Event:
On January 10, the national Standing Committee deployed to accelerate the promotion of major projects identified in the outline of the 14th five year plan and the special plan, and expand effective investment. As of February 10, 9 provinces and cities have disclosed the construction plans of major projects in 2022, 1-2 months earlier than in previous years, involving an annual investment scale of $5 trillion. Due to the large investment scale and high project quality, major projects have undoubtedly become the main focus of local governments to stabilize growth and expand investment under the background of triple pressure on the economy. We take this as a window to observe the strength and direction of this round of local steady growth.
Core view:
According to the major project investment plans announced by 9 provinces and cities, in 2022, the overall investment scale of all localities will be increased, the speed and efficiency will be increased, industrial projects will blossom everywhere, infrastructure projects will be concentrated, and local governments will pay more attention to the balance between steady growth and risk prevention. Meanwhile, in terms of project reserve, capital and land element guarantee, the central and local governments will carry out a series of mechanism reforms this year, which is expected to promote the early implementation and effectiveness of major projects.
I. time point: early release, early commencement and early effect
Since the announcement of major projects in Jiangsu, Zhejiang and Shanghai in January and February of 2029, major projects have been launched in Jiangsu, Shandong and other provinces. The time point is 1-2 months ahead of previous years, and focuses on strengthening the landing guidance. It can be seen that the urgency of local governments to stabilize growth has increased significantly.
Both the central and local governments are actively launching a series of mechanism reforms to speed up the implementation of major projects. From the perspective of project reserves, since 2021, under the guidance of policies, major projects have been implemented in all localities. The number of new projects has increased significantly and the problem of insufficient projects has been alleviated, which is the key to ensure the expansion of effective investment this year. In terms of funds, the 1.46 trillion special bonds issued in advance and the nearly 2 trillion carry over surplus funds are expected to reserve sufficient financial bullets for local governments. In addition, all localities have accelerated the implementation of projects by increasing the guarantee of factors such as financing and land and optimizing the approval process.
II. Scale: increased investment to demonstrate the determination of local governments to stabilize growth
In 2022, the annual planned investment of major projects in the above nine provinces and cities reached 5 trillion, an increase of 10% over 2021, higher than the planned growth rate of 6% in 2021. Among the eastern regions, Zhejiang, Guangdong and Shandong have the largest investment scale. The planned investment of major projects in 2022 is 1097.2 billion yuan, 900 billion yuan and 650 billion yuan respectively, more than 100 billion yuan more than the average annual investment in 2021. In the western region, the investment scale of Shaanxi and Sichuan also showed rapid growth, reversing the downward trend of the investment scale of major projects in 2021.
III. investment direction: industrial projects are blooming everywhere, and infrastructure projects are concentrated
In 2022, major projects around the country will still focus on industry and infrastructure, and the proportion of overall investment in infrastructure will rise slightly. However, all localities have generally increased industrial investment, and the characteristics of centralized infrastructure development are more prominent. According to the investment of major projects in 8 provinces and cities in 2022, the proportion of investment in industry in 6 provinces is the same or higher than that in 2021, while only 4 provinces are the same or higher than that in 2021.
This is because the return on investment of infrastructure projects is low and the project cycle is long. Compared with industrial projects, infrastructure projects rely more on financial capital investment. In the context of the increasing debt burden of local governments and lifelong accountability, the number of provinces willing and able to continue to expand infrastructure investment has decreased, and infrastructure investment has become more concentrated.
In terms of industry, all localities have strengthened the construction of major projects around advanced manufacturing and innovation driven development projects, which is expected to support the high growth rate of manufacturing investment. In terms of infrastructure construction, local governments are moderately ahead of schedule in infrastructure construction. Urban renewal, water conservancy, ecological environmental protection, clean energy and new infrastructure are expected to become new growth points.
Risk tip: the promotion of major projects around the country is not as expected.
