At 10 a.m. today, the State Council Information Office held a press conference where the Finance Minister Lan Fo'an and the Deputy Minister introduced the main aspects of the next fiscal policy. These policies are primarily focused on stabilizing growth and domestic regional risks. The Ministry of Finance will roll out a series of targeted incremental policy measures in the near future to implement the deployment of the Central Political Bureau meeting, to boost the next economic growth rate, which is conducive to enhancing investors' confidence in economic growth.

The incremental policy measures mainly include the following aspects: First, to increase support for local governments to resolve government debt risks, a larger scale increase in debt limits will be implemented to support local governments in resolving implicit debts, allowing localities to free up more energy and financial resources to promote development and ensure people's livelihoods. Second, special treasury bonds will be issued to support large state-owned commercial banks in replenishing their core tier-one capital, enhancing their risk resistance and credit extension capabilities, and better serving the development of the real economy. Third, a combination of local government special bonds, special funds, tax policies, and other tools will be used to support and promote the stabilization of the real estate market. Fourth, increased support and protection for key groups will be provided, with one-time living subsidies already distributed to people in difficulty before the National Day holiday, and further efforts will be made to increase support for student groups, enhancing overall consumption capacity. These measures form a complete set of counter-cyclical adjustments aimed at boosting consumption and driving investment growth. Through the implementation of these policies, the Ministry of Finance aims to stabilize economic growth through fiscal means while enhancing the market's confidence in future economic prospects.

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Minister Lan Fo'an stated that the central government still has a significant debt capacity and room for increasing the deficit, providing more confidence to domestic and international investors. Recently, multiple departments have jointly introduced a "package" of housing policies, greatly boosting the performance of the capital market. From the State Council press conference on September 24th, the heads of the central bank, the financial regulatory authority, and the securities regulatory commission released a number of significant policy benefits. In terms of monetary policy, measures such as interest rate cuts, reserve requirement ratio reductions, and lowering existing mortgage loan interest rates have been taken to increase market liquidity and maintain a reasonable and sufficient level of liquidity. The central bank has created two policy tools, including swaps for institutions such as securities, funds, and insurance to release more funds, with the initial quota for entering the stock market reaching 500 billion, and the scale can be further expanded if necessary. The second tool created is mainly for listed companies and major shareholders to repurchase their own company's stocks through re-lending, with the initial quota reaching 300 billion. Some listed companies have already applied for this, which is a support for the economy and capital market in terms of monetary policy and funding.

On the morning of October 8th, the director of the National Development and Reform Commission, Zheng Shanjie, stated that incremental fiscal policies will be gradually implemented, mainly from the perspective of boosting consumption and benefiting people's livelihoods to drive economic growth. At 10 a.m. on October 12th, a series of statements by Finance Minister Lan Fo'an indicated that further efforts will be made in fiscal policy, and the intensity of counter-cyclical adjustments will be further increased, with specific measures provided. From January to September, China issued 3.6 trillion yuan in new special bonds, supporting more than 30,000 projects, with over 260 billion yuan used as project capital. In 2024, the central government's fiscal arrangement for local government transfer payments exceeds 10 trillion yuan, with overall local debt risks being alleviated.

Considering the significant fluctuations in the capital market recently, the market has been gradually increasing in volume and rising since September 24th, until the first trading day after the National Day holiday, October 8th, when the market released a huge volume, with the daily transaction volume reaching about 3.5 trillion, exceeding the historical record of 2.3 trillion set on June 5, 2015, at 5,000 points. Subsequently, there was a significant correction, with three consecutive trading days of declines, which also greatly affected the confidence of many investors. Investors are also full of expectations for whether fiscal policy can exceed expectations. The speech by the Finance Minister on Saturday has to some extent dispelled market doubts. China will continue to exert efforts in fiscal policy and introduce a "package" of targeted incremental policy measures, which are expected to reverse investors' pessimistic expectations and drive the recovery of market confidence.

