Lin Muxi and Wang Cong: Strengthening Expectation Management to Improve Overall Policy Efficacy
Expectation management acts upon the psychological layer of economic agents primarily through information dissemination. It can effectively reduce expectational bias, transforming positive social expectations into orderly and rational economic behavior, thereby creating powerful confidence and momentum to promote high-quality development.
The 2024 Central Economic Work Conference proposed to "strengthen expectation management, synergistically advance policy implementation and expectation guidance, and enhance the guiding force and influence of policy." This is the latest requirement for strengthening expectation management put forward by the CPC Central Committee with Comrade Xi Jinping at its core, based on a scientific assessment of domestic and international economic situations and an accurate grasp of the laws of macroeconomic operation, combined with the realistic need to improve the macroeconomic governance system. Strengthening expectation management helps guide public expectations toward policy goals and promotes the overall coordination and systematic implementation of macro policies. It holds great significance for improving the macroeconomic governance system and enhancing macroeconomic governance capacity.
1. The Importance of Strengthening Expectation Management Continues to Emerge
Macroeconomic governance is a vital field of national governance; the modernization of national governance inevitably requires the realization of the modernization of macroeconomic governance. As a key component of macroeconomic governance, expectation management refers to the process by which government departments effectively guide, coordinate, and stabilize social expectations through policy interpretation, information disclosure, and press releases. Strengthening expectation management is of great significance for promoting the modernization of the national governance system and capacity.
Strengthening expectation management is an inevitable requirement for forming a policy synergy to promote high-quality development. High-quality development is the "hard truth" [1] of the New Era and the primary task of building a modern socialist country in all respects. A sound macroeconomic governance system is an important support for achieving high-quality development. This means that macroeconomic governance must not only achieve general macro-control objectives—such as economic growth, price stability, full employment, and balance of international payments—but also play an important role in enhancing development momentum, promoting coordinated development, fostering harmony between humanity and nature, advancing internal-external connectivity, and handling the relationship between efficiency and equity. The diversification of macroeconomic governance goals inevitably requires a variety of tools, thus highlighting the importance of strengthening the coordination and cooperation of various policy instruments. Practice has proven that by strengthening expectation management, the government can maximize the avoidance of "compositional fallacies" or "decompositional fallacies" [2] under conditions where multiple policies are applied simultaneously, thereby synergistically advancing policy implementation and expectation guidance and enhancing the effect of macro policies in supporting high-quality development.
Strengthening expectation management is an important prerequisite for promoting the further comprehensive deepening of reform. General Secretary Xi Jinping pointed out: "The comprehensive deepening of reform in the New Era was planned and advanced against the backdrop of our country’s reform entering the 'storming stage' and 'deep-water zone' [3]. It is characterized by a wide scope, deep impact on interests, great difficulty in tackling core problems, and strong interconnectedness." He emphasized the need to "highlight economic system reform as the priority," "broadly build consensus and fully mobilize all positive factors," "rationally guide reform expectations," and "grasp the correct orientation of public opinion." Reform inevitably involves the adjustment of interests across various sectors and will affect the interests of every individual to varying degrees; the diversification of interest demands also increases the difficulty of consolidating a consensus on reform. To this end, the government needs to rationally guide reform expectations, broadly build consensus, fully mobilize all positive factors, correctly handle the adjustment of interest relations and individual gains and losses in the reform, and enhance ideological consciousness and initiative in advancing reform. At the same time, facing demands, contradictions, and problems arising in the reform, we must do a good job in guiding public opinion and creating a stable, transparent, and predictable policy environment.
Strengthening expectation management is a key measure to resolve the difficulties and contradictions facing China’s economic development. Since the 2021 Central Economic Work Conference noted that "China's economic development faces the triple pressure of demand contraction, supply shocks, and weakening expectations," the impact of expectations on the economy has become increasingly prominent. To effectively alleviate the pressure of weakening expectations, the 2022 Central Economic Work Conference proposed to "start by improving social psychological expectations and boosting confidence in development, grasping the key link [4] to carry out work." The 2023 Central Economic Work Conference emphasized the need to "introduce more policies conducive to stabilizing expectations, growth, and employment," placing "stabilizing expectations" first. The 2024 Central Economic Work Conference, while fully affirming that the package of incremental policies [5] has played a role in "effectively boosting social confidence and bringing about a significant economic recovery," continued to emphasize "stabilizing expectations and stimulating vitality." This means that stabilizing expectations remains the top priority for solving the contradictions and problems in current economic development and promoting a sustained economic recovery.
2. Main Content and Requirements of Strengthening Expectation Management
Expectation management in China is widely applied across all major aspects of macroeconomic governance, emphasizing the comprehensive use of multiple policy tools and a balance between long-term and short-term management. In recent years, the connotation of expectation management has continuously deepened, with particular emphasis on improving government credibility, stabilizing consumption and investment, and boosting market confidence to encourage the government, enterprises, and households to work together for high-quality development.
