Expectation: fiscal "easing" will lean towards the livelihood sector

A meeting of the political bureau of the CPC central committee,which has always set the tone for the central economic work conference,was held Tuesday.Reporter discovery,in the meeting of the political bureau of the central committee,is likely to set the stage for the central economic work conference:enhance the regulation of pertinence,flexibility and forward-looking,to continue to handle maintaining steady and rapid economic development,adjust the economic structure and managing inflation expectations,accelerate the transformation of economic development patterns and economic structure adjustment.

In terms of macro economy,the economic growth may slow down next year,and the growth rate of export and investment will decline rapidly.Fiscal policies will play a bigger role,and monetary policies will be more neutral and loose.The reserve requirement ratio is expected to be cut four to six times,and interest rates will not be cut easily.

A meeting of the political bureau of the CPC central committee,which has always set the tone for the central economic work conference,was held on Tuesday.Reporters found that in the politburo meeting,most likely set the tone for the central economic work conference.

Setting the tone for policy next year:we will emphasize timely anticipatory adjustments and fine-tuning

China will keep its prudent monetary policy and proactive fiscal policy unchanged in 2012,the politburo said.The meeting also put forward the need to strengthen and improve macro-control in a more proactive manner,accurately grasp the intensity,pace and focus of macro-control,and make timely anticipatory adjustments and fine-tuning in light of changes in the situation.

Wang tao,chief China economist at ubs,expects a more pronounced loosening of fiscal and credit policies to take place in the first quarter of 2012,when exports and construction activity will slow more sharply.The"relaxation"will be in the"people's livelihood"sectors:affordable housing,water conservancy and irrigation projects,environmental protection projects,urban infrastructure,distribution systems and other service industries.While the government has repeatedly stressed the importance of boosting consumption,the scope for further tax cuts is likely to be limited.The government is expected to raise pensions and subsistence allowances,while increasing support for small and medium-sized enterprises.

There is still room for government debt

Will next year's measures to support growth be led by monetary policy or fiscal policy?'fiscal policy will play a bigger role in stabilizing growth next year,'said li huiyong,an analyst at shenyin wanguo.'there is limited room for interest rates in monetary policy,and more cuts in the reserve requirement ratio will be made to ease capital constraints.'In terms of finance,due to the low overall debt ratio of the government,there is still room to issue bonds.In addition,structural tax cuts can be implemented.

But fan wei,chief analyst at the fixed income headquarters of hongyuan securities,said that from the source of funds,finance only accounts for about 20 percent.Fiscal policy alone cannot achieve the goal of steady growth.

However,he also believes that money will not be as excessive as in 2009,estimated credit growth of about 8 trillion yuan,the interest rate is not likely to adjust for the time being,but it is estimated that the RRR will be cut four times next year,release liquidity of about 1.6 trillion yuan,which will probably increase nominal GDP by about 3.2%.

RMB appreciation continued to be more volatile

What is the trend of the RMB exchange rate in the context of the rapid decline in economic growth?

Liu dongliang,senior analyst of financial market department,head office of China merchants bank,said that against the backdrop of dollar strength,global currency depreciation is the general trend,but it is expected that the RMB is still likely to see a 3%appreciation space next year,but the probability of two-way fluctuations will rise sharply,there may be thousands of points of phased rise and depreciation.Once the European debt crisis takes an abnormal turn for the worse,the RMB is likely to re-peg to the us dollar,or even depreciate against the us dollar for a period of time.Wen tianna,managing director of investment banking at China merchants securities in Hong Kong,expects the yuan to appreciate about 3%next year.Stephen green,chief economist for greater China at standard chartered bank,also said that the exchange rate may rise for one month and fall for another month next year,with the annual appreciation rate narrowing to about 2%to 2.5%.