On April 25, the Political Bureau of the CPC Central Committee held a meeting to analyze and study the current economic situation and economic work. The meeting was held against the backdrop of drastic changes in the external environment, and in response to the external impact brought about by the U.S. tariff war, the tone and deployment of the meeting were particularly important.

In view of the next economic work, in what aspects did the meeting further clarify the direction and focus? Jingtai interprets it for you.

The new tone of "four stability": enterprises have become economic ballast

The latest policy direction is clear, and the focus of economic work has shifted to "stabilizing employment, stabilizing enterprises, stabilizing the market, and stabilizing expectations". Compared with the previous "six stability" and "six guarantees", the "four stability" focuses more on the main body of enterprise operation, releasing a deep change in policy logic - from short-term stimulus to long-term resilience cultivation.

The core logic: the enterprise is stable, the economy can be stable.

The foundation of employment lies in the enterprise: whether it is to stabilize foreign trade, foreign investment, or employment, the ultimate foothold is the healthy operation of the enterprise.

Policy strength may exceed expectations: Luo Zhiheng, chief economist of Guangdong Kai Securities, pointed out that stabilizing expectations requires "faster policy pace and greater intensity", and may even introduce unconventional countercyclical adjustment measures, such as direct fiscal subsidies, financing discounts, interest rate cuts, etc.

From "blood transfusion" to "hematopoiesis": Zhu Keli of the National Research Institute of New Economy believes that the policy is shifting from short-term support to enhancing the ability of enterprises to resist risks, and consolidating macroeconomic fundamentals by stabilizing micro subjects.

Tian Huimin of the Beijing Reform and Development Research Institute predicts that the follow-up support policies may revolve around the following directions:
financial support: expand credit, broaden bond financing channels, and strengthen inclusive financial coverage. Trade facilitation: optimize the customs clearance process + strengthen the protection of intellectual property rights, and promote the integration of domestic and foreign trade.

Optimization of the market environment: refinement of supporting rules + implementation of the "white list" mechanism to reduce hidden barriers. Burden reduction and relief: deepen tax and fee reductions + targeted subsidies, and build a full-chain support system.

Investment implications: The policy dividend will be tilted towards the real economy, focusing on industry leaders and micro, small and medium-sized enterprises that benefit from credit easing, industrial support, and consumption recovery. In the process of restoring market sentiment, resilient high-quality assets may usher in an opportunity to reshape valuations.

When the fiscal force is in progress: special bonds + ultra-long bonds are launched at the same time

The meeting stressed the need to step up the implementation of a more active and promising macroeconomic policy and make full use of a more active fiscal policy and a moderately loose monetary policy.

Specifically, it is necessary to speed up the issuance and use of local government special bonds and ultra-long-term special treasury bonds. It sounds a bit complicated, but it's actually quite simple – the government wants to use these measures to stimulate economic growth, especially by increasing public spending and supporting businesses to expand aggregate demand.

Luo Zhiheng, chief economist of Guangdong Kai Securities, pointed out that the current situation determines the need to "tighten" and "make good use" of the fiscal policy. Doing so will not only expand aggregate demand, but also help prevent and resolve local debt risks and solve the problem of delinquent accounts, thereby smoothing the economic cycle.

Zhang Yiqun, vice chairman of the Performance Committee of the China Fiscal Society, predicts that starting from the "four stability", the issuance of local government special bonds and ultra-long-term special treasury bonds will be significantly accelerated in the future. The central government will also increase transfer payments to local governments, and on the basis of ensuring the bottom line of the "three guarantees" (ensuring wages, ensuring operation, and ensuring basic people's livelihood), we will continue to increase support for key areas such as scientific and technological research and development and innovation, expanding consumption, and stabilizing foreign trade.

The key to the current fiscal policy is to speed up the pace of spending, advance the fiscal expenditure originally scheduled for the second half of the year to the second quarter, and make every effort to boost domestic demand. For example, domestic consumption could be boosted through greater trade-ins for consumer goods and other innovative policy tools. The pace of new government bond issuance of 11.9 trillion yuan this year will be moved forward as a whole, which will also leave room for further fiscal policy in the second half of the year.

Zhang Yiqun also mentioned that it is very important to continue to prevent and resolve the risk of local government debt, especially to solve the problem of government arrears to enterprises. This can alleviate the financial pressure of enterprises and maintain the stability of local financial operations.

|Monetary policy toolbox is upgraded again: RRR cuts can be expected + innovative tools are ready to go

The meeting emphasized the need to cut the reserve requirement ratio and interest rates in a timely manner to maintain abundant market liquidity and further support the development of the real economy.

In fact, this policy tone has been mentioned since the Central Economic Work Conference at the end of last year and this year's government work report. Dong Ximiao, chief researcher of Zhaolian, pointed out that although the financial data in the first quarter performed well, the moderately loose monetary policy still needs to take precautions and continue to stabilize market confidence and expectations.

Dong Ximiao believes that the need to cut the RRR in the short term is greater, mainly because the interest rate on new loans is already at a historical low. Through the RRR cut, long-term and stable low-cost funds can be released and more support can be provided for enterprises.

