China Convenes Central Economic Work Meeting, Highlights Active Fiscal Policy, Stable Monetary Policy, for 2023

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Xi Jinping recently convened China’s Central Economic Work Meeting from 15 to 16 December in Beijing, outlining key focal points for economic policy in 2023.

The meeting called for “better coordination of development and security, comprehensive deepening of reform and opening, vigorous stimulation of market confidence, the organic integration of strategies to expand domestic demand with deepening of supply-side structural reforms; highlighting the effective performance of work to stabilise growth, employment and prices; effectively preventing and dissolving major forms of risk, driving overall improvement to economic cooperation, and achieving effective increases in quality and rational growth in quantity.”

In 2023, the Chinese central government will “make stability the watchword, pursue progress amidst stability, continue to implement active fiscal policy and steady monetary policy, increase the intensity of macro-policy adjustments, strengthen the coordination of different policies and form a combined force to expedite high-quality growth.”

Fiscal policy

The Meeting called for “active fiscal policy [that] must increase in intensity and effectiveness.”

“[We will] maintain the necessary strength of fiscal expenditures, optimise tools including portfolio deficits, special bonds and discounts, and protect fiscal stability and the controllability of local government debt risk while effectively supporting high-quality growth.

“We must expand the intensity of transfer payments by the centre to the regions, drive a sinking of social strength, and effectively perform grassroots ‘three protections’ (三保) work.”

Monetary policy

The Meeting stated that “steady monetary policy must be precise and vigorous,” as well as “maintain rationally ample liquidity and basic correspondence between growth in the scale of the broad money supply and total social financing with nominal economic growth.”

The Meeting also called for “guiding financial institutions to expand the intensity of support for areas including micro-and-small enterprises, tech innovation and green development.”

With regard to the renminbi exchange rate, the Chinese central government will maintain “basic stability at rationally balanced levels,” as well as “strengthen the system for protecting financial stability.”

Industrial policy

The Meeting called for equal focus on development and security when it comes to industrial policy, as well as “optimisation of methods for the implementation of industrial policy, seizing efforts to transform and upgrade traditional industry and nurture and strengthen strategic and emerging industries, and focusing on reinforcing weak linkages in the industrial chain.

“[We must] forge new competitive industrial advantages during the process of fulfilling the missions of achieving carbon neutrality and carbon targets.”

Science and technology policy

In the realm of science and technology policy, the Meeting called for a focus on “independence and self strengthening.”

“[We] must vigorously coordinate education, science and technology and human personnel work…arrange for the implementation of a raft of major national science and technology projects, improve a new-model national system, effectively employ the organisational role of the government in achieving breakthroughs in key core technologies and highlight the sovereign status of science and technology innovations by enterprise.”

Key work goals for 2023

The Meeting outlined key work targets including:

  1. Focusing on the expansion of domestic demand. Placing the restoration and expansion of consumption in a priority position. Strengthening the ability to consume, improving consumption conditions, innovating consumption scenarios.
  2. Accelerating the establishment of a modernised industrial system. Ascertaining weak linkages in key and core technologies and spare parts with a focus on the key industrial chains of the manufacturing sector.
  3. Pragmatic implementation of the “two unwaverings” (两个毫不动摇).
  4. More vigorously attracting and making use of foreign capital. Driving high-level external opening, raising the quality and level of trade and investment cooperation. Expanding the market entry threshold, expanding the intensity of the opening of the modern services sector, and effectively implementing equal treatment for foreign enterprises.
  5. Effectively preventing and dissolving major economic and financial risk. Ensuring the stable development of the real estate market, pragmatically and effectively performing work to ensure the delivery of properties, protect living standards and protect stability. Satisfying the rational financing demand of the sector, driving restructuring and mergers in the sector, effectively preventing and dissolving risk in high-quality headquarter real estate enterprises, improving balance sheets, and firmly and lawfully striking against illegal criminal activity. Implementing policy on a city-by-city basis and supporting inelastic and improvement residential housing demand.