The Central Economic Work Conference (CEWC) was held in Beijing from December 10 to 11. What signals did it send?
Wang Qing of Orient Jincheng: Fiscal Policy to Feature "One Stability, Three Increases" Wang Qing, Chief Macro Analyst at Orient Jincheng, stated that the more proactive fiscal policy in 2026 will be characterized by "one stability, three increases." The conference emphasized maintaining necessary fiscal deficits, total debt, and expenditure levels while optimizing fiscal management and spending structures. Wang predicts the fiscal deficit ratio will remain steady, while special bond issuance, ultra-long-term special treasury bonds, and quasi-fiscal tools will expand.
On monetary policy, Wang expects moderate easing with two key focuses: 1. **Aggregate Measures**: Policy rate cuts of 20–30 basis points and a 1-percentage-point reserve requirement ratio (RRR) reduction are likely, possibly split between H1 and H2. Early 2026 adjustments aren’t ruled out to stabilize Q1 growth. The 5-year LPR may see significant cuts to support the property market. With subdued inflation and potential Fed rate cuts, ample room exists for policy flexibility—though no aggressive easing is anticipated. 2. **Structural Tools**: Increased quotas and lower rates for targeted lending (e.g., tech innovation, green development, SMEs) will drive credit growth and economic rebalancing.
**Local Debt Risks**: The conference highlighted resolving local government financing platform (LGFV) operational debt risks via extensions, rate cuts, and asset revitalization.
Wen Bin of CMBC: Structural Monetary Tools to Expand Wen Bin, Chief Economist at China Minsheng Bank, noted the conference’s call for continued "moderately loose" monetary policy, stressing: - Flexible use of RRR/rate cuts and liquidity tools (e.g., MLF, OMOs) to maintain ample funding. - Prioritizing growth and inflation over strict money supply targets. - Enhancing policy transmission via rate corridor adjustments, yield curve stability, and LPR reforms. - Structural tools to focus on domestic demand, tech, and SMEs, with "volume up, rates down."
Yang Chang of Zhongtai Securities: Prudent Macro Policies Expected Yang Chang, Chief Policy Analyst at Zhongtai Securities, interpreted the conference’s emphasis on "stability" as underscoring steady growth amid external pressures. Fiscal policy will remain proactive, with potential countercyclical measures if needed. Local tax reforms may adjust shared-tax ratios (e.g., corporate income, consumption taxes) to stabilize revenues.
**Employment** tops the民生 agenda, alongside healthcare and market reforms.
Yang Delong of Qianhai开源: Foundation for A-Shares’ "Slow Bull" Market Yang Delong, Chief Economist at Qianhai开源 Fund, sees the conference’s pro-growth policies—boosting demand, tech innovation, and risk mitigation—supporting a 2026 economic recovery. With accommodative liquidity and RMB stability, A-shares may sustain a gradual bull run, aided by household savings shifts and policy backing. Investors should focus on high-quality stocks/funds amid structural opportunities.
In summary, 2026’s policy clarity and reform momentum are poised to underpin steady economic and market performance.
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