Unprecedented Economic Stimulus Amid Policy Reversal
A series of heavy-hitting stimulus policies have left people feeling dizzy.
Following the one-bank, one-bureau, and one-meeting approach, on September 26th, a Politburo meeting was held, releasing a series of economic stimulus signals.
Judging solely from the meeting itself, this comprehensive economic stimulus policy is extraordinary.
According to foreign media reports, the policies of the one-bank, one-bureau, and one-meeting were urgently researched over two days, through a weekend, and then a series of heavy-hitting policies were announced.
This Politburo meeting is also unusual because, according to convention, meetings focusing on the economy are held at the end of April, July, and November, but this time it was held at the end of September, indicating that it was a meeting arranged on an emergency basis.
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The unusual act of urgently convening a meeting, along with the introduction of a series of heavy-hitting policies, both indicate that the trend is indeed about to change.
Beyond some common policies, such as easing monetary policy, relaxing fiscal policy, and accelerating debt issuance, let's focus on the signs of a trend reversal:
1. Rarely proposed: to promote the real estate market to stop falling and stabilize; adjust housing purchase restrictions;
In the past, our policy language was basically "timely adjustment and optimization of real estate policies," "city-specific policies," "digesting existing housing stock," and so on.
Now a new policy direction is given: adjust housing purchase restrictions.Now, apart from the core areas of Beijing and Shanghai, all other regions in the country have long abolished the purchase restriction policy.
Therefore, it can be anticipated that the purchase restriction on houses in the core areas of Beijing and Shanghai will soon be lifted.
In addition, this meeting also proposed a new goal: to promote the stabilization of the real estate market.
Such a statement was quite rare in previous meetings, especially in the field of real estate.
The problems caused by the decline of the real estate market have indeed been taken seriously by the higher-ups, and they have expressed their hope for the market to stabilize.
Therefore, if the real estate market continues to decline, the policy to save the market will continue to intensify.
For example, the comprehensive abolition of purchase restrictions, and the policy for purchasing multiple houses will be the same as for the first house.
In other words, policies that previously restricted speculation will be completely abolished. Although the policy of "housing for living, not for speculation" has not been abolished, it may be allowed in the future.
Looking at today's market performance, the real estate sector soared in the afternoon, with Vanke A's stock price hitting the daily limit; correspondingly, the liquor sector also took off.
All of these are based on the expectation of a major relaxation of real estate policies.How should we view this matter?
We can participate in the capital market, but we should be cautious about participating in the real estate market, because according to international experience, after the collapse of the real estate belief, the downward trend is measured in decades.
2. Rarely proposed: To help enterprises through difficulties and further standardize law enforcement and regulatory actions involving enterprises.
This statement is highly targeted and is in stark contrast to the general trend in the past few years.
In the past two years, the land finance in various places has basically come to a halt, but fiscal expenditure is rigid, so what to do when there is a shortage of money?
The choice of many places is either to increase fines on the people or to increase fines on enterprises.
But what if there are no enterprises in the local area, or if local enterprises have no money? Then they go after enterprises from other places.
The term "distant water fishing" has become popular.
Because as long as the local people use products from enterprises in other places, and as long as the local people report it, they can go to other places to arrest people.
This has severely affected the normal operation of enterprises and has severely undermined the confidence of entrepreneurs.Thus, this meeting clarified: further standardize law enforcement and regulatory actions involving enterprises.
Note that "standardize...regulation" is too unfamiliar a term.
Since 2015, our various fields have essentially entered a strict regulatory cycle, with policy documents consistently emphasizing "strengthen...regulation," making "standardize...regulation" quite rare.
This also indicates that, indeed, policy documents reflect a care for private enterprises.
But as always, what private enterprises want is not preferential treatment but a sense of security.
Can this policy change the current situation where entrepreneurs lack a sense of security?
3. Rare: Concession to the people.
The original text of this meeting: Strengthen assistance to employment difficulties such as the elderly, disabled, and those unemployed for a long time; enhance aid and support for low-income populations.
