context: The annual CEWC (Central Economic Work Conference) is the main agenda-setting event for the upcoming year. Answering debates on whether or not to extend COVID-time support policies, CEWC gave reassurances that necessary support for the economy would be continued, but more efficiently and precisely. Among concerns, expanding innovation and domestic consumption figure prominently.

Eight key tasks must be carried out in 2021 as per the CEWC readout, including

  • strengthening national strategic scitech capabilities
  • enhancing independent controllability of industrial supply chains
  • expanding domestic demand
  • comprehensively promoting reform and opening up
  • solving the problem of seeds and cultivated land
  • reinforcing anti-monopoly and preventing the disorderly expansion of capital
  • solving the housing problem in large cities
  • carrying out the carbon emission neutrality agenda

Overall directives and expressions of interest include

  • ensuring that macroeconomic policy in 2021 is
    • continuous
    • stable
    • sustainable
  • continuing implementing proactive fiscal policy and prudent monetary policy
    • maintaining necessary support for economic recovery
    • making policies more precise and effective
    • strengthening the financial guarantee for major national strategic tasks
  • concentrating in a timely fashion on promoting reform and innovation in
    • technological innovation
    • transforming the economic structure
    • adjustments to income distribution
    • resolving local government implicit debt
  • stablising and balancing
    • the macroeconomic leverage ratio
    • the RMB exchange rate
    • the growth rate of money supply and the scale of social financing (to basically match the nominal economic growth rate)
  • ramping up
    • financial support for technological innovation, SMEs, and green development
    • reform of interest rate and exchange rate marketisation
    • multi-channel replenishment of bank capital
    • legal construction of the bond market

The gist is to strike a fine balance between economic recovery and managing risks, notes Dong Ximiao 董希淼 Merchants Union Consumer Finance chief researcher. With the emphasis on maintaining the continuity of policies, CEWC has managed to stabilise market confidence and expectations, Dong believes.