This is a rare macro policy discussion in recent years. Over the past month, a group of economists including Lin Yifu, Yu Yongding, Li Xunlei, Zhao Jian, Xia Chun, and others have participated in various ways. The core issue of controversy is whether China's macro policies should focus on stimulating consumption or investment.

Scholars have different perspectives and viewpoints. However, there is also consensus behind the differences - whether focused on boosting consumption or driving investment, participants in this discussion all agree that the current economy is facing some problems and challenges that require finding more effective policies to address in the short to medium to long term.

Since the beginning of this year, the overall operation of the Chinese economy has been stable, maintaining a trend towards innovation and optimization. However, it should also be noted that in the first eight months, the national fixed assets investment (excluding farmers) fell by 7.2% year on year, and the total retail sales of consumer goods increased by 1.1%, of which only 0.4% in August. From a month on month perspective, some data shows signs of increasing pressure.

It is understandable that the market expects stronger response measures. This is the foundation of the debate and also the key signal released by this debate.

In this regard, the introduction of the "924" package of incremental policies in 2024 is a good reference. In 2024, multiple economic data achieved a good start in the first quarter, but continued to decline in the second and third quarters. It was not until the "924" package of policies was introduced that the economic operation maintained a stable and positive trend. The policies introduced at that time timely stabilized the market and released liquidity. More importantly, the policy has conveyed clear signals and reversed market expectations.

Compared with 2024, the positive factors in the economic operation this year are more prominent, especially the impressive performance of new driving forces and the more obvious characteristics of the transition between old and new driving forces. On the other hand, the continuous weakening of consumption and investment data indicates that the problem of insufficient domestic demand still needs to be highly valued.

In fact, from last year's Central Economic Work Conference to this year's National People's Congress and Chinese People's Political Consultative Conference, and then to the Central Political Bureau meeting held on July 30th, statements such as "increasing countercyclical and cross cyclical adjustment efforts", "enhancing policy foresight, targeting, and coordination", "timely planning and implementing quantitative policies for Taiwan, and increasing countercyclical adjustment efforts" indicate that the focus of macroeconomic policy efforts is directed towards "effectively expanding domestic demand".

We have also seen that since the beginning of the year, a series of incremental policies have been continued, and new policies have been introduced one after another, such as the "housing subsidy" policy introduced before National Day. This indicates that there are still reserves for future incremental policies.

The key is when, with what intensity, density, and method these policies should be introduced. This is certainly within the consideration of the decision-making department, as it will greatly affect market expectations and judgments. Perhaps it is not difficult to understand that before the National Day holiday, there were speculations in the market about another "924" - the introduction of a new package of incremental policies.

Some policy commentators believe that the beginning of the fourth quarter is a good policy window period. If incremental policies are introduced at the beginning of the fourth quarter, it can provide clearer expectations for enterprises, local governments, and other entities, affecting the arrangements of various market entities for investment, consumption, and other activities in 2027.

In mid October, the National Bureau of Statistics will release China's economic data for the third quarter. We believe that this may be an important time window to observe the direction of macroeconomic policies.

Looking back at history, whether to focus on "accumulation, savings, and investment" or consumption has always been an important debate topic in the Chinese economic field, and has repeatedly appeared at critical junctures of economic adjustment. The macro policy choices in different historical stages reflect the economic reality of China at that time and the constraints of decision-makers.

In fact, whether to stimulate consumption or stimulate investment has never been a Single choice question. Anyway, looking beyond this policy discussion, perhaps it's time to consider a new package of incremental policies. When the new incremental policy presses the start button, we will see decision-makers weighing the pros and cons of this discussion.

(Author)