Infrastructure investment has become an important starting point for steady growth. At present, many places have made a “good start”, and major projects were started in the first quarter. More than ten provinces and cities including Beijing, Shanghai, Shandong and Zhejiang have also announced the investment list of major projects in 2022.
According to the latest data disclosed by the Ministry of finance, the new local debt quota of 1.788 trillion yuan in 2022 has been issued in advance, and more sufficient funds may promote the rebound of infrastructure investment in the first quarter. According to expert analysis, under the background of the steady growth policy, the growth rate of infrastructure investment is expected to reach 7% to 8% in the first quarter of 2022.
Reflected in China’s A-share market, the large infrastructure sector has continued to rise in recent days. On February 15, Zhejiang Construction Investment Group Co.Ltd(002761) rose by 7 boards, Xinjiang Communications Construction Group Co.Ltd(002941) , China Zhonghua Geotechnical Engineering Group Co.Ltd(002542) rose by more than 10%, and Tianjin Tianbao Infrastructure Co.Ltd(000965) , Xinjiang Beixin Road & Bridge Group Co.Ltd(002307) , Anhui Gourgen Traffic Construction Co.Ltd(603815) followed.
the demand for construction machinery will stabilize and recover
The sales volume data of construction machinery industry is an important indicator for observing fixed asset investment, especially infrastructure investment. As a barometer of macro economy, affected by off-season factors and excessive stock, excavator sales fell sharply in January, but the market is optimistic about the prospect of excavator sales.
According to the statistics of 26 excavator manufacturing enterprises by China Construction Machinery Industry Association, 15607 excavators of various types were sold in January 2022, a year-on-year decrease of 20.4%; Among them, there were 8282 sets in China, a year-on-year decrease of 48.3%; 7325 units were exported, with a year-on-year increase of 105%.
It has been 10 months since the decline of Chinese excavator sales in April last year. The influencing factors include excessive stock, insufficient demand, rising prices of raw materials and stricter environmental protection, among which excessive stock is the main reason. In the case of weak demand growth, it is difficult to continue high growth.
However, the bright performance of excavator overseas market in January weakened the impact of the decline in the Chinese market. In January, China’s Excavator exports increased by 105% year-on-year, continuing the high-speed growth trend and realizing the year-on-year positive growth for 55 consecutive months since July 2017. It is worth noting that overseas sales accounted for 46.93% of the total sales in January, the highest proportion since statistics.
Luo Zhiheng, chief economist of YueKai securities, told first finance that the export of excavators has maintained a high growth. First, strong overseas demand, low interest rate policies in Europe and the United States and home office have led to a hot real estate market and accelerated the construction of new houses; Second, the recovery of overseas production is slow, and a large number of orders are transferred to China.
One belt, one road, and the post epidemic era, have been being used to create a market for overseas brands. The export of domestic brands of excavators has been improving overseas and the development opportunities of the post epidemic era. From the past, only third hundred countries were exported to the world, and nearly 10000 units were exported to Europe and the United States.
According to the data, in 2021, the export value of China’s construction machinery exceeded US $30 billion to US $34 billion, with a year-on-year increase of 62.3%, and the export of excavators reached 68427, with a year-on-year increase of 97%. For one belt, one road, the total export volume is 42.4%, up 60.4% from the same period.
For the subsequent excavator sales trend, industry analysis shows that the construction machinery industry is indeed difficult to turn from negative to positive under the influence of excessive stock and high base number. However, on the demand side, the large investment plans of provinces and cities in 2022 have been issued, and the national development and Reform Commission has repeatedly said that the advanced infrastructure investment, the accelerated issuance and centralized resumption of work of special bonds, and the overweight layout of new infrastructure have brought more opportunities to the construction machinery industry which is in the “downward cycle”. With the boost of construction machinery enterprises seizing the overseas market, the market performance is expected to have more surprises.
