Integrating historical data and predictive analysis, it is very likely that the economic policies of this year’s “Two Sessions” will be closely related to the policy tone set in the government work report. The local “Two Sessions” and earlier ministerial meetings have already released key signals, which will provide us with clues about the focus policies that may be introduced during the Two Sessions.
Surrounding the reform measures and industry themes proposed in the recent high-level policy meetings, and in conjunction with the current macroeconomic trends, it is expected that the overall policies released during this year’s Two Sessions may not fluctuate too much. Considering the actual growth rate of GDP in 2023 was 5.2%, along with the 5% growth targets for 2024 set by the three major economic provinces of Guangdong, Jiangsu, and Shandong, the national GDP growth target this year may be maintained at around 5%.
On the fiscal policy front, although the bottom line of this year’s narrow fiscal deficit ratio remains unchanged at 3%, special attention should be given to the potential expansion of the broad fiscal deficit in terms of special government bonds, Pledged Supplementary Lending (PSL), and special bonds. Meanwhile, the central government may continue to take a leading role in leveraging. On the monetary policy front, from the People’s Bank of China’s “dual reduction” policy on January 24th, marking the first time in eight years, to the substantial interest rate cut of the five-year LPR (Loan Prime Rate) in February, both have confirmed the signal for monetary easing. However, given the currently high real interest rates, there is still the possibility of cutting interest rates and required reserve ratios this year, but policy implementation needs to consider the balance between achieving monetary easing and maintaining exchange rate stability.
In terms of real estate policy, a series of measures have been gradually introduced since the Politburo meeting on July 24th last year. At this year’s Two Sessions, it is expected that the “three major projects” will continue to be the core focus to promote the stability of the real estate market and the expansion of infrastructure construction. As for the industrial policy, it is anticipated that emerging productivity, large-scale equipment renewal, and the replacement of durable consumer goods may become the main development trends of the industry.
The term “new quality productivity” has not only become a keyword in economic work deployment from central to local levels but has also been frequently mentioned in high-level meetings, which will undoubtedly become a focus topic of the Two Sessions. The attention will be placed on the development of strategic emerging industries, future industries, and the digital economy industry. The strategies discussed in the fourth meeting of the Central Financial and Economic Affairs Commission on February 23, such as equipment renewal, trade-in of consumer goods, reducing logistics costs for the whole society, expanding domestic demand, stimulating manufacturing investment, and expanding production capacity, all indicate that this year’s Two Sessions may clarify the related policy directions and measures.
