|2023→2024: The first year of post-pandemic economic recovery → a key year for the goals and tasks of the 14th Five-Year Plan
Facing the situation: external pressure is increasing, internal difficulties are increasing.
Overall strategy: from actively "resisting pressure and overcoming difficulties" to passively "calmly adapting and taking comprehensive measures".
Performance summary: from "the economy is picking up" to "the economy is running smoothly on the whole, and there is progress in stability", from partial to stable. System construction, breakthroughs in scientific and technological innovation→ steady development of new quality productivity: gradually get rid of the "stuck neck" in Europe and the United States, from catching up to leading; Added "orderly and effective risk resolution in key areas": prevent and resolve real estate risks, underlying banking and financial risks, debt risks, etc.
In particular, the 926 package of incremental policies was mentioned: policy shift, from stability to proactive.
The main difficulties and challenges faced
External risks: basically peaked, ranging from "increasing complexity, severity and uncertainty of the external environment" to "deepening adverse impacts".
The main difficulties: the demand side: insufficient demand is still the core problem, but there is a lack of "weak social expectations", "there are blockages in the domestic circulation" and other expressions, indicating that the upper level believes that the policy performance since September is in line with expectations, Xinhua News Agency and other official media have also released a series of articles such as China's economic Q&A, answering in detail about economic growth, monetary policy and fiscal policy, domestic demand, housing market, exports and other issues of concern to the public, with a view to improving expectations; In addition, it may also be that a series of new policies and measures in 25 years can play a positive effect and significantly improve the problem of weak expectations; Supply side: from overcapacity to production and operation difficulties, the enterprise crisis is more serious, and it is expected that more favorable policies will be introduced on the enterprise side in 25 years (tax reduction and burden reduction);
Summarizing qualitatively: the long-term is good, and the stage is difficult.
Work focus: from security to macro-control to a new height
Priorities:
2023: 5 high-quality developments and 5 security developments, with equal emphasis on security and development, with development paying special attention to qualitative changes and weakening quantitative growth (defusing risks);
2024: The party's leadership and promising government, macroeconomic regulation and control are no longer a supplement to the efficient market, but the same height (economic development) is mentioned.
A more active fiscal policy and a moderately loose monetary policy
For the first time in history: The combination of "more active fiscal policy + moderately loose monetary policy" is the first time in the history of the Politburo meeting.
In 2025, the internal and external challenges will be greater, and the policy will be more proactive, but "stability" is still the core, there will be no excessive stimulation, and the means will be similar to the "small steps and fast running" model of the 2024 policy, but the intensity will inevitably be greater, and the frequency may be higher, forming a policy "combination punch", with the goal of maintaining a 5% growth rate.
In terms of direction, in 2024, there will basically not be much investment at the consumption level, mainly on the supply side and the investment side to resolve potential economic risks. In 2025, the investment direction of benefiting people's livelihood and promotional expenses has been clarified, and there will be greater and more lasting investment in the field of "two new", that is, equipment renovation and consumer goods trade-in.
It is expected that the bank interest rate will further be at least 50bp, and at the same time, the bank's non-performing assets may also be accelerated, and the central bank will provide timely support to prevent systemic risks (referring to the listing restructuring of the four major banks, and resolving the risk of falling interest rates to the banking industry through capital injection).
Nine key tasks
Among the nine key tasks of the Central Economic Conference in 2023 for 2024, the first is "leading the construction of a modern industrial system with scientific and technological innovation", and the second is the work of expanding domestic demand. However, among the nine key tasks of the Central Economic Work Conference in 2024 for 2025, the first is to expand domestic demand, and the second is to "lead the development of new productive forces with scientific and technological innovation and build a modern industrial system". The change in order means that there have been new changes in the country's current economic development. Obviously, expanding domestic demand will become the core task of China's economic development in 2025.
