Set the tone in 2024!Central Economic Work Conference: A prudent monetary policy should be flexible, moderate, precise and effective

Every reporter: Xiao Shiqing Every editor: Zhang Yiming

According to Xinhua News Agency, from December 11 to 12, the Central Economic Work Conference was held in Beijing, which comprehensively summarized the economic work in 2023, deeply analyzed the current economic situation, and systematically deployed the economic work in 2024.

The meeting emphasized that next year, we should focus on promoting high-quality development, highlight the key points, grasp the key, and do a solid job in economic work. Regarding monetary policy, the meeting pointed out that a prudent monetary policy should be flexible, moderate, precise and effective. Liquidity should be kept reasonably abundant, and the scale of social financing and money supply should be commensurate with the expected targets of economic growth and price levels. We should give full play to the dual functions of monetary policy tools, revitalize the stock, improve efficiency, and guide financial institutions to increase support for scientific and technological innovation, green transformation, inclusive small and micro enterprises, and digital economy.

Wang Qing, chief macro analyst of Oriental Jincheng, pointed out that "flexibility and moderation" means that under the prospect that the price level will still run at a low level in 2024, it will focus on boosting domestic demand and supporting the resolution of local debt risks, and there is room for the central bank to cut interest rates and reserve requirements in 2024. In 2024, the US and European central banks are expected to turn to interest rate cuts, which also provides more room for mainland central banks to flexibly implement monetary policy. Combined with the expectation of interest rate cuts, the market interest rate center has the potential to further decline slightly in 2024, and the market liquidity will continue to be reasonably abundant as a whole.

He judged: "Comprehensive support for medium-to-high-speed economic growth, revitalization of existing loans, efforts to resolve local debt risks and other influencing factors, the scale of new credit and social financing in 2024 will increase slightly compared with the previous year." ”

A prudent monetary policy should be flexible, moderate, precise and effective

The reporter of "Daily Economic News" noted that the Central Economic Work Conference proposed that "a prudent monetary policy should be flexible, moderate, precise and effective", which is consistent with the statement at the Politburo meeting held on December 8. Compared with the description of monetary policy at last year's Central Economic Work Conference, this year's overall continuation of last year's formulation, but there have also been some adjustments.

Last year's Central Economic Work Conference pointed out: "A prudent monetary policy should be precise and powerful. It is necessary to maintain reasonable and abundant liquidity, keep the growth rate of broad money supply and social financing scale basically matching the growth rate of the nominal economy, and guide financial institutions to increase support for small and micro enterprises, scientific and technological innovation, green development and other fields. Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level, and strengthen the financial stability guarantee system. ”

At this year's meeting, it was proposed that monetary policy should still be precise and powerful, but the new proposal was "flexible and moderate". In addition, the expression "keeping the growth rate of the broad money supply and the scale of social financing basically matching the growth rate of the nominal economy" has been adjusted to "the scale of social financing and the money supply are matched with the expected targets of economic growth and price levels".

Regarding the structural monetary policy, the meeting pointed out that it is necessary to give full play to the dual functions of the total amount and structure of monetary policy tools, revitalize the stock, improve efficiency, and guide financial institutions to increase support for scientific and technological innovation, green transformation, inclusive small and micro enterprises, and digital economy. Promote the steady and moderate decline of comprehensive social financing costs. Promote the steady and moderate decline of comprehensive social financing costs. Maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

Wang Qing pointed out that the monetary policy emphasizes "precision and effectiveness", which means that the "persistence in deepening the structural reform of the financial supply side" emphasized by the Central Financial Work Conference at the end of October will be concretely implemented, and the structural monetary policy tools will be further relied on in 2024 to guide more financial resources to flow to major strategies, key areas and weak links such as scientific and technological innovation, advanced manufacturing, green development, small and micro enterprises and the real estate industry. He judged that focusing on providing long-term low-cost funds for the "three major projects" such as the construction of peace-emergency dual-use infrastructure, the transformation of urban villages, and the construction of affordable housing, PSL may be released again in 2024, or the central bank may create new targeted support tools.

Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, said that the prudent monetary policy is expected to continue to be positive, but emphasizes policy coordination, precision and effectiveness, and market liquidity remains reasonable and abundant, which promotes the steady and moderate decline of comprehensive social financing costs, and it is expected that the year-on-year growth rate of social finance and M2 is expected to continue to be slightly higher than the nominal economic growth rate. In terms of monetary policy tools, it is expected that the prudent monetary policy will continue to provide strong support for economic recovery through the comprehensive use of RRR cuts, structural tools, interest rate cuts and reform tools in the future.

Meet the reasonable financing needs of real estate enterprises with different ownership systems without discrimination

It is worth noting that the meeting pointed out that it is necessary to continue to effectively prevent and resolve risks in key areas. It is necessary to coordinate and resolve risks such as real estate, local debts, and small and medium-sized financial institutions, severely crack down on illegal financial activities, and resolutely adhere to the bottom line of preventing systemic risks.

The meeting also pointed out that it is necessary to actively and prudently resolve real estate risks, meet the reasonable financing needs of real estate enterprises with different ownership systems without discrimination, and promote the steady and healthy development of the real estate market. Accelerate the construction of affordable housing, the construction of public infrastructure for both ordinary and emergency purposes, and the transformation of urban villages. Improve relevant basic systems and accelerate the construction of a new model of real estate development. To coordinate the resolution of local debt risks and stable development, major economic provinces should truly take the lead and make greater contributions to stabilizing the national economy.

Wang Qing pointed out that this means that the real estate support policy will continue to increase in 2024, in addition to continuing to implement the financial support policies for real estate enterprises represented by the "three arrows", the later policy "toolbox" still has a lot of room in relaxing the conditions for buying houses and lowering the interest rate of residential mortgages. Among them, the key is to guide the further reduction of LPR quotations with a maturity of more than 5 years and continue to reduce the interest rate of residential mortgages. This means that even if the policy rate (MLF rate) remains stable in 2024, targeted rate cuts for real estate will continue to advance.

Wang Qing judged that around the middle of 2024, the real estate market is expected to show a trend recovery, which will end the downward cycle of the industry for about three years. However, considering the deployment of the "three major projects" and the main tone of housing not speculation will be adhered to for a long time, the possibility of a "V-shaped" reversal in the real estate industry next year is very low.

Zhou Maohua believes that this time the focus is on the financing support of real estate enterprises, emphasizing the return to market neutrality for all types of ownership real estate enterprises, which will not only help alleviate the current financial constraints of real estate enterprises, but also help stabilize the development confidence of real estate enterprises and help real estate accelerate its recovery. At the same time, the meeting mentioned three major projects, which will stabilize real estate investment and boost domestic demand while promoting the stable and healthy development of real estate in the medium and long term.

National Business Daily