Key investment points:
The growth rate of infrastructure construction hit a ten-year low. Two major reasons led to the downturn of infrastructure investment
Since the second half of 2021, China's economy has faced great downward pressure. Infrastructure has become an important starting point for "steady growth", and the market also has great expectations for this. However, can infrastructure carry the banner of steady growth?
To understand the future of a thing, you'd better understand its past. Since 2017, the growth rate of infrastructure has continued to decline and the performance has been sluggish. From 14.93% in 2017 to 3.41% in 2020, the growth rate of infrastructure fell to 0.21% in 2021, a 10-year low. We believe that the weak growth of infrastructure in 2021 is mainly due to the insufficient willingness of the government to promote infrastructure, and the ability to promote infrastructure is relatively limited due to capital and other reasons.
Government wishes: with the recovery of economic growth in 2021, the regulatory authorities' motivation to stimulate the economy by stimulating infrastructure is also relatively weak. With the continuous resumption of production and work, combined with the impact of the low base in 2020, GDP increased by 8.1% year-on-year in 2021. Although after July, the national Standing Committee proposed to "strengthen cross cycle regulation according to the new situation of economic operation", the pressure of economic growth throughout the year is small, and the action of infrastructure construction is small.
Government capacity: infrastructure investment is based on the demand for infrastructure. After several rounds of large-scale infrastructure construction, China's traditional "old infrastructure" construction has gradually saturated, and the overall infrastructure construction has gradually entered a mature period. The shortage of funds is still the core problem perplexing infrastructure investment. From the perspective of composition, infrastructure investment is mainly extrabudgetary funds, and the proportion of budgetary funds including special bonds is relatively low. The financing subject of extrabudgetary funds is mainly local urban investment. In recent years, urban investment and financing policies have been continuously tightened, and financial discipline has formed obvious constraints on infrastructure investment.
2022 Infrastructure Research and judgment: the government's willingness to make efforts has increased, and the infrastructure growth rate may reach 5%
From the situation in recent years, although the government has a strong willingness to boost infrastructure, the problems of funds and projects are still difficult to solve. On the one hand, the urban investment and financing policy is still tightening; On the other hand, according to the investment list of major projects disclosed by Guizhou and Guangdong provinces, the growth rate of infrastructure projects remains low. There has been no significant improvement in the two important factors hindering the development of infrastructure. In terms of high-frequency data, and the high-frequency data since 2022 also show that although the overall infrastructure has been boosted, the scope of development is limited, and the investment situation of some important sub industries has even deteriorated compared with the same period in 2021.
Under the downward pressure of 2021, the overall growth rate of infrastructure investment may still be higher than that of 2022. From the experience of the past few years, even in 2020, when the downward pressure on the economy is the greatest, the growth rate of overall infrastructure investment is only 3.4%. Considering that 2022 is a big political year and there is great downward pressure on real estate, we expect that the growth rate of infrastructure investment may be slightly higher than that in 2020, maintaining at about 5%.
