The Central Economic Work Conference in December has just ended, and three main things have been done: summarize the economic work in 2025, analyze the current economic situation, and deploy key tasks in 2026.
The meeting further clarified the specific policy arrangements and objectives of these tasks, especially in the key directions of fiscal policy, monetary policy and policy force.
So, what important signals and policy directions did the meeting release? Jingtai interprets it for you.
Maintain the necessary fiscal deficit, total debt size and total expenditure
The Central Economic Work Conference made it clear that a more active fiscal policy will continue to be implemented in 2026, simply put, the money that should be spent must be spent, and it must be spent smarter and more accurately. Specifically:
maintain the necessary fiscal deficit and debt scale to ensure that the government has sufficient funds to boost the economy; optimize the expenditure structure and spend more money on people's livelihood and people; standardize tax incentives and subsidy policies to avoid "pepper noodles"; Focus on solving local financial difficulties, especially ensuring the "three guarantees" at the grassroots level - ensuring basic people's livelihood, wages, and operation; Party and government organs continue to live a tight life and strictly control unnecessary expenses.
How big will the deficit and debt be? Luo Zhiheng, chief economist of Yuekai Securities, predicts that the fiscal deficit rate in 2026 may not be less than 4% (higher than the level of recent years); The scale of new government debt may reach about 15 trillion yuan, which is higher than this year, to support steady growth.
Where will the money be spent? From "heavy investment" to "equal emphasis on investment + consumption".
In the past, the government mainly invested in infrastructure and enterprises, but now it is also necessary to support more household consumption and household needs. People's livelihood investment will be increased: increase childcare subsidies; extend the free preschool education period; Increase the pension of urban and rural residents. The purpose is to help ordinary families reduce the burden and repair the "residents' balance sheet" (that is, make everyone more capable of spending and daring to spend).
Infrastructure continues to exert force: Zhang Yiqun, a researcher at the Jilin Institute of Fiscal Sciences, pointed out that government investment will continue to be strong, focusing on:
ensure the completion of major projects under construction; Increase investment in new infrastructure such as energy, water conservancy, networks, and data centers to lay the foundation for industrial upgrading, artificial intelligence, high-end manufacturing and other cutting-edge fields.
Strengthen the bottom line of the "three guarantees" at the grassroots level: cities and counties with high local financial pressure will receive more central and provincial transfer payments to ensure that grassroots governments can pay wages normally, protect people's livelihood and operate steadily.
Next year's fiscal policy will be "more active", but not to spend money indiscriminately - but to stabilize growth and benefit people's livelihood, not only to build roads and networks, but also to issue subsidies and increase pensions, and at the same time strictly manage waste to ensure that every penny is used on the blade.
Flexible and efficient use of various policy tools such as RRR and interest rate cuts
The Central Economic Work Conference made it clear that moderately loose monetary policy will continue to be implemented in 2026, and for the first time proposed to "flexibly and efficiently use various policy tools such as RRR cuts and interest rate cuts".
This sends an important signal: monetary policy is no longer just about "waiting for the right moment", but about being more proactive and precise.
What is "flexible and efficient"? In the past, it was often said that "timely RRR cuts" and "interest rate cuts at the right time", focusing on "when to take action"; Now the emphasis is on "flexibility and efficiency", and the focus has become - how to use it most effectively.
Guan Tao, chief economist of Bank of China Securities, pointed out that this shows that the policy will focus more on practical results rather than mechanical operations. Cheng Shi, chief economist of ICBC International, explained: "In the future, monetary policy will stabilize growth, promote consumption, and promote a moderate recovery in prices through more abundant liquidity, smoother transmission mechanisms, and more accurate structural tools."
Simply put, it is to make it easier for money to flow where it is needed - such as enterprises, residents, and innovation fields, rather than just staying in the banking system.
How does the exchange rate go?
The meeting once again emphasized that the basic stability of the RMB exchange rate at a reasonable and balanced level should be maintained. This is the fourth consecutive year that this request has been made.
Guan Tao believes that this means: not only to prevent the sharp depreciation of the renminbi (affecting imports and confidence), but also to avoid excessive appreciation (hurting export competitiveness). It is expected that the RMB will still fluctuate in both directions in 2026, but the overall stability will be stable.
Will there be a RRR and interest rate cut next year? Most likely it will.
Cheng Shi judged that the central bank may continue to use a combination of RRR cuts, interest rate cuts + targeted support tools (such as small re-lending, science and technology innovation rediscounting, etc.): consolidate the recovery of domestic demand; improve the corporate financing environment; and promote a steady decline in market interest rates
At the same time, Guan Tao mentioned that it is also necessary to reform supporting measures, such as: improving the interest rate self-discipline mechanism;
rectify the "involution" vicious competition in the financial industry; establish a long-term mechanism to support the "five major financial articles" such as science and technology finance, green finance, and inclusive finance
Only in this way can we ensure that financial resources truly flow to key areas such as scientific and technological innovation, small, medium and micro enterprises, and green development.
