Half of 2025 has already passed. In the first half of the year, facing sudden changes in the external environment, China intensified the implementation of more proactive and proactive macro policies, achieving good results. Although GDP data has not yet been released, it can be seen from economic indicators such as the manufacturing PMI that the economy showed a positive trend in the first half of the year. Looking ahead to the second half of the year, there are still many external uncertainties and instability factors. How should macroeconomic policies be strengthened in the next step to ensure the achievement of the annual economic and social development goals? Incremental policy: There is enough room for discretionary choice. Since this year, China has implemented more active and promising macro policies, such as raising the deficit ratio, expanding the scale of special debt and ultra long term special treasury bond, and launched a package of financial policies on May 7, including a 0.5 percentage point reduction in reserve requirements and 0.1 percentage point reduction in interest rates. These policies have achieved positive results. The overall economic performance in the first half of the year was better than expected, "said Wen Bin, Chief Economist of China Minsheng Bank. After laying a good foundation in the first half of the year, the pressure to achieve the annual target is relatively controllable, and it is unlikely that policies will be significantly increased in the second half of the year. He believes that in the second half of the year, policies will focus on stability and continue to make good use of existing policies. Incremental policies will be "pre researched and reserved" and temporarily "prepared but not used", but if there is an unexpected impact, it will be ensured that they can be launched in a timely manner. Although the necessity of easing and increasing in the short term in the second half of the year is not strong, there is ample space. Li Chao, Chief Economist of Zheshang Securities, stated that it is expected that the central bank will still implement a 0.5 percentage point reserve requirement ratio cut and a 0.2 percentage point interest rate cut within this year. Looking at the whole year, the monetary policy in 2025 will maintain a loose tone, forming a policy synergy with various policies such as finance, industry, employment, and social security. Since this year, "two new" and "dual" have become the main supporting forces to drive the recovery of consumption and investment, behind which is the accelerated issuance and use of ultra long term special treasury bond and special bonds, reflecting the important role of fiscal policy in stabilizing growth. On June 24, Lan Fo'an, Minister of Finance, mentioned in his report on the 2024 central final accounts to the 16th meeting of the Standing Committee of the 14th National People's Congress that the next step would be to make full use of more active fiscal policies, launch incremental reserve policies in a timely manner according to changes in the situation, focus on stabilizing employment, enterprises, markets and expectations, and fully consolidate the fundamentals of economic development and social stability. Wen Bin stated that in the second half of the year, it is expected that the finance department will take the lead in implementing and accelerating the implementation and effectiveness of existing policies. "In the second half of the year, there is still more than 7 trillion yuan of broad fiscal space under the full scope, including 4.03 trillion yuan of deficit, 2.24 trillion yuan of special debt, and 745 billion yuan of super long term special treasury bond, respectively. The 'surplus' is sufficient." Considering the uncertainty of the external environment, Wen Bin said that the possible incremental policies include revitalizing the local debt balance limit, creating new policy based financial instruments, and so on. The intensity of "anti involution" or further increase in "involution style" competition usually refers to low price and homogeneous competition between enterprises, which is an ineffective competition that leads to low overall industrial efficiency. The internal competition among enterprises has led to a homogeneous and low-level price war in the industry. ”Zhang Jun, Chief Economist of China Galaxy Securities, stated that the current "involution style" competition has become the key crux of the weak price recovery, and deeply affects the transmission path from PPI to CPI. The phenomenon of "internal competition" has received high attention from the central government. This year's government work report proposes to comprehensively rectify 'internal competition'; The sixth meeting of the Central Financial and Economic Commission held on July 1st proposed to "govern the disorderly competition among enterprises at low prices in accordance with laws and regulations, guide enterprises to improve product quality, and promote the orderly exit of backward production capacity". Several industries have launched self regulatory actions to combat internal competition. In October 2024, the China Photovoltaic Industry Association, together with 16 leading photovoltaic enterprises, held a symposium on preventing vicious competition in the industry and reached a consensus to strengthen industry self-discipline; On May 31st of this year, the China Association of Automobile Manufacturers released the "Initiative on Maintaining Fair Competition Order and Promoting Healthy Development of the Industry"... Li Chao stated that the current policy focus of comprehensive rectification of "internal competition" is more on controlling the increment, such as regulating the investment attraction behavior of local governments for new, repeated and ineffective investments; The optimization of existing production capacity mainly relies on industry self-discipline, regulating low price vicious competition, rather than accelerating market clearance through administrative means. The intensity of 'anti internal competition' in the second half of the year may further increase. ”Zhang Jun stated. He suggested taking the comprehensive rectification of internal competition as the starting point and vigorously promoting the transformation and upgrading of traditional industries. At the micro level, it is necessary to strengthen the self revolution of enterprises, adhere to innovation leadership, and focus on enhancing innovation capabilities. In terms of industry development, it is necessary to strengthen industry self-discipline and promote the formation of a benign competition and cooperation ecological pattern in the industry. In terms of macro policies, it is necessary to improve the top-level design of industrial layout and reduce or even eliminate "internal competition" from the source. (New Society)