Event:
On the morning of March 5, the fifth session of the 13th National People's Congress opened at the Great Hall of the people in Beijing to hear Premier Li Keqiang's report on the work of the government.
Comments:
\u3000\u30001. "China's GDP increased by about 5.5%"
The economic growth target set by the government this year is about 5.5%, which is consistent with our previous expectations. Last year, the government's economic target was more than 6%, the difficulty of achieving the target was low, and the actual GDP increased by 8.1% year-on-year. In contrast, this year's government work report pointed out that "the risks and challenges faced by China's development this year have increased significantly". Therefore, this year's economic growth target should strive to stand on tiptoe or even jump. At present, the consensus expectation of the market for GDP growth this year according to wind statistics is 5.2%, which also shows that 5.5% is a higher target value than the market expectation.
Relative to the absolute value of the macro-control policy, the implied growth rate is more concerned about. Historically, almost all the economic growth targets set by the government in the past 20 years have been achieved. One of the lower years is 2019, with a target of 6% - 6.5% and an actual growth of 6%, which is at the lower limit of the target range. In 2014, the target is 7.5% and the actual growth is 7.4%, with a difference of only 0.1%. In recent years, the government has mostly adopted the form of interval for the growth target. Although the reference of "left and right" means that the actual growth rate can be flexible compared with the target, it means that the "law is above it and gets it", which means that the steady growth policy should be based on targeting at least 5.5%, which helps to boost the market's expectation of the strength of subsequent steady growth policies. The report puts forward that "all regions and departments should earnestly shoulder the responsibility of stabilizing the economy and actively launch policies conducive to economic stability." Maintain the judgment that the first half of the year, especially the first quarter, will be a period of intensive introduction of stable growth policies.
From the perspective of the month on month growth rate of GDP, the month on month growth rate of GDP in the first quarter and the third quarter of last year was only 0.3% and 0.7% respectively, significantly lower than the same period level in normal years, especially the month on month level of 0.7% in the third quarter, which will affect the year-on-year growth rate of GDP in the first half of this year. Using the quarter on quarter growth rate for four consecutive quarters to calculate the year-on-year growth rate, the month on month growth level of GDP in the first half of this year is very key to the year-on-year growth of GDP in the whole year. To achieve a year-on-year GDP growth rate of 5% in the first half of the year, the average month on month growth rate in the first and second quarters needs to reach about 1.3%. GDP in the fourth quarter of last year was 1.6% month on month (MOM), and the average mom of the first and second quarters of five years from 2019 were 1.7% and 1.6% respectively. Therefore, we believe that as long as the impact of overseas risk events on China is controllable this year, and the epidemic situation in China is no longer repeated on a large scale, combined with the steady growth policy, the mom of GDP in the first half of the year is expected to gradually approach the average level of normal years. From the actual data, the amount of credit and social financing at the beginning of the year, and the PMI reflects the initial improvement of domestic demand. Therefore, we believe that there is no need to be pessimistic about the economic growth in the first half of the year, and the GDP in the first half of the year is expected to achieve a year-on-year growth of more than 5%. In the second half of the year, due to the lifting of the suppression of the low growth rate of GDP in the third quarter of last year, the year-on-year growth rate of GDP was higher than that in the first half of the year, and it is still expected to achieve a growth rate of about 5.5% in the whole year.
\u3000\u30002. "The proactive fiscal policy should improve its efficiency and pay more attention to accuracy and sustainability. The prudent monetary policy should be flexible and moderate and maintain liquidity
Reasonable and abundant. The employment priority policy should be improved and strengthened. The policy force should be advanced appropriately, and the reserve policy tools should be used in time to ensure the smooth operation of the economy. "
It is believed that the lack of a strong grasp of the steady growth policy is an important reason for the lack of confidence in the broad credit and steady growth of the market this year, and we have always believed that the willingness and ability of the policy to stabilize growth should not be underestimated.
In terms of fiscal policy, in consideration of fiscal sustainability, the deficit ratio is planned to be about 2.8% this year and return to the fiscal deficit level in 2019, down from 3.6% in 2020 and 3.2% in 2021. On the other hand, due to the fact that certain state-owned financial institutions and franchised institutions turn over the remaining profits in recent years and transfer them into the budget stability adjustment fund according to law, the scale of expenditure this year will be more than 2 trillion yuan larger than last year, and the available financial resources will be significantly increased. This year, the central government's expenditure will increase by 3.9%, which is significantly more positive than the negative growth last year. The central government's transfer payment to local governments increased by about 1.5 trillion yuan, with a scale of nearly 9.8 trillion yuan and a growth rate of nearly 18%, the highest growth rate since 2012 except 2020. It reflects the determination and strength of the central government to mobilize financial resources to support the stabilization and development of local economy. At the same time, it also shows that the steady growth of this year needs to give better play to the strength of local governments and markets.
In terms of special bonds, it is expected to add 3.65 trillion yuan of special bonds of local governments this year, the same as last year, only lower than 3.75 trillion yuan in 2020, the second highest in history. The issuance scale of special bonds is not reduced, indicating that there are abundant funds for infrastructure related projects this year. At the same time, it is worth noting that, unlike the slow pace of issuing special bonds last year and the fact that most special bonds are issued in the next few months, resulting in the weak infrastructure in the second half of the year, since various high-level meetings at the end of last year, the central government has continuously stressed that this year's finance should "move forward" and relevant projects should be "arranged in advance", This government work report also proposes to "moderately advance infrastructure investment around the major national strategic deployment and the 14th five year plan". It is expected that the development of infrastructure in the first half of this year will play an important role in China's economic stabilization. At the same time, infrastructure is not limited to traditional railway and public institutions, and new infrastructure is expected to become
Key investment areas.