Central China Securities Co.Ltd(601375) pointed out that the growth of excavator export demand in 2022 is expected to partially hedge the decline of Chinese demand. As the steady growth policy continues to increase, the implementation of various steady growth measures is expected to increase significantly, and the demand release rhythm of the construction machinery industry is expected to advance. It is expected that this year’s infrastructure investment data is expected to be good, which will directly drive the stabilization and recovery of construction machinery demand.
moderately advance infrastructure investment
The national development and Reform Commission said recently that there are many uncertain factors in the first quarter of this year. We should appropriately move the policy starting point forward, make early arrangements, start early and achieve early results, and meet various challenges with a stable economic operation situation. We will promptly introduce a series of policies and measures to implement the strategy of expanding domestic demand. Timely study and put forward targeted measures to revitalize industrial operation. Carry out infrastructure investment moderately ahead of schedule and strive to form more physical workload in the first quarter.
Specifically, we should solidly promote the implementation of 102 major engineering projects in the 14th five year plan. We will promote the construction of new infrastructure and increase support for the optimization and upgrading of traditional industries to high-end, intelligent and green. We will strengthen the guarantee of land, sea and energy for major projects, and make good use of the investment in the central budget and the special bonds of local governments. Optimize the development environment of private economy, actively mobilize the vitality of social capital, and strengthen the effective supervision of capital according to law.
Luo Zhiheng said that infrastructure, as an important force for steady growth, can not only quickly and effectively stabilize the total demand, but also optimize the supply structure and improve the efficiency of economic operation. It is a counter cyclical and cross cyclical adjustment measure based on the current situation.
Special debt has become one of the most direct and effective policy tools for the government to stimulate investment. At the executive meeting of the State Council held on January 10, it was required to pay close attention to the issuance of special bonds issued this year, make good use of the investment in the central budget, focus on the projects under construction and those that can start as soon as possible, leverage more social investment, and strive to form more physical workload in the first quarter.
According to the “issuance of local government bonds in January 2022” released by the government debt research and evaluation center of the Ministry of Finance on February 14, with the approval of the State Council and reported to the Standing Committee of the National People’s Congress for the record, the Ministry of Finance issued in advance the new local government debt limit of 1.788 trillion yuan in 2022, including 328 billion yuan of general debt limit and 1.46 trillion yuan of special debt limit.
In January, local organizations issued 698.9 billion yuan of local government bonds. Among them, 583.7 billion yuan of local government bonds were added (99.3 billion yuan of general bonds and 484.4 billion yuan of special bonds); Refinancing bonds amounted to 115.2 billion yuan (23.1 billion yuan for general bonds and 92.1 billion yuan for special bonds). From the perspective of capital investment, more than half of the funds are invested in transportation infrastructure, municipal construction and industrial park infrastructure.
According to China Industrial Securities Co.Ltd(601377) statistics, the total amount of new special bonds that have been disclosed by various regions and planned to be issued in February and March this year has exceeded 600 billion yuan. With 484.4 billion yuan issued in January, the probability of new special bonds issued in the first quarter will exceed 1 trillion yuan.
Wen Laicheng, a professor at the Central University of Finance and economics, told first finance that local bond issuance increased significantly in January this year. This is against the background of great downward pressure on the current economy. In order to implement the central government’s stable deployment, the Ministry of Finance issued this year’s local government bonds in advance. All localities accelerated bond issuance and invested funds in major projects to promote steady economic growth.
Affected by the accelerated promotion of major projects and the accelerated issuance of local bonds, institutions generally expect infrastructure investment to rebound this year. In 2021, the annual infrastructure investment increased by 0.4% year-on-year, far lower than the annual growth rate of 3.8% before covid-19 epidemic, and even lower than the growth rate of 0.9% in 2020.
