measures, reduce the burden on enterprises, reduce operating expenses, and improve policies such as R&D expenses plus deductions, value-added tax retention and tax rebates.

When setting the tone for next year's economic work, the Central Economic Work Conference held a few days ago pointed out: "It is necessary to take the lead in a steady manner and seek progress in a stable manner." This requirement is slightly different from the previous years' emphasis on "seeking progress in stability", and what is more striking is that the "steady word is the head" is placed before "seeking progress in stability", and the rich policy connotations contained in it need to be deeply understood and accurately grasped.

The policy focus once again emphasizes steady growth

The Politburo meeting held in April this year judged the economic situation as a "window period with less pressure to stabilize growth", so the focus of policy in the first three quarters was not stable growth, but more on structural adjustment and risk control. The meeting did not mention the "window period" again, but emphasized continuing to do a good job in the "six stability" and "six guarantees" work, continuously improving people's livelihood, focusing on stabilizing the macroeconomic market, keeping the economy operating within a reasonable range, and maintaining the stability of the overall social situation. This change in expression shows that the complexity of the internal and external environment of China's economy has further intensified, the uncertainty of economic operation is still relatively large, the economy is facing greater downward pressure, and the necessity of stable growth has risen. Stability is the main tone and the overall situation, and its policy implication is that in order to support stable growth, it is necessary to carry out the necessary local fine-tuning and structural relaxation as soon as possible.

Many people are worried that the emphasis on steady growth will not conflict with high-quality economic development. The author believes that the two are not contradictory, on the contrary, "stability" as the premise and foundation, the ultimate goal is to achieve "progress" or "high-quality development". High-quality development requires economic growth rate to be maintained in a reasonable range, and the construction of a new development pattern needs to maintain a reasonable economic growth rate, and the two complement each other and complement each other. The main task of future economic work is to achieve "high-quality development" under the premise of ensuring "steady growth."

"Steady word" faces five major challenges

The change and adjustment of the policy focus stems from the profound changes in the internal and external environment of economic operation, as well as from the uncertainty of economic entities' expectations for the future. This poses a major challenge to the stable operation of the economy, which is mainly manifested in five aspects:

First, the debt problem of real estate enterprises makes investors worry and doubt about the long-term development of the industry, and at the same time, as the sales area and sales of commercial housing continue to decline, the growth rate of real estate investment may decline, and reduce the driving force of related consumption, thereby reducing the momentum of macroeconomic growth and aggravating the downward pressure on the economy, which will become the biggest problem of stable economic growth next year.

Second, with the opening up of overseas and the repair of supply chains, the global economy will continue to recover in the future, and the gap between opening up at home and abroad may put pressure on the market share of China's exports. At the same time, the continuous appreciation of the renminbi and the gradual rise in production costs of enterprises have also reduced the competitiveness of export enterprises to a certain extent.

Third, although the market expects that the price of industrial products will fall rapidly next year, the biggest uncertainty in the evolution of inflation is that if a new round of more serious global epidemics is triggered by the Omikejong mutation, then not only will the global supply chain tension not be effectively alleviated, commodity prices will rise again, and it is possible that the stagflation in Europe and the high inflation in the United States this year will continue for a long time. The global structural inflation and economic contraction caused by the mismatch between supply and demand caused by the supply shock and the widening gap between supply and demand have a tendency to evolve towards the medium term.

Fourth, due to the joint impact of the new crown pneumonia epidemic, the expansion of the "scissors difference" between PPI and CPI, small and medium-sized enterprises have experienced short-term difficulties in operation, and some small and medium-sized enterprises are unwilling to increase investment even if they have obtained profits, but give priority to repaying debts or reducing the scale of new debt. This has led to a decline in the ability of SMEs to absorb employment.

Fifth, in the face of an increasingly serious and long-term inflation situation, the Fed is accelerating the reduction of its bond-buying program and may raise interest rates earlier than market expectations. The acceleration of the Fed's monetary policy normalization will have a huge spillover effect, which will have a significant spillover effect on global interest rates, exchange rates, cross-border capital flows, and asset prices, especially on the recovery of emerging and developing economies that have a slower recovery process and are more dependent on DOLLAR liquidity. China will also face the risk of high U.S. inflation and the impact of potential turmoil in financial markets.

Stable growth requires policy efforts and appropriate advances

In view of the prominent problems of high downward pressure, uneven recovery and high local risks in the current economic operation, it is necessary to formulate an economic revitalization plan focusing on high-quality development. To do a good job in economic work next year and stabilize the macroeconomic market, the author believes that we should pay attention to the following five aspects.

First, fiscal and monetary policies should be moderately expanded to support the real economy on a positive and prudent tone. Under the background of the triple pressure of China's economic development facing contraction in demand, supply shock and expected weakening, the Central Economic Work Conference clearly pointed out that macro policies should be stable and effective. The so-called "steady and effective" means that under the premise of a steady tone, the necessary expansion and marginal relaxation are maintained to support the real economy.

Next year's fiscal policy should be more active, the intensity of expenditure should be greater, the progress of expenditure should be faster, the tax reduction and fee reduction should be more accurate, effective and sustainable, and the structural moderate relaxation should be used to promote the smooth operation of the economy and the optimization of the economic structure, so as to ensure that China's economy can operate in a reasonable range. At present, the government's leverage ratio is still relatively low, and the central government can appropriately increase leverage to avoid the rise of hidden local government debt. The budgetary fiscal deficit rate can be maintained near 3.2% or even slightly higher, the amount of new local special debt can be slightly increased to about 3.8 trillion yuan to 4 trillion yuan, and the scale of new general debt can be about 0.8 trillion yuan to 1 trillion yuan, all of which need to be slightly higher than in 2021. At the same time, the focus of fiscal policy should focus on small and medium-sized enterprises, individual industrial and commercial households, manufacturing, risk mitigation, and the realization of green development, employment promotion and people's livelihood, and appropriately advance infrastructure construction, with public expenditure to drive private capital investment.

