Last week, China held a meeting of the Politburo, which made some adjustments to the direction of future economic policies
Traditionally, at the Politburo meeting in December, the next important agenda is the Central Economic Work Conference, which will more accurately describe the positioning of the annual economic work.
The Central Committee of the Communist Party of China holds Politburo meetings every month, but there are mainly four meetings focusing on economics. Three of them were held after the release of quarterly economic data, including April, July, and October. The meeting summed up the economy of the past quarter and will set the tone for the economic work of the new quarter. As for the December meeting, it is important to focus on setting a broad policy for economic work in the new year. Investors will pay special attention to any important changes in terms of fiscal policy, monetary policy, and property market policy during the meeting.
Taking the Politburo meeting in December this year as an example, the focus of the economy includes:
President Xi Jinping emphasized that to do a good job in next year’s economic work, we must contrast the goal of building a well-off society in an all-round way, and in order to successfully complete the goal of “two doublings of GDP” The market anticipates that there will be stimulating economic policies. The meeting stated that “strengthening the infrastructure construction”, while not mentioning the regulation of the property market, made the “Pine House” conjecture another focus of the meeting.
Generally speaking, in terms of economic policy, the Politburo meeting will give a general direction and a more detailed description. The market will pay attention to the Central Economic Work Conference (hereinafter referred to as the Economic Commission).
Monetary and financial policy setting
To observe the changes in the direction of China’s economic policies and guidelines, we must pay attention to the annual China Economic Commission, which is the highest-level economic work conference in China. It is jointly held by the Central Committee of the Communist Party of China and the State Council. It is held once a year, usually in December. For a period of 3 days, the meeting will summarize the economic work of the current year, analyze the current economic situation, and deploy economic work for the coming year.
As the “vane” of China’s economic policy, the central economic work conference, the description of the economic situation at the conference is worthy of attention. The special mention of “there are changes in the steady operation of the economy, and there are worries in the course of change.”
Changes in the meeting ’s description of monetary policy will also provide the market with a certain “psychological preparation” for tightening monetary policy in the coming year. Because unless the economy suddenly changes unexpectedly, the People’s Bank of China’s current monetary policy will be adjusted in the direction set by the China Economic Commission to adjust to actual conditions, and the chances of a large turn are low.
In addition to the noteworthy tone of monetary policy, the China Economic and Social Council each year mentions that setting a political tone for different fields will affect the policy direction of the current year or even the next few years. It seems that the “housing and living” that people often hear in recent years is actually the keynote of the real estate policy of the China Economic and Trade Commission at the end of 2016.
The China Economic Commission will sometimes put forward some important directions in the direction of financial policy. The focus of the market is mainly to see how the infrastructure has fallen. After all, from the perspective of supporting the overall economy, the effects of real estate and infrastructure have been most significant. In the past, transportation networks, parking lots, and even “new infrastructure” including 5G construction have been proposed.