In terms of monetary policy, the report proposes to "give full play to the dual functions of the aggregate and structure of monetary policy tools to provide stronger support for the real economy." In terms of specific contents, it is emphasized to expand the scale of new loans, further dredge the transmission mechanism of monetary policy, and promote the reduction of comprehensive financing costs of market players, so as to continue to release more positive signals. On the basis of the RRR reduction in December last year, the policy interest rate (reverse repo and MLF interest rate) and LPR interest rate have been reduced this year. Although the Fed's interest rate hike makes the external liquidity environment unfriendly, based on China's stable political and economic situation, RMB and related assets now reflect a certain risk aversion attribute, This is conducive to the stability of the RMB exchange rate during the Fed's interest rate hike cycle and provides more space for China's policy to maintain "focus on me". Therefore, it is expected that China's monetary policy is expected to maintain a stable and loose pattern in the first half of the year, the possibility of further reduction of policy interest rate is not ruled out, and the maintenance of reasonable and sufficient liquidity will provide favorable conditions for credit expansion.
\u3000\u30003. Real estate emphasizes the implementation of policies due to the city, and is not pessimistic about the annual real estate investment
In terms of real estate regulation, the report continues to emphasize that housing is not fried, but at the same time, it puts forward that "promote the construction of affordable housing, support the commercial housing market to better meet the reasonable housing needs of buyers, stabilize land prices, house prices and expectations, and promote the virtuous circle and healthy development of the real estate industry due to urban policies." We believe that the general tone of not speculation in real estate will not change easily, which means that it is difficult to see a comprehensive relaxation of real estate market regulation. However, due to the different situation of the real estate market in various regions, "implementing policies for the city" is actually more indicative of the change of real estate policies this year.
It can also be seen from the recent changes in the regulation policies of the local real estate market that more and more cities begin to relax the regulation measures of the real estate market based on the local situation, involving the mortgage interest rate, the identification of the first house, the down payment ratio and so on. As a key component of the economy, real estate is still inseparable from stable growth. Although there is still downward pressure on the growth rate of real estate investment in the first half of this year, under the situation of relaxing the policy margin and improving the real estate financing environment, we are not pessimistic about real estate investment in the second half of this year. It is expected that after industry adjustment and integration, the year-on-year growth rate of real estate investment in the second half of this year is expected to rebound to positive growth. Combined with the tail raising factors, the real estate investment in 2022 may reach the annual low point year-on-year in the same month or around April. After that, it is expected to gradually rise, and the overall growth rate in the second half of the year is higher than that in the first half of the year.
4. Consumer prices rose by about 3%
The CPI target of 3% is only of upper limit significance. At present, the actual CPI rate is probably lower than this level. At present, two months have passed since 2022. The CPI and PPI in January are 0.9% and 9.1% year-on-year respectively. Although the CPI and PPI in February are not published at present, based on our continuous tracking of high-frequency data in February, the CPI and PPI in February are expected to be about 0.85% and 9% year-on-year respectively, of which the CPI performance is in line with expectations, PPI was mainly due to the rise in crude oil prices caused by the conflict between Russia and Ukraine, which was slightly higher than expected. Based on the comprehensive research and judgment, we maintain the judgment on the trend of CPI and PPI in 2022 proposed in the annual macroeconomic outlook for 2022, that is, it is expected that under the pressure of pork prices in the first half of 2022, CPI is unlikely to rise rapidly. In the second half of 2022, CPI will rise significantly compared with the first half of 2022. Under the action of tail raising factors and the continuous force of China's guaranteed supply and stable price, etc, The year-on-year increase of PPI in 2022 will gradually decline. It is expected that the inflation trend in 2022 will still have little restriction on monetary policy. The variable that needs to be vigilant is whether the impact of overseas geopolitical situation on the prices of important commodities such as crude oil will continue to exceed expectations.
In addition, the report also mentioned promoting scientific and technological innovation, promoting industrial optimization and upgrading, strengthening pollution control and ecological protection and restoration. We believe that although it is difficult for traditional infrastructure and real estate to give the market sufficient imagination space in terms of investment, there is no lack of investment space in the connotation of high-quality development, including new economy, high-end manufacturing With the coordination and cooperation between low-carbon environmental protection and traditional infrastructure and real estate, steady growth still has a grasp in investment. At the same time, in terms of consumption, the report also proposes to promote the continuous recovery of consumption, continue to support the consumption of new energy vehicles, and encourage local governments to carry out green smart appliances to the countryside and trade in. There is still room for China's consumption upgrading. With the increasing emphasis on accuracy in epidemic prevention and control, we maintain a optimistic judgment on this year's consumption recovery.
On the whole, we believe that the government work report continues to confirm the policy direction of steady growth, and will be a combination of multiple perspectives. The capital market should cherish the policy and liquidity environment-friendly window period in the first half of the year, and enhance confidence in the subsequent credit easing and steady growth.
