Foreign-funded financial institutions look at the two sessions： policy overweight boosts consumption, expands domestic demand, develops emerging industries and helps economic restructuring.

The gross domestic product will increase by about 5%, the consumer price will increase by about 2%, and deficit ratio plans to arrange it by about 4% … This year’s government work report has set the expected targets for major economic and social development in 2025.

This policy tone has also attracted the attention of foreign-funded institutions. According to many foreign financial institutions interviewed by shanghai securities news, a series of key words such as "more active and promising macro policies", "expanding domestic demand in all directions" and "cultivating and expanding emerging industries and future industries" released more positive signals, demonstrating China’s determination to continuously promote high-quality economic development.

Macro policies are more active and promising.

In the government work report, "implementing more active and promising macro policies" has aroused widespread concern.

In terms of fiscal policy, the government’s work report states that this year, deficit ratio plans to arrange around 4%, which is 1 percentage point higher than the previous year, with a deficit of 5.66 trillion yuan, which is 1.6 trillion yuan higher than the previous year.

Xiong Yi, chief economist of Deutsche Bank Group in China, said that the intensity of fiscal expenditure has increased significantly this year, which will form the strongest fiscal multiplier effect since 2021. He said that the growth rate of expenditure in 2025 will accelerate from less than 3% in 2024 to 7% in 2025, which is expected to boost the nominal gdp growth by about 2 percentage points.

On the monetary policy level, the government work report proposes to implement a moderately loose monetary policy. Give full play to the dual functions of monetary policy tools in terms of aggregate and structure, timely reduce the RRR and interest rates, maintain sufficient liquidity, and match the scale of social financing and the growth of money supply with the expected goals of economic growth and overall price level.

Ding Shuang, chief economist of Standard Chartered Bank for Greater China and North Asia, said that on the whole, the growth of money supply should match the expected targets of economic growth and inflation, reflecting the decision-making departments’ intention to promote moderate price recovery, which is also one of the considerations of setting the inflation target at a more reasonable level of 2% in the government work report.

According to Zhu Haibin, chief economist of JPMorgan Chase China and head of economic research in Greater China, the continuity of policy is an important feature of economic policy in 2025. He believes that this round of policy adjustment since September 2024 is a layout of "the first half", and 2025 is the "second half" of this layout. This continuity is not only reflected in the specific content of the policy, but also in the smooth communication between the government and the market.

"The government work report shows that the government attaches great importance to the timeliness of policies. The report puts forward that’ the implementation of policies should be early, rather than late’." Ding Shuang said.

"Expanding domestic demand in all directions" is the primary task.

The government work report lists "expanding domestic demand in all directions" as the top ten tasks, and boosting consumption is placed in a more prominent position.

"Cyclical and structural policies will work together to boost domestic consumption." Liu Jing, chief economist of HSBC Global Research Greater China, said that the long-term stable consumption boost comes from the improvement of residents’ income level and income expectation. In addition to some direct income-increasing policies, the new urbanization also emphasizes the provision of basic public services according to the permanent residence, which is expected to improve the consumption power of the agricultural transfer population.

Zhu Haibin believes that promoting consumption and promoting effective investment will promote the enhancement of economic endogenous growth momentum. According to his calculation, the subsidy scale of the old-for-new policy has doubled from 150 billion yuan in 2024 to 300 billion yuan, which is expected to boost the related livelihood consumption growth by over 400 billion yuan.

"In addition, the policy of service-oriented consumption is stronger than last year, and the policy details are more specific. For example, promote the further opening up of telecommunications, medical care, finance and other fields, further tap the potential of domestic service consumption, and provide consumers with a better service experience. " Zhu Haibin said.

The development of emerging industries helps the transformation of economic structure.

The government work report proposes to cultivate and expand emerging industries and future industries. In the view of many foreign financial institutions, this formulation conveys an important signal to support scientific and technological innovation.

Zhu Haibin believes that in addition to the previous "new three" fields (new energy vehicles, lithium batteries and photovoltaic products), this year’s fields such as artificial intelligence and humanoid robots have ushered in more catalytic factors in the capital market, and the follow-up is expected to become a new bright spot for investment to encourage innovation.

"Under the goal of economic restructuring, on the one hand, we hope to see the real estate market stabilize, on the other hand, we hope to promote economic growth through the development of new quality productivity and the pull-up of new economic sectors." Zhu Haibin said that in the past few years, the representative "new three kinds" of China’s industries have developed very rapidly, but in terms of the proportion of their contribution to the overall economic growth, the growth of new economic sectors needs to be expanded. The emergence of hot events such as deepseek shows the market that China has the ability to innovate in more industries, which is the most positive signal.

He believes that in the short term, there is still much room for improvement in the proportion of industrial chains such as ai in the total economic output. "If this growth momentum can be maintained, developing from’ new three kinds’ to’ new N kinds’ will help the economic restructuring to reach a steady state as soon as possible."

Liu Jing said that China has always attached great importance to scientific and technological innovation to improve productivity. The breakthrough of deepseek has made the world sit up and take notice of China’s innovation ability and potential, and also made the government and the market more actively plan the layout and development of emerging industries and future industries.

Source: shanghai securities news

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Shangguan number author: Shanghai Finance