The Central Economic Work Conference held on December 10-11 outlined ten critical policy directions for 2026. GF Securities' macroeconomic team highlights the following focal points:
1. **Five New "Must-Dos"**: Building on 2024's framework, the conference introduced updated imperatives including "fully unleashing economic potential" to address insufficient demand and "combining policy support with reform/innovation" to balance short-term stimulus with structural reforms. Notably, "strengthening endogenous resilience through internal capacity-building" signals heightened cross-cycle policy coordination.
2. **Stabilizing Investment Growth**: With fixed-asset investment declining 1.7% YoY in 2025, measures will include maintaining fiscal deficit thresholds, expanding central budget allocations, optimizing special bond usage, and stimulating private capital participation.
3. **Dual Monetary Policy Goals**: Prioritizing GDP growth and price recovery, the PBOC retains tools like RRR/interest rate cuts while directing credit toward domestic demand, tech innovation, and SMEs—reflecting concerns over "acute supply-demand imbalances."
4. **Urban-Rural Income Boost**: The accelerated rollout of resident income growth plans underscores consumption-driven strategies, particularly for gig economy workers. Service sector stimulus and AI+ applications gain policy emphasis.
5. **Property Market Stabilization**: Sector-specific risk mitigation will focus on sales-side inventory digestion and affordable housing conversions rather than new construction, alongside housing fund reforms.
6. **Corporate Debt Clearance**: Building on March 2025 initiatives, intensified efforts to resolve payment arrears aim to repair credit chains, benefiting industries with high receivables exposure.
7. **Anti-Fragmentation Measures**: Following four consecutive months of positive PPI momentum, nationwide market integration regulations will institutionalize measures against cutthroat competition.
8. **Energy Modernization**: The forthcoming Energy Power Development Plan advances grid upgrades, energy storage, carbon trading expansion, and distributed energy systems—with equipment manufacturers poised to benefit.
9. **Local Tax Reforms**: Expedited consumption tax adjustments may reorient regional competition from production-focused investment to consumer market cultivation.
10. **Financial Sector Consolidation**: Small/mid-sized institutions will undergo accelerated restructuring under market-driven principles to mitigate systemic risks.
Key risks include external economic shocks, geopolitical tensions, and potential domestic property market pressures.
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