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founder securities released a research report pointing out that the first economic work deployment at the politburo meeting in september conveyed a strong determination to stabilize growth and expectations.

the meeting pointed out: "we need to promote the real estate market to stop falling and stabilize. we need to strictly control the increase in commercial housing construction, optimize the stock, improve the quality, increase the loan issuance for 'white list' projects, and support the revitalization of idle land. the expression "stop falling and stabilize" is relatively rare, indicating that the policy level is paying more and more attention to the economic and social impact of falling housing prices.

the meeting pointed out: "we must strive to boost the capital market, vigorously guide medium- and long-term funds into the market, and clear the bottlenecks for social security, insurance, and financial management funds to enter the market. it is expected that there will be further support in guiding medium- and long-term funds to enter the market, improving the quality of listed companies, and protecting investors in the future.

the meeting pointed out: "it is necessary to reduce the deposit reserve ratio and implement a strong interest rate cut." there is still room for further strengthening of the aggregate policy such as the reserve ratio cut in the fourth quarter. governor pan gongsheng pointed out that "compared with the central banks of major economies in the world, my country's deposit reserve ratio still has some room for reduction. before the end of the year, it may further reduce the reserve ratio by 0.25 to 0.5 percentage points depending on relevant circumstances."

the full report is as follows

for the first time, the political bureau of the cpc central committee deployed economic work at a meeting in september, conveying a major determination to stabilize growth and expectations. the political bureau generally holds meetings once a month, with the three meetings in april, july and december mainly discussing economic issues, deploying economic work for the second quarter, the second half of the year and the following year respectively. however, the frequency and topics are not strictly fixed. there have been two precedents of discussing economic issues at the political bureau meetings in october. on october 28, 2016 and october 31, 2018, the political bureau of the cpc central committee held meetings to summarize the economy in the third quarter and deploy economic work tasks for the next stage. but september is still the first time. there have been a total of 11 political bureau meetings in september since 2013, and this year is the first time to discuss economic issues.

the emphasis on "sense of urgency" is due to the increasing pressure on stabilizing growth since july. the meeting pointed out: "we must truly enhance our sense of responsibility and urgency in doing a good job in economic work. we must focus on key points, take the initiative, effectively implement existing policies, step up efforts to introduce incremental policies, further improve the pertinence and effectiveness of policy measures, and strive to complete the annual economic and social development goals and tasks."

the economy has faced three new problems since july. first, there is great pressure to achieve economic targets. the economy grew by 5% in the first half of the year, but the economy has weakened marginally since july-august. the economic growth rate in the third quarter may be lower than the 4.7% in the second quarter. the pressure to achieve an annual economic growth rate of 5% is great. second, domestic demand is insufficient and prices have weakened again. among domestic demand, only manufacturing investment is still strong, while infrastructure, real estate and consumption are all weakening. in august, the growth rate of infrastructure investment after excluding power investment was only 1.2%, and the growth rate of social retail sales was only 2.1%; affected by insufficient demand, prices have weakened. in august, the core cpi continued to fall to 0.3% year-on-year, and the ppi fell sharply to -1.8% year-on-year. third, the external situation has changed, and the export outlook is uncertain. exports are the main support for this year's economy. in the first eight months, the growth rates of exports in us dollars and rmb reached 4.6% and 6.9% respectively, but in the future, there will be uncertain risks such as weakening overseas economy, intensified trade frictions, and the us election.

finance: how to strengthen fiscal policy?

the meeting pointed out: "we must increase the countercyclical adjustment of fiscal and monetary policies, ensure necessary fiscal expenditures, and do a good job in the 'three guarantees' at the grassroots level. we must issue and make good use of ultra-long-term special treasury bonds and local government special bonds to better play the role of government investment in driving development."

