Summary:
How big is the impact of the epidemic on the economy in the first quarter? The research of the World Health Organization shows that Omicron has the characteristics of high infectivity, high immune escape ability and relatively low toxicity. At present, six imported cases of Omicron mutant have been found in China. In the future, the overall situation of the epidemic in China is expected to remain stable. On the one hand, in response to Omicron, China adheres to the general strategy of "external defense input and internal defense rebound" and the general policy of "dynamic clearing"; Second, strengthen the vaccination and accelerate the promotion, which can effectively prevent the large-scale spread of the virus. For consumption, the multi-point spread of the epidemic and the "local Chinese New Year" of the Spring Festival are not conducive to the repair of consumption. For exports, repeated overseas outbreaks will delay the downward speed of China's exports.
What does steady growth rely on?
(1) capital construction: new and old capital construction work together to help the economy "get off to a good start". From the perspective of the willingness of infrastructure investment, the central economic work conference listed "ensuring the intensity of fiscal expenditure and accelerating the progress of expenditure" and "moderately ahead of infrastructure investment" as one of the important tasks in 2022. It can be seen that infrastructure is the key to steady growth this year. In terms of projects, the project reserves will be sufficient in 2022, and the new and old infrastructure will work together.
(2) wide credit: monetary policy turns to loose, and the implementation of wide credit can be expected. On January 17, the central bank lowered the MLF bid winning interest rate and Omo interest rate; Then, on January 20, the one-year LPR and five-year LPR decreased, and the monetary policy has shifted to substantive easing. We judge that this credit extension has three development directions: infrastructure, manufacturing and real estate.
(3) real estate: rectification policies have been intensively introduced to reduce the downward pressure on real estate. First, meet the reasonable housing demand. In January, the mortgage interest rate in many cities decreased month on month, and the lending cycle was shortened. Second, the financing environment of real estate enterprises has improved recently. Third, due to the implementation of urban policies, some urban house purchase policies with rapid sales slowdown, large downward pressure on house prices and serious population outflow have been significantly relaxed. Fourth, the construction of affordable rental housing will be accelerated in 2022, which is expected to boost real estate investment by 1.5-2 percentage points.
(4) industrial policy: actively promote the energy revolution and digital economy, and effectively enhance the economic momentum. In the energy revolution, on the one hand, the low-carbon transformation of traditional energy is the key measure to achieve the goal of "double carbon"; On the other hand, renewable energy and power grid investment have entered the fast lane. In terms of digital economy, recent policy documents have been issued frequently, setting the tone and developing the digital economy in an all-round way. As the main economic form after agricultural economy and industrial economy, digital economy is of great significance to China's economic development.
Under the expectation of the Fed raising interest rates, where will monetary policy go? We believe that the opening of the tightening cycle by the Federal Reserve will not significantly restrict the "self dominated" of China's monetary policy. First, looking back on history, there is no lack of precedent for the situation of "tightening and loosening". The fundamental reason lies in the dislocation of China US economic cycle. China US monetary policy does not have to be synchronized. Second, the impact of monetary policy differentiation on exchange rate is limited. Although the short-term tightening of the Federal Reserve may have some depreciation pressure on the RMB exchange rate, in the medium and long term, the factors supporting the appreciation of the RMB in the early stage are still. First, due to the overseas epidemic, the downward slope of China's exports is expected to slow down, and exports can maintain a good performance in 2022. Second, foreign capital is expected to continue to increase its holdings of RMB assets.
Risk factors: covid-19 virus mutation leads to vaccine failure; China's policy exceeded expectations.
