Key points of the report
Looking forward to 2022, the popularization of specific drugs and vaccines is expected to greatly alleviate the epidemic situation, and the risk lies in virus mutation. The improvement of China’s investment and consumption offset the decline in exports, the economic growth picked up slightly, and the structural change was more significant. China’s PPI gradually fell year-on-year, turned negative in the second half of the year, and the CPI was 2.3% year-on-year. China’s monetary policy is stable and slightly loose, the mortgage interest rate is lowered, and the intensity of fiscal expansion remains unchanged. US inflation fluctuated at a high level in the first half of the year and fell in the second half of the year. There is no stall risk in China’s real estate and exports. The risk of higher than expected US inflation leading to the Fed’s accelerating monetary tightening deserves attention.
Summary:
1、 The popularization of specific drugs and vaccines is expected to greatly alleviate the epidemic next year. The promotion of specific drugs in 2022 may reduce the harm of covid-19 pneumonia to influenza level. The improvement of vaccination rate is conducive to epidemic prevention and control in developing countries, and strengthening vaccination is also conducive to epidemic prevention. The global epidemic situation is expected to be greatly alleviated in 2022, and the risk lies in virus mutation.
2、 In 2022, the improvement of China’s investment and consumption offset the decline in exports, the economic growth picked up slightly, and the structural change was more significant. It is estimated that the investment in fixed assets will increase by 4.3% year-on-year in 2022, slightly better than that in 2021, but with different structural performance. Among them, investment in real estate, infrastructure and manufacturing increased by 2.0%, 4.0% and 5.5% respectively year-on-year. Real estate fell significantly, and investment in infrastructure and manufacturing improved. With the further mitigation of the epidemic in China, it is expected that the consumption in 2022 will be better than this year, but still lower than the pre epidemic level, with a year-on-year increase of about 5.5%. Overseas epidemics still restrain overseas supply. China’s exports are better than the long-term trend level. It is expected that the export amount will increase by 9.0% year-on-year in 2022. In 2022, China’s GDP grew by 5.4% year-on-year, slightly better than this year. The overall growth rate has not changed much, and the structural change is more significant.
3、 In 2022, China’s PPI gradually fell year-on-year, turned negative in the second half of the year, and the CPI was 2.3% year-on-year. China’s coal price has fallen sharply, and the transmission effect from PPI of means of production to PPI of means of living is very small. It is expected that China’s PPI will gradually fall year-on-year in 2022, and turn to negative growth in the second half of the year, with a year-on-year growth of 0.3%. In 2022, there is no inflationary pressure on China’s CPI. The base effect will lead to a year-on-year rise of CPI to about 2.5% in the first half of the year and about 2.3% in the whole year.
4、 In 2022, China’s currency will be stable and slightly loose, the mortgage interest rate will be lowered, and the intensity of fiscal expansion will remain unchanged. The current mortgage interest rate is about 25bp higher than the general loan interest rate. It is expected that the mortgage interest rate will be reduced in 2022. China’s monetary policy is generally neutral, and MLF interest rate and Omo interest rate are expected to remain unchanged. It is estimated that 7.22 trillion government bonds will be added, which is the same as that in 2021.
5、 In 2022, US inflation fluctuated at a high level in the first half of the year and fell back in the second half of the year. Be vigilant against inflation exceeding expectations. Since May, the stimulus to consumption by the US fiscal bailout has declined and will continue to decline. Since September, American consumers have hoarded goods in advance, leading to a rebound in retail sales growth, which can last for another month. The replenishment of retailers’ inventories and the stimulation of low interest rates on consumption in the first half of next year will support US consumer demand, and the growth rate of consumer demand will accelerate and fall in the second half of next year. The shortage of labor supply in the United States will continue until about the middle of next year, and the inflationary pressure in the United States will remain high in the first half of next year. Pay close attention to the consumption performance and inflation level in the next 2-3 months to judge whether inflation exceeds expectations, and be vigilant against the risk of the Federal Reserve accelerating monetary tightening.
Risk factors: virus mutation, specific drugs and vaccine failure, and higher inflation in the United States than expected
