The Politburo met to discuss among other things economic work for 2022, in its annual meeting before the Central Economic Work Conference that will likely convene in the next few days.

Language in the readout about about real estate has gotten a lot of attention, but I would caution it looks to be more a calibration to ease some of the pressures than a signal of significant easing. The upcoming 50 bps cut to the reserve requirement ratio also should not be seen as a sign of significant easing.

I have seen some claims that the absence of the phrase "houses are for living in not for speculation" from the Politburo readout is a sign that that the property policy is going to ease materially. That language was not in the 2020 readout of the early December Politburo meeting and yet the policies were tight for the next 12 months. The “not for speculation” language was in the third historical resolution and Liu He’s recent People’s Daily piece, so it seems highly unlikely that would have changed in such a short period of time.

There is an indication of a calibration toward something looser in real estate - 要推进保障性住房建设，支持商品房市场更好满足购房者的合理住房需求，促进房地产业健康发展和良性循环 We will promote the construction of low-income housing, support the commercial housing market to better meet the reasonable housing needs of home buyers, and promote the healthy development and virtuous cycle of the real estate industry" but I do not think that is a fundamental shift. Policymakers are dealing with some significant problems in the property markets including but far from limited to Evergrande, and they do not want to crater the industry. Can they calibrate and avoid disaster? We are going to find out.

A lot will depend on the GDP target they decide to go with next year, if it is much more than 5% they will likely have to ease more, but more signals are coming in that the “target but don’t call it a target” will be about 5%.

The readout from this year’s meeting also does not include the phrasing about strengthening anti-monopoly work and preventing disorderly expansion of capital we saw last December, but I would not take that to mean there will be a relaxation of either. They were both in the historical resolution.

Today’s Essential Eight items:

1. Politburo meeting

2. RRR cut and Evergrande

3. Xi Jinping Economic Thought

4. Religious affairs work conference

5. Xia Baolong on Hong Kong’s democracy

6. PRC really amped up about Democracy and the Democracy Summit

7. US makes diplomatic ban of Olympics official

8. TikTok