The meeting also placed special emphasis on the creation of new structural monetary policy tools and the establishment of new policy-based financial instruments to support scientific and technological innovation, expand consumption and stabilize foreign trade.

Zeng Gang, chief expert of the Shanghai Finance and Development Laboratory, believes that these new tools will accurately guide the flow of funds to key areas, such as scientific and technological innovation, to help break through key technologies; further stimulate consumption and enhance the vitality of the domestic market; It will also help stabilize foreign trade and enhance international competitiveness.

Zeng Gang said that the new policy-based financial instruments may be similar to the policy-based development financial instruments established before in terms of term, but there will be obvious differences in the direction of investment, which is more in line with the current direction of China's economic structural optimization. For example, in the areas of consumption and foreign trade, these tools will focus more on stimulating market vitality and supporting external demand.

Looking back on the second half of 2022, in order to better play the role of infrastructure investment as a "ballast stone" in stabilizing the economy, the People's Bank of China and other departments supported the establishment of policy-based development financial instruments. Zeng Gang pointed out that the previous policy-based development financial instruments mainly focused on the construction of major projects, mainly to stabilize investment and make up for shortcomings. The new policy-based financial instruments are expected to pay more attention to structural optimization and functional expansion, especially in the fields of consumption and foreign trade, to inject more vitality into the market.

|New Quality Productivity Cultivation Program: Science and Technology Industry + Financial Support Two-Wheel Drive

The meeting particularly emphasized the need to cultivate and expand new quality productive forces and create a number of emerging pillar industries.

This means that in the future, there will be a focus on some key technology areas, such as artificial intelligence, low-altitude economy, biomedicine, and advanced manufacturing. Wu Yin, a professor at the School of Economics at Southwestern University of Finance and Economics, pointed out that this is the first time that the central government has proposed to "build a number of emerging pillar industries", which not only means that there is a clear industrial map, but also indicates that these industries will bring significant output value and employment growth.

In order to support scientific and technological innovation, the meeting also proposed a "technology board" for the innovative launch of the bond market. Tian Xuan, dean of the National Institute of Financial Research at Tsinghua University, said that this initiative is mainly to enrich the bond financing channels of science and technology innovation enterprises, and then improve the diversified system of science and technology loans, bonds and equity financing.

Ming Ming, chief economist of CITIC Securities, believes that the establishment of the "science and technology board" of the bond market is not only an innovation in financing tools, but also a key breakthrough in the financial support system for scientific and technological innovation. Through the combination of diversified bond products, policy incentives and market-oriented mechanisms, it is expected to systematically alleviate the financing problems of science and technology enterprises, accelerate the transformation of scientific and technological achievements, and help the implementation of innovation-driven development strategies.

The creation of the "science and technology board" of the bond market is equivalent to opening up an exclusive financing channel for hard technology enterprises, and using the structural reform of the capital market to solve the financing problems of small and medium-sized technology-based enterprises. This is undoubtedly good news for start-ups and growing businesses that are in dire need of financial support.

The capital market ushered in a new stage of "survival while maintaining stability".

The meeting pointed out that it is necessary to continue to stabilize and invigorate the capital market.

Zhang Jun, chief economist of China Galaxy Securities, said that the recent impact of external factors on the global financial market, investors' risk aversion has risen significantly. However, with the endogenous resilience of China's economy and forward-looking policy responses, the A-share market has shown strong stability. This means that on the premise of maintaining stability, the market needs to be further active in the future. This is also the concrete embodiment of the general tone of the work of "seeking progress while maintaining stability" at the capital market level.

According to Cheng Fengchao, a member of the Academic Advisory Committee of the China Association of Public Companies, "stabilizing and activating the capital market" is not an isolated goal, but a systematic project to serve the overall national strategy, improve the quality of economic operation, and activate investment confidence.

On the one hand, the capital market is not only the main position for resource allocation, but also an important channel for transmitting policy expectations and stabilizing social confidence. On the other hand, the term "active capital market" releases a positive signal, which helps to enhance the confidence of medium- and long-term investors, encourage more "long-term capital to enter the market", and form a virtuous circle.

Zhang Jun believes that since the beginning of the year, various policies have been put forward and the trend of China's economy has been consolidated. In the context of accelerating China's economic transformation and upgrading, the capital market will play an important role in the reallocation of residents' wealth, the financing of scientific and technological innovation enterprises, and the transformation of local government functions. He stressed that there is a need not only for a stable capital market, but also for an active capital market. An active market can effectively reduce financing costs, improve the efficiency of capital allocation, and better serve the real economy.

In order to achieve this goal, a series of measures are expected to be taken at the policy level in the future:

Guiding medium and long-term funds into the market: Attract more long-term investors to enter the market and increase market vitality. Encourage mergers and acquisitions: Enhance overall competitiveness by optimizing the corporate structure.

Improve the trading mechanism: simplify the process and improve market efficiency. Promote domestic and overseas connectivity: Promote cross-border capital flows and expand market influence. The market is changing from "seeking stability" to "seeking survival while maintaining stability", and investors are advised to adjust their strategies to adapt to the characteristics of the new stage.