The Politburo meeting of the CPC Central Committee, which has always set the tone for the Central Economic Work Conference, was held on the 9th. The reporter found that in the Politburo meeting, it is very likely to set the tone for the Central Economic Work Conference: to enhance the pertinence, flexibility, and foresight of regulation and control, and continue to handle the maintenance of stable and rapid economic development, adjustment of economic structure, and management of inflation. The relationship between the three is expected to accelerate the transformation of economic development mode and economic structural adjustment.
In terms of macro-economy, economic growth may slow down next year, export and investment growth will decline rapidly, fiscal policy will play a greater role, monetary policy will be neutral to loose, the deposit reserve ratio is expected to be lowered 4-6 times, interest rates will not be easily lowered, and new credit is expected to reach 8 trillion billion yuan next year.
The Central Economic Work Conference will be held soon, and the Politburo meeting of the CPC Central Committee, which has always set the tone for the Central Economic Work Conference, has been held on the 9th. The reporter found that in the Politburo meeting, it is very likely to set the tone for the Central Economic Work Conference.
Next year's policy tone: emphasis on timely pre-adjustment and fine-tuning
The Politburo meeting decided that China will maintain its prudent monetary policy and proactive fiscal policy in 2012. The meeting also proposed that it is necessary to strengthen and improve macro-control more predictively, accurately grasp the intensity, rhythm, and focus of regulation and control, and make timely pre-adjustments and fine-tuning in accordance with changes in the situation.
Wang Tao, chief economist at UBS China, predicts that more obvious fiscal and credit policy easing will occur in the first quarter of 2012, because export and construction activities will slow down more significantly by then. "Relaxation" will tend to "people's livelihood" areas: affordable housing construction, water conservancy systems and irrigation projects, environmental protection projects, urban infrastructure, circulation system construction and other service industries. While the government has repeatedly stressed the importance of boosting consumption, the scope for further tax cuts may be limited. The government is expected to increase pensions and living allowances, while increasing support for small and medium-sized enterprises.
There is still room for government debt issuance.
Will monetary policy lead or fiscal policy lead next year's growth-preserving measures? Shenyin Wanguo analyst Li Huiyong said that next year, the fiscal will play a greater role in stabilizing growth, monetary policy interest rate space is limited, more will be through the reserve requirement ratio reduction to ease the financial constraints. On the fiscal side, there is still room for debt issuance due to the low overall government debt ratio; in addition, structural tax cuts can be implemented.
However, the chief analyst of Hongyuan Securities Fixed Income Headquarters, Fan Wei, said that from the source of funds, finance only accounted for about 20%. Fiscal policy alone cannot achieve the goal of steady growth.
However, he also believes that money will not be issued indiscriminately as in 2009. It is estimated that credit will grow by about 8 trillion yuan, and interest rates will not be adjusted for the time being. However, it is estimated that the deposit reserve ratio will be lowered four times next year, releasing liquidity of about 1.6 trillion yuan, which will probably increase nominal GDP by about 3.2.
RMB appreciation continues to increase volatility
In the case of rapid decline in economic growth, the RMB exchange rate trend?
Liu Dongliang, a senior analyst at the Financial Markets Department of China Merchants Bank, said that in the context of the strengthening of the U.S. dollar, the general devaluation of global currencies is a major trend, but it is expected that the renminbi may still see about 3% appreciation next year, but the probability of two-way fluctuations will be substantial. Rising, there may be a phased rise and depreciation of thousands of points. Once the European debt crisis deteriorates abnormally, the RMB is likely to re-peg to the US dollar, or even depreciate against the US dollar in stages. Wen Tianna, managing director of investment banking at China Merchants Securities in Hong Kong, expects the yuan to appreciate by about 3 per cent next year. Wang Zhihao, chief economist of Standard Chartered Bank Greater China, also said that the exchange rate may rise in one month and depreciate in one month next year, and the annual appreciation will be reduced to about 2% to 2.5.