According to IMF statistics, the average government debt ratio of G20 countries at the end of 2023 was 118.2%. Among them: Japan 249.7%, Italy 134.6%, the United States 118.7%, France 109.9%, Canada 107.5%, the United Kingdom 100%, Brazil 84.7%, India 83%, Germany 62.7%; The average government debt ratio of the G7 countries was 123.4%, while the debt ratio of the Chinese government was 67.5% in the same period.
Vigorously boost consumption, improve investment efficiency, and expand domestic demand in all directions
This year's policy and direction on expanding domestic demand are quite clear, mainly pointing to the following three directions:
Increase income and reduce burden: Putting the improvement of consumption capacity before increasing consumption willingness, it is clearly proposed to increase income and reduce the burden for low- and middle-income groups, and increase the standard of basic pension and medical insurance subsidies (the total amount of social security in the country will be 8.2 trillion yuan in 2023), and it is expected that there will be trillion-level investment.
Encourage consumption: The policy clearly points to the first economy, the ice and snow economy and the silver economy, as well as the two new areas and service consumption, the essence is still innovative consumption scenarios, and there is no essential difference from last year's proposal, but the scope and intensity will be greater. Foreign trade with a growth rate of 5% in 2024 has played an important role, and the total import and export volume of the country in the first three quarters increased by 5.3% year-on-year, slowing down from the 6.1% growth rate in the first half of the year. Among them, exports increased by 6.2% and imports increased by 4.1%, and the growth in the third quarter was only 3.8%. Next year's tariff issue will inevitably have a significant impact on external demand, so the scale of domestic demand stimulus is strongly correlated with overseas tariff increases.
Optimize investment: Consumption and investment are two sides of the same coin, and good investment can drive employment, which in turn will increase income and promote consumption. The investment has put forward two new directions, one is urban renewal, and the other is the special action to reduce the logistics cost of the whole society, and it is expected that the financial department will make efforts in these two aspects. (On December 19, China Digital Logistics, a new central enterprise, was established, with a registered capital of 10 billion, and the first data technology central enterprise with data resource sharing, development and utilization in the fields of road, rail, water, and shipping ports as the core, and built a national logistics data platform).
Leading the development of new productive forces with scientific and technological innovation, and building a modern industrial system
Weakening of the logic of domestic substitution: In 2023, we will focus on the development of the manufacturing industry chain, and the logic behind it is national security and domestic substitution; The 2024 proposal focuses on basic research and advanced core technology research and application demonstration, and the logic behind it is to face the future and continue to grow. Combined with the perception of primary market investment, the domestic substitution logic of most of the subdivided tracks in the past has become unreasonable, and the middle and low-end have almost fully fallen into "involution", and have begun to export outward, sweeping the world (such as new energy vehicles, photovoltaics, lithium batteries, low-end chips, etc.); The high-end has almost all made breakthroughs, and there is basically nothing that is completely unable to produce independently in China, and the only remaining areas also need to strengthen basic research and continue to invest (basic research and development accounts for 15% in the United States, 6.65% in China, and the absolute volume difference is 4-5 times), this field is slow but significant, and requires more government participation to support the growth rate of total factor productivity, so as to maintain economic growth.
Continue to develop new quality productivity: artificial intelligence and other future industries + traditional industries digitalization, green transformation of equal importance, the formulation is basically the same as last year, there is no major change in the direction, but the mechanism is further optimized, such as improving the multi-level financial service system, comprehensive rectification of involution, standardize the behavior of the government and enterprises, etc.
Give full play to the leading role of economic system reform and promote the implementation of landmark reform measures
Economic system reform landing year: this year's expression in the economic system reform is mainly "completed", "introduced", "formulated" and other deterministic expressions, is a series of landmark reform measures to land in the key year, from the law, the system on the basis of the "15th Five-Year Plan" reform direction and goals, do a good job in expected management, is expected to have a number of blockbuster policies introduced, such as the core of state-owned enterprises to deepen reform, promote the private economy, standardize enterprise law enforcement, The formulation of guidelines for the unified national market is still aimed at expanding domestic demand and serving domestic demand.