In 2026, monetary policy will be more "smart" - water is released when it is time to release water, and drip irrigation when it is time to drip irrigation, with the goal of stabilizing the economy, stabilizing prices, stabilizing the exchange rate, and at the same time allowing finance to better serve the real economy.
Continue to deepen the comprehensive reform of capital market investment and financing
The Central Economic Work Conference clearly stated that it is necessary to continue to deepen the comprehensive reform of investment and financing in the capital market, and emphasize the promotion of small and medium-sized financial institutions to "reduce quantity and improve quality" - that is, the quantity can be reduced, but the quality must be improved.
What signal does this send?
Zhang Jun, chief economist of China Galaxy Securities, pointed out that China's economy is currently driven by "new quality productivity" (such as artificial intelligence, high-end manufacturing, biotechnology, etc.) to drive high-quality development, and these innovative enterprises need the support of the capital market the most.
Therefore, reforming the capital market is to empower future industries.
In addition, the "15th Five-Year Plan" proposal has proposed to "improve the capital market function that coordinates investment and financing", and this meeting will "continue to deepen", indicating that 2026 will be a key year for the implementation of reform.
How to change the reform?
Yan Xiang, chief economist of Founder Securities, believes that future reforms will be grasped by both the investment side and the financing side, with the goal of making the market system more inclusive and flexible; Enhance the professional ability and enthusiasm of various participants (investors, institutions, enterprises).
Tian Xuan of Tsinghua University further detailed possible specific measures:
Improve the basic system: focus on key links such as listing, trading, mergers and acquisitions, and delisting; Make it easier for good enterprises to raise funds, and poor enterprises to exit in time. Attract "long money" to the market: promote long-term funds such as pensions and insurance to increase the allocation of A-shares; optimize public fund rates and encourage long-term holding; Increase the shareholding ratio of institutional investors to make the market more stable. Expand opening up: deepen the interconnection mechanism such as Shanghai-Shenzhen-Hong Kong Stock Connect; Make it easier for foreign investors to invest in A-shares and enhance the attractiveness of RMB assets. Protect investors' rights and interests: strengthen information disclosure and crack down on fraud; Improve dispute mediation and compensation mechanisms to make small and medium-sized investors more secure.
The reform of the capital market is not a "small repair", but a systematic upgrade - not only to serve scientific and technological innovation, but also to make the people feel at ease to invest and earn with peace of mind; It is necessary to improve quality and efficiency internally, but also to be open and inclusive to the outside world. There is only one goal: to create a healthier, more dynamic and more capable Chinese stock market that can support high-quality development.
Adhere to domestic demand to build a strong domestic market
The Central Economic Work Conference has set the first key task of economic work in 2026 as: adhere to the leadership of domestic demand and build a strong domestic market.
To put it simply, it is to make domestic consumption and investment truly the main engine of economic growth.
Why do you attach so much importance to domestic demand? Wang Qing, chief macro analyst of Oriental Jincheng, explained: Next year, the external environment is uncertain and exports are unreliable, so we must focus on "our own people" - so that ordinary people dare to spend money and enterprises are willing to invest.
How to make people more willing to consume?
The meeting put forward a series of specific measures:
Let everyone "bulge their money bags" first. a plan to increase the income of urban and rural residents will be introduced; Focus on increasing wage income, expanding middle-income groups, and promoting fairer income distribution.
Hong Yong, a researcher at the Ministry of Commerce, said: Only with stable income can there be sustainable consumption.
Provide more good goods and services expand high-quality supply, such as better education, medical care, cultural tourism, pension and other services; clean up those "strange regulations" that restrict consumption (such as unreasonable restrictions on new energy vehicles and housekeeping services in some places). Policy support expands from "buying big things" to "daily flowers" In the past, the promotion of consumption mainly subsidized "durable consumer goods" such as home appliances and automobiles; Next year, it may be expanded to service consumption such as catering, tourism, entertainment, and even general daily necessities.
Investment cannot be left behind: to "stop falling and stabilize", the meeting clearly stated that investment should be stabilized, including:
increase investment in the central budget (money directly invested by the state); optimize the "two-fold" project (i.e., security capacity building in major national strategic projects and key areas); more flexible use of local government special bonds; Continue to make good use of new policy financial instruments (such as special treasury bonds, re-lending, etc.).
This means that investment in the following areas will accelerate next year: scientific and technological research and development; high-end manufacturing; Loans and bond financing for science and technology enterprises. These are all "effective investments" - not to engage in duplicate construction, but to invest in future competitiveness.
