On December 9th, the Politburo of the Communist Party of China conveyed an important signal. Experts analyzed that extraordinary counter-cyclical adjustments will be implemented in the future, with the deficit rate expected to be raised to 4.0% by 2025, and the economic growth target set at around 5%. Monetary policy will shift from prudent to moderately accommodative, with expanded space for interest rate cuts and reserve requirement ratio reductions. Fiscal policy will also become more proactive to stimulate domestic demand and address external uncertainties. At the same time, stabilizing the real estate and stock markets will be a policy focus to repair the balance sheets of households and enterprises

The Central Committee Political Bureau meeting held on December 9th released a clear signal, with twelve experts providing authoritative interpretations.

Extraordinary Counter-Cyclical Adjustment

Li Chao, Chief Economist, Co-Director, and Head of the Large Asset Group at Zheshang Securities

Extraordinary means that various counter-cyclical policies may be intensified and increased. The deficit rate may be revised up to 4.0% in 2025. The economic growth target for 2025 is likely to be set around 5%, laying a solid foundation for a good start to the "14th Five-Year Plan."

Cao Jing, Associate Researcher at the Financial Research Institute of the Chinese Academy of Social Sciences

Extraordinary counter-cyclical adjustment is mainly reflected in two aspects: first, the tone of monetary policy shifts from prudent to moderately loose, with further room for reserve requirement ratio cuts and interest rate reductions, and the monetary policy toolbox continues to be enriched and improved; second, stabilizing the real estate and stock markets to help residents and enterprises repair their balance sheets, thereby stabilizing expectations and stimulating vitality.

Moderately Loose Monetary Policy

Huang Wentao, Chief Economist at CITIC Construction Investment Securities

It is expected that in 2025, policies will lean more towards interest rates in the balance between interest rates and exchange rates, increasing the implementation of interest rate cuts and reserve requirement ratio reductions.

Wen Bin, Chief Economist at China Minsheng Bank

The expression of monetary policy has changed from "prudent" to "moderately loose," marking the first time in over a decade that China has reiterated "moderately loose" monetary policy. This means that China continues to adhere to a supportive monetary policy stance, maintaining reasonable liquidity and further reducing the comprehensive financing costs for enterprises and residents.

More Proactive Fiscal Policy

Xu Guangjian, Professor at the School of Public Administration, Renmin University of China

Implementing a more proactive and effective macro policy is based on the successful experience of previous macro-control and is a scientific deployment based on domestic and international situations.

Next year's fiscal policy will be more proactive and effective, expanding total demand with necessary expenditure efforts to boost domestic demand and counter external uncertainties.

Tao Chuan, Chief Economist at Minsheng Securities Research Institute

Previously, the tone of the Central Political Bureau meeting regarding fiscal policy was mostly "proactive." This time, the proposal to "implement a more proactive fiscal policy" indicates that increasing the deficit rate and expanding the scale of special fiscal tools in 2025 is highly probable.

Stabilizing the Real Estate and Stock Markets

Luo Zhiheng, Chief Economist at Yuekai Securities

The real estate market relates to residents' existing wealth, while the stock market is key to increasing residents' property income. Stabilizing both markets will stabilize residents' balance sheets and is expected to stabilize consumption and domestic demand.

Ming Ming, Chief Economist at CITIC Securities

This meeting is the first to propose "stabilizing the real estate and stock markets," making the stabilization of the stock market one of the key focuses of next year's economic work. For the stock market, the Central Political Bureau meeting has basically set a positive tone for next year's policies, and market risk appetite is expected to remain high, with a clear trend of economic recovery. It is anticipated that under the dual impetus of policy expectations and economic trends, the stock market is likely to continue its upward trend with fluctuations.

Comprehensively Expanding Domestic Demand

Zhu Keli, Executive Director of the China Information Association and Founding Dean of the National Research Institute for New Economy

The next step to achieve "comprehensive" expansion of domestic demand may involve the following policy directions: first, promoting consumption demand by increasing residents' income and enhancing consumption capacity; second, attracting more consumption by optimizing the consumption environment and improving consumption quality; third, expanding investment demand by increasing infrastructure investment and promoting industrial upgrading.

Chen Lifeng, researcher at the Market Economy Research Institute of the Development Research Center of the State Council

Currently, it is essential to continue consolidating the momentum of consumption recovery, promote the rebound of consumption in automobiles, home appliances, etc., and enhance the expansion and quality of digital consumption, experiential consumption, and cultural tourism consumption.

Promote the implementation of landmark reform measures

Li Wei, associate researcher at the Institute of Industrial Economics of the Chinese Academy of Social Sciences

The series of deployments from the meeting will further promote the in-depth implementation of the innovation-driven development strategy, facilitate the integrated development of the real economy and the digital economy, advanced manufacturing, and modern service industries, cultivate new productive forces to create more new growth points, and continuously accelerate the transformation of old and new driving forces.

Long Haibo, researcher at the Development Research Center of the State Council

To effectively implement the meeting's deployment, the key is to make every effort to promote agricultural efficiency, increase farmers' income, and enhance rural vitality, further improving the system and mechanism for urban-rural integrated development.

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