Improving government credibility and enhancing the guiding force and influence of policy is the primary prerequisite for strengthening expectation management. Improving government credibility is the key to the smooth implementation of expectation management. Measures such as increasing transparency, strengthening supervision and accountability, and improving service quality are important for increasing public support and trust in the government. Enhancing the guiding force and influence of policy is also an inherent requirement of expectation management. China is currently in a critical period of accelerating transformation and upgrading and striving to promote high-quality development. The tasks of reform, development, and stability are unprecedentedly arduous. Government policy guidance and proactive regulation are key to promoting high-quality economic development. It is essential to reinforce the important role of macro policies in guiding the psychological expectations and market behavior of micro-agents. This requires the government to further strengthen its response to public opinion on government affairs, avoid expectational deviations, and ensure that various policies can be effectively implemented and widely accepted.
Correctly guiding social expectations focuses on stabilizing consumption and investment expectations. Social expectations refer to the subjective judgments made by micro-agents regarding specific economic indicators or macroeconomic trends based on past experience, current information, and logical rules. These expectations are highly sensitive and widely disseminated. Once social expectations are formed, they act upon total social demand and supply through the stages of production, exchange, distribution, and consumption, thereby exerting a substantive impact on macroeconomic operations. Currently, correctly guiding social expectations focuses on guiding consumption and investment expectations, stimulating potential consumption, expanding productive investment, and forming a virtuous cycle where consumption and investment promote each other. Stabilizing consumption expectations is an effective way to expand domestic demand; necessary means should be taken to raise household income levels, accelerate the improvement of the social security system, and improve the consumption environment to fully release consumption potential and play the foundational role of consumption in economic development. Stabilizing investment expectations is an important lever for expanding effective investment and improving investment efficiency. This requires both enhancing the leading role of government investment in driving total social investment and boosting the investment confidence of enterprises, especially private enterprises, while also stabilizing the real estate and stock markets.
Improving market expectations for enterprises and stabilizing and boosting market confidence are important goals of strengthening expectation management. To further improve enterprise expectations, we should accelerate the implementation of existing ("stock") policies and intensify the introduction of a package of incremental policies to solve the problem of weak expectations among private enterprises, especially small, medium, and micro-sized enterprises. Full attention should be paid to factors affecting private enterprise expectations, such as policy stability, the fairness of the business environment, and the protection of property rights and entrepreneurial rights, supporting private enterprises to develop with firm confidence. At the same time, we must complete the action to deepen and upgrade the reform of state-owned enterprises (SOEs) with high quality, promoting state-owned capital and SOEs to become stronger, better, and larger, realizing a situation where the public and non-public sectors of the economy complement and reinforce each other.
3. The Focus of Strengthening Expectation Management Lies in Improving Expectation Management Mechanisms
When the Third Plenary Session of the 20th CPC Central Committee made important arrangements for "improving the macroeconomic governance system," it explicitly emphasized "improving expectation management mechanisms." This is a clear requirement for strengthening expectation management from the perspective of institutional building, closely following the general goal of "continuing to improve and develop the system of socialism with Chinese characteristics and promoting the modernization of China's system and capacity for governance." Combined with the key tasks and requirements of expectation management, improving expectation management mechanisms should primarily start from the following aspects:
Improve the policy system for expectation management. To achieve a balance and unification between the holistic, long-term goals and the local, stage-specific goals of expectation management, it is necessary to strengthen top-level design. First, give full weight to the strategic guiding role of national development plans, ensuring the alignment and interaction of expectation management with development strategies, development plans, and annual plans. Second, continuously enrich the "policy toolkit" for expectation management by researching and reserving tools with expectational guidance effects and introducing new measures in a timely manner to handle various "beyond-expectation" changes. Third, improve policy coordination mechanisms for expectation management by strengthening communication between departments in policy formulation and execution to ensure that macro-policy orientations are consistent and synergistic.
Improve the indicator system for expectation management. First, increase the application of quantitative indicators, which can reflect the economic situation more directly and objectively than qualitative descriptions. Second, make full use of comprehensive indicators with rich meanings to assess development levels and trends, as single indicators struggle to capture modern economic uncertainty. Third, further develop indicators with clear directional signals, such as business climate indices, confidence indices, and financial condition indices, to transmit macro-control intentions to society and enhance the effectiveness of "pre-tuning" and "fine-tuning" [6] in macro-control.
Improve mechanisms for routine tracking and communication. Continuously reduce information asymmetry between the government and the public. First, improve information acquisition mechanisms by using multiple channels to track and analyze information in real-time, listening to the interest demands of different subjects. Second, improve proactive communication mechanisms, where the government adheres to transparency and provides timely, accurate policy interpretations. Third, increase publicity for economic work, giving full play to the role of mainstream media in unifying thoughts and guiding public opinion, especially by using media influence to eliminate investor nervousness and reduce market volatility during periods of intense market fluctuations.
Improve mechanisms for expectation early-warning and risk identification. First, improve long-term working mechanisms by incorporating the management of inflation expectations, deflation expectations, and financial/capital market expectations into the macroeconomic monitoring and warning system. Second, scientifically set monitoring indicators and warning intervals for early warnings. This includes both basic indicators for long-term monitoring and characteristic indicators that reflect changes in the macroeconomic state, ensuring that expectation management remains consistent with the goals of macroeconomic governance.