judging from the statement, it is relatively close to the political bureau meeting in july, emphasizing that "it is necessary to issue and use ultra-long-term special treasury bonds and local government special bonds well." we believe that the fiscal policy is more likely to speed up the progress of revenue and expenditure and strive to achieve the annual budget target. the growth rates of fiscal revenue and expenditure in the first eight months of this year were -2.6%/+1.5%, respectively, 5.9 points and 2.5 points lower than the budget target. in our previous report, we pointed out that the fiscal "catch-up progress" corresponds to an increase in the growth rate of expenditure from september to december from 1.5% in the first half of the year to 5.5%. compared with the baseline scenario, an additional expenditure of 0.4 trillion yuan will be required in the second half of the year, driving the growth rate of nominal gdp for the whole year by 0.12-0.27 points, and the growth rate of nominal gdp in the second half of the year by 0.22-0.51 points.

real estate: promote the real estate market to stop falling and stabilize.

the meeting pointed out: "we must promote the real estate market to stop falling and stabilize, strictly control the increase in commercial housing construction, optimize the existing stock, improve the quality, increase the loan issuance of "white list" projects, and support the revitalization of existing idle land. we must respond to the concerns of the people, adjust the housing purchase restriction policy, lower the interest rates of existing mortgage loans, speed up the improvement of land, fiscal, tax, and financial policies, and promote the construction of a new model of real estate development."

the expression "stop falling and stabilize" is relatively rare, indicating that the policy level attaches more and more importance to the economic and social impact of falling housing prices. as of august this year, the prices of new and second-hand houses in 70 cities fell by 8.4% and 14.7% respectively compared with the high point in mid-2021. the decline in housing prices has had a significant impact on all aspects of the macro-economy. first, real estate consumption and investment directly drag down economic growth; second, "land finance" is unsustainable, and local fiscal pressure has increased; third, the wealth of residents' families has shrunk; fourth, upstream and downstream real estate companies have been directly impacted; and fifth, financial risks have been derived from this.

how to stop the decline and stabilize? on the one hand, the restrictive policies in the original overheated market stage have been cancelled. at the 924 financial ministry press conference, policies such as reducing down payments and interest rates have been introduced. in the long run, there is room for further reductions in mortgage interest rates. on the other hand, "strictly control the increase and optimize the stock", increase the efforts to collect and store affordable housing, promote the liquidation of supply and inventory, and accelerate the rebalancing of market supply and demand.

capital market: strive to boost the capital market and form a policy relay with 924.

the meeting pointed out: "we must work hard to boost the capital market, vigorously guide medium- and long-term funds into the market, and clear the bottlenecks for social security, insurance, and wealth management funds to enter the market. we must support mergers and acquisitions of listed companies, steadily advance the reform of public funds, and study and introduce policies and measures to protect small and medium-sized investors." in the past two years, the capital market has increasingly become a focus of policy attention. the political bureau meeting in july last year proposed "to activate the capital market and boost investor confidence." the meeting in april this year pointed out that "multiple measures should be taken to promote the healthy development of the capital market." the meeting in july pointed out that "investor confidence should be boosted and the inherent stability of the capital market should be enhanced." this meeting proposed "working hard to boost the capital market," which went a step further. from a practical point of view, support has also been strengthened recently.

on september 24, after the introduction of a package of financial policies, market confidence was stabilized and the a-share market rebounded sharply. the effect was obvious, but the market was also worried that subsequent policies would not keep up and the improvement in confidence would not be sustainable. this meeting dispelled this concern, and it is expected that there will be further support in guiding medium- and long-term funds into the market, improving the quality of listed companies, and protecting investors.

monetary policy: the reduction in reserve requirement ratio and interest rate have been announced and can be further implemented.

the meeting pointed out: "it is necessary to reduce the deposit reserve ratio and implement a strong interest rate cut." at the press conference on september 24, the implementation of specific policies such as reducing the reserve requirement ratio, reducing interest rates, reducing the interest rates of existing mortgages, and supporting the capital market has been announced. looking forward, there is still room for further increase in aggregate policies such as the reserve requirement ratio cut in the fourth quarter. governor pan gongsheng pointed out that "compared with the central banks of major economies in the world, my country's deposit reserve ratio still has room for downward adjustment. before the end of the year, it may further reduce the reserve requirement ratio by 0.25 to 0.5 percentage points depending on relevant circumstances."