The Central Economic Work Conference was held in Beijing from December 11th to 12th. The meeting explicitly proposed to implement a moderately loose monetary policy. The Central Politburo meeting held on December 9th also explicitly proposed to implement a more proactive fiscal policy and a moderately loose monetary policy when setting the tone for next year's macroeconomic regulation policies. Compared to the policy orientation in recent years, fiscal policy has shifted from "active" to "more active", and monetary policy has shifted from "prudent" to "moderately loose", indicating an upgrade of policy "combination punches". The last time a moderately loose monetary policy was used was 16 years ago. In November 2008, in response to the international financial crisis, China proposed to implement a "moderately loose monetary policy" to promote rapid economic recovery, which continued until 2009 and 2010. Since 2011, China's monetary policy has consistently adhered to a "prudent" approach, and today it is again proposing "moderate easing". To maintain a reasonable economic growth rate, it is necessary to implement a moderately loose monetary policy. According to data released by the National Bureau of Statistics, China's gross domestic product grew by 5.3% year-on-year in the first quarter of this year, 4.7% in the second quarter, and 4.6% in the third quarter. The gross domestic product (GDP) grew by 4.8% year-on-year in the first three quarters, while the government's development target for this year is to increase by around 5%. Meanwhile, 2025 is the final year of the 14th Five Year Plan, and due to the impact of the epidemic, there are no clear requirements for GDP growth in the 14th Five Year Plan. But to achieve the goal of "reaching the level of moderately developed countries in per capita GDP by 2035" proposed in the 14th Five Year Plan, the average annual GDP growth rate during the 14th Five Year Plan period must be maintained at 4.83% or above. Therefore, maintaining a reasonable economic growth rate is essential to achieving the 2035 vision, and a moderately loose monetary policy starting from the demand side can expand total demand and stabilize economic growth. The economic situation is facing uncertainty and challenges, and it is necessary to strengthen unconventional countercyclical adjustments. Currently, the global economy is facing downward pressure, regional conflicts are emerging one after another, technological revolution and industrial transformation are surging, coupled with challenges such as the US tariff policy towards China, China Europe trade friction, and industrial chain restructuring, making the Chinese economy face a complex external environment. In 2008, China launched a moderately loose monetary policy in response to the international financial crisis. Now, in order to cope with the uncertainty and challenges facing the economy, it is also necessary to strengthen unconventional countercyclical adjustments. At present, the problems of shrinking demand, supply shocks, and weakened expectations still exist in the Chinese economy. According to the National Bureau of Statistics, from January to October, the total profit of industrial enterprises above designated size in China decreased by 4.3% year-on-year. Among them, state-owned holding enterprises achieved a year-on-year decrease of 8.2% in total profits; Joint stock enterprises achieved a 5.7% decrease in total profits; Foreign and Hong Kong, Macao, and Taiwan invested enterprises achieved a 0.9% increase in total profits; Private enterprises achieved a 1.3% decrease in total profits. Industrial enterprises lack confidence in profitability and investment is weak. Moderately loose monetary policy and more proactive fiscal policy send positive signals to the market, effectively boosting confidence from all parties. The current economic operation is supported by a moderately loose monetary policy. In November 2024, the national consumer price index rose by 0.2% year-on-year. On average from January to November, the national consumer price index rose by 0.3% compared to the same period last year. In November 2024, the ex factory prices of industrial producers in China decreased by 2.5% year-on-year. On average from January to November, the ex factory prices of industrial producers decreased by 2.1% compared to the same period last year. The current CPI and PPI are operating in the low range. In October, China's money supply M1 decreased by 6.1% year-on-year, while M2 increased by 7.5% year-on-year, both in the low range. The current money supply and price level can support a moderately loose monetary policy without significant inflationary pressure. Moderately loose monetary policy will maintain moderate liquidity and expand credit scale. Therefore, the interest rates in the loan market are expected to further decline, driving down the financing costs of the real economy. The reserve requirement ratio is also expected to further decline, releasing more liquidity into the market. The People's Bank of China may further purchase bonds to maintain reasonable and sufficient liquidity. Under a moderately loose monetary policy, the credit environment for business entities will be more relaxed, thereby promoting consumption and investment. The decrease in financing costs will also promote technological and industrial innovation, accelerate the development of new quality productivity. Meanwhile, a return to moderate monetary policy easing can also have a certain boosting effect on the stock and real estate markets. (New Press) (Yuan Zheng, Senior Researcher at the Yangtze River Economic Belt Research Institute and Professor at the School of Economics, Southwest University of Finance and Economics)