This lays the foundation for the market to usher in a second wave of attacks in the coming period. At the press conference on Saturday, the Finance Minister stated that some incremental policies will be introduced in the real estate sector to support the stabilization of the real estate market, which is also a favorable policy for the housing market. Currently, the overall transaction volume of China's real estate market has shrunk, and the housing prices of the top ten cities in the country have also fallen for four consecutive years. Some time ago, Guangzhou has become the first city among the first-tier cities to fully cancel purchase restrictions, and Shenzhen, Shanghai, and Beijing have also relaxed significantly. It is expected that in the future, administrative restrictions such as purchase restrictions may be gradually lifted to support the recovery of real estate market demand. The stabilization of the real estate market is very important because real estate, as a pillar industry of the national economy, its stabilization is conducive to the stability of 60 upstream industries, can boost demand, drive industrial development, and drive the recovery of industrial added value. At the same time, it can also create more job opportunities and boost residents' income expectations. Therefore, the press conference on Saturday is a significant benefit for the real estate market.

The recent strong performance of the stock market has attracted a large amount of funds, with many funds flowing out from bank wealth management, bank deposits, and the bond market. The seesaw of stocks and bonds has begun to tilt towards the stock market, which is completely different from the performance of the previous few months. If incremental policies can be further implemented, and the stock market ushers in a second wave of attacks, there may be more funds flowing into the capital market from the bond market and bank deposits.

Overall, today's speech by the Finance Minister is in line with expectations, and the introduced "package" of incremental policies is conducive to boosting investors' confidence in the economy. The measures proposed this time are the largest in recent years to support local debt resolution, which also alleviates investors' concerns. Because one of the main risk points of China's economy at present is local debt. By increasing the debt limit on a large scale at one time, replacing the existing implicit debt of local governments, and increasing efforts to support local governments in resolving debt risks, it can also reduce the environmental pressure on local governments. At the same time, support for the real estate market also alleviates investors' concerns about the housing market to a certain extent. So overall, this is still in line with expectations and is conducive to boosting investors' confidence in China's economic growth and the capital market.

Minister Zheng stated that China still has a significant space in fiscal deficits, which means that more substantial fiscal policies may be introduced later. For example, by issuing several trillion yuan in ultra-long-term government bonds to support investment and stimulate consumption. Looking back at the beginning of 2009, in response to the global financial crisis, China decisively implemented a 4 trillion yuan investment plan, and the amount implemented later reached about 10 trillion yuan, mainly driving investment growth in infrastructure construction, which had an immediate effect on economic growth. However, this also led to overcapacity in some traditional industries and low efficiency in some infrastructure investment projects.Therefore, it is anticipated that the fiscal policies to be introduced in the future will not only focus on infrastructure construction but may also lean towards the demand side, that is, consumption. For instance, consumption may be stimulated by distributing cash or consumption vouchers to middle and low-income groups, supporting the exchange of consumer goods for new ones, and other measures, thereby providing more support at the consumption level. In recent years, the contribution of consumption to GDP growth has exceeded the combined total of investment and exports, making it crucial to stabilize and stimulate consumption.

Especially recently, there has been a significant surge in trading volume in our country's capital market. Although there has been some correction recently, the market sentiment has been activated. The market turnover in recent trading days has even reached as high as 3 trillion, which is a rare favorable situation, and we are also very much looking forward to more incremental policies that exceed expectations in the future. Seizing the current favorable market situation, thoroughly activating the capital market, forming a wealth effect, and filling the wallets of 200 million stock investors and 700 million fund investors will lead to a better rebound in consumption, thereby driving a significant recovery in the entire economy.

As I have mentioned many times before, a prosperous capital market is an important aspect of stimulating consumption and economic growth, and initiating a bull market is a shortcut to solving the current economic growth dilemma. A good situation has now emerged, and all sectors of society should cherish the current rare confidence situation and introduce more measures to support the development of the economy and the capital market. It is hoped that this bull market can exceed the expectations of most people.