Combined with the policies of the past two days: Reduce the interest rates on existing mortgages, with an average decrease of 0.5%;
The Ministry of Civil Affairs and the Ministry of Finance jointly deploy the issuance of one-time living subsidies to people in extreme difficulty, orphans, and other disadvantaged groups on the occasion of the 75th anniversary of the founding of the People's Republic of China;The issuance of the opinion on implementing an employment-first strategy to promote high-quality and full employment highlights the importance of increasing the share of labor remuneration in the initial distribution and strengthening macro guidance on corporate wage distribution. This is indeed a departure from the past.
Prioritizing the interests of the people, valuing the common folk, and safeguarding consumer confidence have been the focal points of our persistent advocacy. The recent series of policies have also aligned with the points we have been advocating for, which actually represents a significant shift in economic thinking.
The economic logic is as follows:
1. The current challenge is oversupply, with the most significant issue being insufficient demand; 2. The economic model of internal circulation shifts from being a "world factory" to a "world market," with the role of the common people transitioning from producers to consumers; 3. Economic growth is transformed from investment-driven to consumption-driven; etc.
All these demand: prioritizing the interests of the people.
Prioritizing the interests of the people is absolutely a good thing and is the trend of the future. However, what do we need to pay attention to?
When the state provides subsidies to the common people, it must ensure that the subsidies are delivered effectively, allowing the money to truly reach those in need, without being intercepted by those with connections or by grassroots organizations.
Additionally, subsidy policies should be as reasonable as possible. For example, the scope of subsidies should be as broad as possible, and the amount of subsidies can be appropriately reduced. The policies should not be solely aimed at creating exemplary cases.Because compared to other surrounding rural populations, the current subsidies for poor households and those on minimum living standards are indeed quite high. This means that whoever gets a slot for poor households or minimum living standards becomes part of the local upper class overnight. For example, they can get affordable housing at low prices, have high medical reimbursements, and receive high monthly guarantees, among other things.
Of course, the subsidies are not very high, but because the income of the people around them is too low and the guarantees are too few, poor households and those on minimum living standards can quickly turn their economic situation around with just a little bit of policy favor.
Finally, respecting workers and protecting their rights, the country must lead by example.
For instance, during legal holidays, don't make the shift adjustments so disgusting; give the people a few more days off in reality. Also, when taking the civil service exam, eliminate the age limit of 35, and so on.
We cannot put the task of protecting workers' rights entirely on the shoulders of enterprises, otherwise, the cost for enterprises will be too high, and naturally, it will be difficult to continue.
4. Rarely proposed: Western industrial migration.
The issue of western industrial migration was not mentioned in this Politburo meeting, but it was mentioned in the "Opinions on Implementing an Employment Priority Strategy to Promote High-Quality and Full Employment": guiding funds, technology, and labor-intensive industries to orderly transfer from the east to the central and western regions, and from central cities to the hinterland.
In fact, as early as April 2023, in the article "Don't Let Low-End Industries Run Away," we proposed a similar viewpoint: Our country has a vast territory and unbalanced regional development. The vast central and western regions need the so-called "low-end industries."
In the article "For the First Time, the High-Level Mentioned 'Low-End Industries': They Cannot Withdraw, and They Are Not Allowed to Escape!", we explained in detail why low-end industries are needed, the significance of western industrial migration, and why it is unreasonable to transfer industries to Southeast Asia.What is the issue?
Let's all ponder this: with the same salary level, why do coastal enterprises "phase out" industries and prefer to go to Southeast Asia rather than to the central and western regions?
Business environment.
To be realistic, the business environment in the northern and central-western regions is vastly different from that of the Yangtze River Delta and the Pearl River Delta, and the trend of the business environment is deteriorating, especially against the backdrop of a significant decline in fiscal revenue. "I don't have the ability to support a company, but it's too easy to ruin one."
Therefore, we need to go beyond the economic level of major adjustments so that the westward migration of industries will not remain just a slogan.
Comparing this, the slogan "Revitalize the Northeast" has been raised for decades and trillions of funds have been invested, but there is still no substantial change.
Finally, stepping out of policy, let's share the social laws of our society:
Nothing is unchanging, nothing is an iron law, what exists is only pragmatism.
There is no grand chess game, no meticulous layout, what exists is only necessity. In the past, whether it was not recognizing the seriousness of economic problems, or being constrained by the external environment and not daring to let go, the situation has changed now.The trend shifts towards: stimulating the economy, stimulating the economy at all costs.
The next focus is: inflation.