On October 21, the "CMF Monthly Economic Data Analysis Conference" was held. Wang Jinbin, former executive vice president of the School of Economics at Renmin University of China and a key member of the China Macroeconomic Forum (CMF), attended the conference and emphasized that policies should guide and promote a moderate increase in risk appetite to stimulate innovation.

What is the vitality of innovation? Wang explained that it refers to the rise in risk appetite, which in turn stimulates investment. This includes several aspects:

First, stock indices should maintain a moderately sustainable valuation, with stable or healthy investments that enhance investors' risk appetite. He pointed out that the performance of China's stock market this year has been notably good. "From 3300 and 3400 points to now around 3800 and 3900 points, the indices have increased by more than ten percent, which is very important for boosting overall market activity."

Additionally, the significant rise in transaction stamp duty this year is also a result of the stock market's moderate and healthy upward trend, which greatly influences investor sentiment, especially given the large number of new accounts opened in the Chinese stock market.

Second, monetary policy may continue a modest interest rate cut in the fourth quarter, reducing overall financing costs, which would benefit enterprises and help maintain a positive economic operating condition. Profits for companies lead to wages, which influence prices, thereby establishing a mechanism of profits-wages-prices.

Third, the limits on debt, including fiscal policies, may need to be addressed earlier. He noted that the local government debt limit for 2026 should consider the slowdown in GDP growth particularly in the third quarter, while focusing on supporting major projects. Furthermore, it is necessary for local governments to resolve hidden debt and tackle overdue payments owed to enterprises.

Wang emphasized that the downside risk options of policies are crucial for maintaining and moderately boosting risk appetite.