Next year's monetary policy should maintain a certain forward-looking and play a more structural role. A variety of tools should be adopted, such as flexible open market operations, moderate replacement of expired MLF, and active use of structural financial instruments such as carbon emission reduction support tools to maintain reasonable and sufficient liquidity and support the development of the real economy. Further promote the structural adjustment of credit, guide financial institutions to increase support for the real economy, especially small and micro enterprises, scientific and technological innovation, and green development, and achieve "precision drip irrigation" for credit support in key areas and weak links. To this end, it is recommended that monetary policy should create a good financial environment to support economic development, promote moderate credit expansion, reduce financing costs, reduce the burden on enterprises, resolve potential risks, boost market confidence, restore investment growth, and expand total demand and the scale of social financing.

Second, multiple measures should be taken to vigorously support the development of small and medium-sized enterprises. The most important thing to stimulate the vitality of market players is to increase the rescue and support for small and medium-sized enterprises. While continuing and implementing the institutional tax reduction and tax reduction policy, it is necessary for governments at all levels to study new institutional tax reduction and fee reduction measures, reduce the burden on enterprises, reduce operating expenses, improve policies such as R&D expense deductions, value-added tax retention and rebates, etc.; vigorously implement various policies for inclusive finance, improve policy effects, and help small and medium-sized enterprises enhance their core competitiveness; focus on solving the problem of large enterprises defaulting on small and medium-sized enterprises, establish a long-term governance mechanism with the focus on improving the system, and rectify the abuse of market advantages to maliciously default on accounts. Ensure the convenience of payment settlement for small and medium-sized enterprises.

Third, promote the healthy development and virtuous circle of the real estate industry. The healthy development and virtuous circle of the real estate industry are conducive to achieving steady progress and high-quality development of the economy. To achieve a virtuous circle in the real estate industry, we should avoid the ups and downs of the market, so that all aspects of real estate sales, land purchase, financing and so on are in normal operation and coordinated with macroeconomic operations. Relevant departments should pay attention to stabilizing market expectations, optimizing regulatory policy means, adhering to the principles of marketization and rule of law, focusing on preventing large-scale liquidity risks in the real estate industry, and avoiding the "risk of disposal risks". On the basis of controllable risks, financial institutions should inject liquidity into the real estate market as soon as possible, focusing on meeting the reasonable financing needs of first-home and improved housing and the reasonable financing needs of high-quality real estate development enterprises to alleviate liquidity pressure.

In the long run, to achieve the healthy development and virtuous circle of the real estate industry, it is necessary to accelerate the reform of the fiscal and taxation system, promote the optimization and upgrading of local industries, and reduce the dependence of local governments on the land market; promote the reform of the land market, enhance the elasticity of land supply, explore long-term mechanisms such as the linkage between people and land, improve the degree of synergy between land supply and population flow and the development trend of the metropolitan area, and achieve a virtuous circle between the industry and the population and the city; vigorously develop the construction of affordable housing and the rental market, and provide reasonable and stable financial support for it. To hedge the downside of real estate investment.

Fourth, accelerate scientific and technological innovation and industrial upgrading in the era of digital intelligence. The meeting particularly emphasized the acceleration of digital transformation and the upgrading of traditional industries. The era of digital intelligence not only means digital industrialization, but also requires industrial digitalization. To this end, it is necessary to strengthen the national strategic scientific and technological strength, improve the system and mechanism of scientific and technological innovation, vigorously develop emerging industries and future industries, transform and upgrade traditional industries, enhance the core competitiveness of manufacturing, and accelerate the cultivation of a large number of "specialized and specialized" enterprises. We should speed up the pace of technological research and innovation, stimulate the vitality of talent innovation, strengthen the docking of the innovation chain and industrial chain, adhere to the use of market-oriented mechanisms to stimulate enterprise innovation, use tax preferential mechanisms to encourage enterprises to increase investment in research and development, efficiently use financial policies to support the research and development and application of key core technologies, stimulate innovation-driven endogenous power, enhance enterprises' technological innovation capabilities, and strive to promote enterprises to lead high-quality development with innovation, and achieve a virtuous cycle of science and technology, industry and finance.

Fifth, implement the policy of giving priority to employment and provide necessary assistance to specific groups in need. The meeting stressed that it is necessary to "ensure employment and people's livelihood and ensure the main body of the market." To this end, we should continue to adhere to the policy of giving priority to employment, persist in placing the work of stabilizing employment in the priority position of economic and social development and macro policies, exert efforts from both the demand and supply sides of the labor market, protect market players, especially small and medium-sized and micro enterprises, strengthen the support of the underlying policy, and ensure the stability of the employment situation. Targeted tax reductions or deferred tax payments can be adopted to ensure employment and people's livelihood through the insurance of market entities; broaden the employment channels of key groups, guide workers to adapt to new employment through vocational training, and improve the social security of flexible employment personnel. In terms of ensuring people's livelihood, the focus is on actively providing assistance to those low-income people who have been most affected by the epidemic, including continuously increasing fiscal transfer payments, expanding social security coverage, improving social security standards, and subsidizing specific groups. (Wang Jun, Chief Economist of Zhongyuan Bank)

Source: Shanghai Securities News