In 2022, the necessity of steady growth of infrastructure investment increases. Since the commencement time of major projects is earlier than in previous years and the 1.2 trillion new special bonds issued in the fourth quarter of 2021 are to be used, and the infrastructure investment in the first quarter accounts for only about 13% - 15% of the whole year, it has great year-on-year flexibility, so we can take a high look at the growth rate of infrastructure investment in the first quarter of 2022. However, compared with the current mainstream market view, we are relatively cautious in judging the growth rate of infrastructure investment in the whole year. At present, more than 10 provinces, cities and autonomous regions have announced the annual planned investment amount of major projects in 2022, which is lower than that in 2021, and the "lack of projects" is still difficult to solve; The support of the two financial accounts for infrastructure has changed one after another. In addition, it is necessary to continue to reduce the payable of infrastructure projects, and the "lack of funds" still exists. We maintain the judgment of 4% year-on-year capital investment in 2022 in the annual report.
The demand for steady growth of infrastructure increased. Historical data show that when the growth rate of real estate investment and export, the two growth drivers, drops significantly, government led infrastructure investment plays a supporting role. In 2022, both are facing the pressure of slowdown, and the necessity of steady growth of infrastructure investment has increased significantly. This is also the reason why the senior management has repeatedly pointed out that "infrastructure investment should be carried out moderately in advance" and all localities have successively announced the investment plans of major projects in 2022 after new year's day.
We should not overestimate the improvement of funds. First, the national budget funds in the capital construction investment sources are mainly the funds invested in the capital construction field by general public finance and government funds. There is a relationship between the two, and the increase is expected to be about 280 billion in 2022. Second, when calculating the growth rate of infrastructure investment from the source of funds, it is easy to ignore the drag of accounts payable on infrastructure investment. We expect that the drag of accounts payable on infrastructure investment in 2022 may be 400 billion-500 billion. Third, the central economic work conference in 2021 pointed out that "resolutely curb the new hidden debts of local governments". The anti-corruption efforts of urban investment may be strengthened in 2022. It may be difficult for local governments to significantly improve their willingness and ability to finance infrastructure projects, and the difficulty of supporting financing is still a tight constraint on infrastructure investment in 2022.
The lack of projects is still difficult to solve. First, the role of major projects should not be overestimated. At present, 11 provinces, cities and autonomous regions including Beijing, Shanghai and Hebei have announced the annual investment amount of major projects in 2022. Guangxi has announced the annual investment amount of the first batch of major projects, which is expected to increase by 9.1% year-on-year, lower than the total year-on-year 13.1% of the 18 provinces, cities and autonomous regions that announced the annual investment completion amount of major projects in 2021. Second, the implementation of penetrating supervision on the implementation of special debt projects from 2022 will improve the requirements of special debt docking projects, which makes the projects that meet the self balancing of special debt income more scarce. Third, UHV, new energy vehicle charging pile, urban high-speed railway and urban rail transit have been included in the infrastructure investment. 5g infrastructure belongs to the official infrastructure, but the proportion is only 1% in 2021. Big data center, artificial intelligence and industrial Internet are more biased towards manufacturing and service industries. The overall impact of new infrastructure on infrastructure investment is limited.
The contribution of price factor to the nominal year-on-year capital construction is 3.2 percentage points lower than that in 2021. Using the year-on-year correlation between PPI and fixed asset investment price index, it is estimated that the year-on-year fixed investment price index in 2021 and 2022 are 7.8% and 4.6% respectively. The year-on-year decline of PPI will drag down the year-on-year reading of infrastructure.
