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The significance of the new tone of China's economic policy
According to reports, on October 31, the Political Bureau of the Central Committee of the Communist Party of China held an economic work conference to analyze and study the current economic situation and deploy current economic work. There should be a lot of new information revealed for this Politburo meeting. For example, there will be no mention of leverage and the regulation of the property market, and the focus will shift to increasing investment in infrastructure and supporting the economy, helping SMEs, and stimulating the capital market. It can be said that the most important thing is the change in policy thinking and policy concepts. These changes need to re-evaluate the current economic situation at home and abroad, and form new policy ideas in order to prepare for this year's economic work conference and set the tone for the next year's economic work.
For example, the Politburo meeting pointed out that the current economic operation is stable and changing, the downward pressure on the economy has increased, and some companies have more operating difficulties, and the risks accumulated over the long term are exposed. We must attach great importance to this, enhance predictability, and take timely measures. At the level of economic policy, the core of this text is to acknowledge the current problems facing the domestic economy, rather than basically just singing a good tone. Since China's economy is facing problems, we must face it, we must pay attention, we must adjust our thinking, and we must have corresponding policies. These are quite different from the past.
It can be said that the domestic economy has basically remained in a stable operating range since this year, but the domestic stock market has experienced large fluctuations, but this has not had a great impact on China's real economy. In fact, for the Chinese economy this year, the three major events that will have the biggest impact are: first, the start of the Sino-US trade war; second, weird talks about private enterprises; third, deleveraging and adjustments to prevent financial risks. This year, these three events will definitely have the biggest impact and impact on China's economy.
Because the Sino-U.S. Trade war began in early April this year, which was an unexpected event at the 2017 Central Economic Work Conference. Regarding the outbreak of the Sino-US trade war, despite the domestic preparations at that time, they were still insufficiently prepared. This is not only a lack of understanding of the uncertainty and team characteristics of U.S. President Trump, but also a lack of reflection on the little changes in the Sino-U.S. Trade war, which is somewhat passive at the beginning, which will inevitably make companies and people How much influence and impact on the Sino-US trade war has no bottom. In this sense, the impact of the Sino-US trade war on the domestic economy in terms of perception and confidence is far greater than the impact on the real economy. This will inevitably cause domestic companies to over-react to the possible impact and shock of the Sino-US trade war. This over-reaction is manifested in the early shipment of domestic products by US exporters, and in the case of many domestic companies that are not optimistic or confident about the future economy. If enterprises have insufficient confidence in the future economy, they will naturally reduce investment and affect future economic growth.
Of course, the biggest reflection at present is that the Sino-US trade war has led to the rapid depreciation of the RMB exchange rate. It can be said that despite the depreciation of the RMB exchange rate since April this year, the official opinion is that prices have fallen with the strength of the US dollar. According to the change of the US dollar exchange rate index, the depreciation of the RMB against the US dollar is also in the corresponding range. However, the market, enterprises and foreign investors have different understandings, and they often think that this is the way the Chinese government responds to the Sino-US trade war. In particular, the depreciation of the exchange rate of the RMB against the US dollar has reached its lowest level since 2008. Concepts are strengthening. It can be said that the depreciation of the RMB against the US dollar during this period is not only manifested by the substantial flight of domestic funds, the decrease in RMB deposits in offshore markets, or the decline in the RMB proportion of foreign trade settlements, but also more importantly, the decline in the confidence of enterprises and people in the domestic economy. Therefore, this political conference can recognize its situation and adjust its thinking, which naturally can find a better way to deal with the Sino-US trade war. However, no matter how the situation in the Sino-US trade war changes, the uncertainty of US President Trump will always be the starting point for domestic policy responses.
The second big thing in economic life this year is the emergence of strange talks about the private economy earlier. For example, some people have even publicly asked private companies to leave, private companies have to accept the guidance of party branches, and so on. Regarding the nature and role of the private economy, whether it is the speech of the leaders of the South Tour in 1992 and a series of documents on the development of the private economy, or the report of the Third Plenary Session of the 18th National Congress and the Report of the 19th National Congress, they are clearly defined and affirmed. But why did this strange talk about the private economy in 2018 spread? This is definitely a big question worth pondering. This will certainly frighten private entrepreneurs and completely lose confidence in China's future economy. Fortunately, the highest level of the central government came out in time to show its attitude and emphasized its firm support for the unchanged status of private enterprises.
Of course, the rise of this weird weirdness that denies the private economy has a very, very significant impact on domestic entrepreneurs. To fundamentally end this debate, it is not only necessary to have a clear and clear attitude of the central leadership. Theoretically reflect on the incident, and at the same time use laws and systems to fix the important role of the private economy in national economic development, and introduce a series of policies to promote the development of the domestic private economy. Therefore, at this Politburo meeting, it was emphasized to promote the common development of multiple ownership economies, and to study and solve the difficulties encountered in the development of private enterprises and small and medium-sized enterprises. At the same time, on November 1, Chinese leaders presided over a forum on private enterprises and proposed a six-point policy to assist private enterprises. These should be the focus of economic work in 2019.
The third big thing is to adjust the policy of deleveraging and preventing risks. It can be said that deleveraging and preventing financial risks are one of the three most important economic tasks of the top ten and nine reports and last year's economic work conference. According to the current market statement, why should these policies be adjusted? First, the work has achieved significant results this year. After rectification, the risks of domestic shadow banking and Internet finance have been greatly reduced; The method is easy to trigger new risks caused by deleveraging. In fact, these are not very important reasons, because the current rate of credit expansion in China's financial market, and the current level of domestic corporate, residential and government debt are not in a safe range. What is important is how to ensure domestic economic growth. Eliminate risks in China's financial markets. Here is more a strategic adjustment of policy, not a change in policy direction. Preventing the risks of the domestic financial system is also a very important matter.
In short, the new tone of the policy of the Politburo Economic Working Conference is to make appropriate adjustments to economic policies in the face of drastic changes in the domestic and foreign environments. The most important issue is how to deal with the continued Sino-US trade war. The focus is on optimizing various economic policies in order to strengthen the domestic economy and comprehensively improve the domestic economy's ability to deal with various risks.