SHANGHAI: The most important word that has emerged from this year’s Central Economic Work Conference is “stability”, which means the economic work in 2022 will prioritise stability while pursuing progress.

       It also means that next year, policy will be more focused on supporting growth, compared to this year’s policy that has done more to prevent risks such as deleveraging and regulatory crackdowns.

       To achieve such goals, China will continue to implement proactive fiscal policy and prudent monetary policy next year, and this has been decided at the meeting.

       Why China chose to adopt such a macroeconomic policy mix and whether stable growth can be better guaranteed in 2022 are matters worth exploring.

       Looking first at monetary policy, the tone for next year is still “prudence”, and any adjustments should be flexible and appropriate.

       Liquidity should be maintained at a reasonable and ample level, the meeting said.

       Due to contracting demand, supply shocks and weakening expectations, China’s economic growth has been facing downward pressure since the third quarter. Market entities are expecting monetary policy to be more accommodative.

       The People’s Bank of China, the central bank, has responded quickly this year, cutting the reserve requirement ratio for banks effective Dec 15, its second such move this year, releasing 1.2 trillion yuan (US$188bil or RM794bil) in long-term liquidity to counter slowing growth.

       However, room for the central bank to ease monetary policy further next year is limited, especially as the United States continues to tighten its monetary policy. — China Daily/ANN