Reform of the fiscal and taxation system: The Third Plenary Session of the 20th Central Committee of the Communist Party of China not only proposed for the first time to "increase local independent financial resources", but also proposed to "promote the backward transfer of consumption tax collection links and steadily delineate to local governments, optimize the sharing ratio of shared taxes, etc., to reduce local financial pressure, combined with the previous policy of resolving local hidden debts, in essence, in order to open up the circulation channels of policy funds and improve the efficiency of capital utilization."
Open up the medium and long-term funds to enter the market: from the September meeting to determine the direction, insurance funds, social security funds, pension funds and other medium and long-term funds into the market.
Expand high-level opening-up, stabilize foreign trade and foreign investment
New changes (the core is to solve the problem of requirements):
Less intermediate goods trade, more green trade: the curve export route is gradually blocked, new energy vehicles, new energy batteries, photovoltaic and other green industries have established outstanding advantages, will be one of the important industries to encourage exports next year, support export growth.
Increase transit visa-free to attract foreign investment: On December 17, China extended the length of transit visa-free foreigners' stay in China from 72 hours and 144 hours to 10 days, and implemented a 240-hour transit visa-free stay. At the same time, 21 new applicable airport ports were added, increasing the number to 60, and the total number of provinces applicable to the policy increased from 19 to 24. After the relaxation and optimization of the transit visa-free policy, eligible persons from 54 countries, including Russia, Brazil, the United Kingdom, the United States, and Canada, who transit from China to a third country (region), can enter the country visa-free from any of the 60 ports in 24 provinces (autonomous regions and municipalities), and stay in the specified area for no more than 240 hours. In the first 11 months of this year, 29.218 million foreigners entered the country's ports, a year-on-year increase of 86.2%; Among them, 17.446 million people entered the country without visas, a year-on-year increase of 123.3%.
Easing market access to attract foreign investment: In August this year, the state issued a document to continue to relax market access for the service sector and further open up to the outside world in the fields of telecommunications, education, elderly care, medical care, and health. On September 8, the Special Administrative Measures (Negative List) for Foreign Investment Access (2024 Edition) was issued, which came into effect on November 1, and the restrictions on foreign investment access in the manufacturing sector were fully lifted. On September 9, a document was issued to clarify the pilot project of expanding opening up in the medical field. In the field of biotechnology, foreign-invested enterprises are allowed to engage in the development and application of human stem cells, genetic diagnosis and treatment technologies in the China (Beijing) Pilot Free Trade Zone, China (Shanghai) Pilot Free Trade Zone, China (Guangdong) Pilot Free Trade Zone and Hainan Free Trade Port. In the field of wholly-owned hospitals, it is proposed to allow the establishment of wholly foreign-owned hospitals in Beijing, Tianjin, Shanghai, Nanjing, Suzhou, Fuzhou, Guangzhou, Shenzhen and Hainan (excluding traditional Chinese medicine hospitals, excluding mergers and acquisitions of public hospitals).
Effectively prevent and resolve risks in key areas, and firmly adhere to the bottom line of no systemic risks
There has also been a substantial shift in the presentation of risk:
Real estate risk: from resolving real estate risk to "continuing to push hard" the real estate market to stop falling and stabilize, indicating that real estate has basically not induced systemic risk, and the decline and stability are manifested as rising and falling, and there are still opportunities in first-tier, new first-tier, second-tier and other head cities, and the house returns from investment attributes to residential attributes, and the neutral price valuation will be directly linked to the return on assets.
Local debt risk: The 2024 statement does not mention the related risk.
Risks of small and medium-sized financial institutions: The non-performing asset industry is expected to accelerate the liquidation, and some local banks and other financial institutions may be at risk of bankruptcy.