Wang Qing, chief Macro Analyst of Dongfang Jincheng, analyzed first finance and economics that infrastructure investment is an important support for stabilizing the macro-economic market in 2022. Under the background of the steady growth policy, the growth rate of infrastructure investment in the first quarter of 2022 is expected to reach 7.0% to 8.0%. The annual infrastructure investment is expected to increase by 4% to 6% year-on-year.
Sheng Songcheng, Professor of China Europe International Business School and his team estimated that in order to achieve a 5.5% economic growth in 2022, the growth rate of infrastructure should be increased to at least 5.4%, with an investment of at least 828 billion yuan more than that in 2021. If we consider the risk of export falling faster than expected, the growth rate of infrastructure investment will be higher.
centralized commencement of major projects in many places
At present, local governments have a strong willingness to stabilize growth, coupled with abundant funds. Recently, many places across the country have made a “good start”. Major projects were started in the first quarter. Compared with previous years, the commencement time was earlier, the number of projects was large and the investment scale was large. Major projects in Hebei and Hunan should be started as soon as possible after the Spring Festival.
At present, more than 10 provinces and cities including Beijing, Shanghai, Shandong and Zhejiang have announced the list of major project investments in 2022, with a total investment of more than 100 billion yuan. Infrastructure construction, especially transportation and energy, is still the focus of efforts, and new infrastructure such as 5g and data center construction are also given more expectations.
On February 8, Hubei Province held a centralized commencement of major projects in the first quarter, with 1913 projects with more than 100 million yuan, much higher than 1250 in the first quarter of 2021, and the annual planned investment is 368.1 billion yuan. Hubei Provincial Development and Reform Commission said that the major projects started in the first quarter have the characteristics of large investment scale, high project quality and strong leadership. More than 70% of the funds in the investment plan in the provincial budget in 2022 will be directly assigned to specific projects, play a guiding and leading role, and form effective investment as soon as possible.
The government work report of Hebei Province in 2022 said that the main direction of economic work is to focus on investment projects. In the first quarter, 43 projects were started in xiong’an new area of Hebei, with a total investment of 60.1 billion yuan, including 16 projects with a total investment of more than 10 billion yuan.
“New infrastructure” has become an important starting point for consolidating the development foundation of digital economy and expanding effective investment in many places. At present, more than 20 provinces (autonomous regions and cities) including Shanghai, Fujian, Sichuan, Hunan and Anhui have defined the construction plans of 5g and data center in 2022, and proposed to further give play to the scale effect and driving role of “new infrastructure” such as 5g and create an important engine of economic growth.
Shanghai proposed to fully complete the three-year action plan for the construction of new infrastructure in 2022, promote the in-depth coverage of 5g network, and build a batch of new infrastructure such as super large-scale open computing platform. Anhui said that it will implement the “new infrastructure +” action, create a national Internet backbone direct connection point, a national hub node cluster of the national integrated computing network, and build more than 25000 5g base stations. Sichuan has set the development goal of accelerating the construction of digital information infrastructure. In 2022, it will promote the large-scale deployment of 5g, industrial Internet and Internet of things, implement the national “digital computing in the East and Western” project, start the construction of provincial big data resource center and build a national Tianfu data center cluster.
Sheng Songcheng analyzed that compared with traditional infrastructure, the new infrastructure has a greater pulling effect on the upstream and downstream and related industrial chains. For example, 5g network construction has a strong driving effect on the development of digital economy and information economy, which is conducive to cultivating new economic momentum. With the gradual increase of the proportion of new infrastructure in infrastructure investment, it will further drive the investment in new manufacturing and service industries through the linkage effect of upstream and downstream.
\u3000\u3000 “There is still a lot of room for China’s infrastructure construction. Under the premise of scientific planning, rational layout and efficiency, infrastructure investment has great potential, and the key is to mobilize the enthusiasm of the central and local governments. Infrastructure investment can promote economic stability in a short time, help improve market expectations and stimulate the enthusiasm of market players, which is of special significance to steady economic growth this year Meaning. ” Sheng Songcheng said.
