Energy consumption double control during the 14th Five Year Plan Period
The government work report clearly states that "standing before breaking", which is in line with our prediction in the annual strategy report "standing before breaking, industrial breakthrough" in November 2021. We believe that in 2022, we focus on "building", and are optimistic about "new energy +", that is, the industrialization of new energy, which will lead to the reconstruction of many traditional industries, especially traditional industries, such as electronics, chemical industry, machinery, construction, light industry The "new energy +" field represented by nonferrous metals and others, which has not been fully recognized, will contain significant expectations.
The meeting pointed out that the energy consumption intensity target will be comprehensively assessed during the 14th Five Year Plan period, and the new renewable energy and raw material energy consumption will not be included in the total energy consumption control. We believe that under the background of steady growth this year, the dual control policy is expected to be relaxed to help achieve the annual economic growth target. Restricting the production activities of high energy consuming enterprises through the dual control policy will help reduce energy consumption and emissions and achieve the "double carbon" goal, but in the short term, it will limit the production of some industries and drag down economic growth. The meeting highlighted that steady growth in 2022 should be put in a more prominent position, and proposed the overall assessment of the 14th five year plan of the dual control policy of energy consumption, aiming to achieve the goal of steady growth this year. We expect that this year there will be release supply of high energy consuming raw materials and intermediate inputs supporting new energy production, such as silicon, soda ash and photovoltaic glass, The constraints restricting the production of new energy are expected to be gradually removed to support the economy.
Strengthening and supplementing the manufacturing chain and rebuilding the industrial foundation promote the manufacturing investment to exceed expectations
We believe that the manufacturing investment in 2022 contains a large expectation difference, and the industrial policy policy of "building first and breaking later" drives the comprehensive reconstruction of the industrial system. We judge that manufacturing industry is the biggest contributor to investment demand, and the supply and demand of manufacturing industry are strong in 2022. The government work report clearly pointed out that "we will strengthen the supply guarantee of raw materials, key parts and components, implement the project of ensuring and stabilizing the chain of leading enterprises, and maintain the safety and stability of the supply chain of the industrial chain. We will start a number of industrial infrastructure reconstruction projects, promote the upgrading of traditional industries, accelerate the development of advanced manufacturing clusters, and implement the national strategic emerging industry cluster project." We judge that industrial policies such as strengthening the chain, supplementing the chain, fixing the chain and stabilizing the chain will drive the investment in technological transformation to maintain a high growth rate. At the same time, the focus of the industrial foundation reconstruction project is to transform the manufacturing industry into new energy and intelligence, and drive the capital expenditure of plant, machinery, equipment and so on. It is estimated that the growth rate of manufacturing investment is expected to reach 11.1% in 2022.
Economic growth and other targets are in line with expectations
The main economic and social objectives in the government work report are basically in line with expectations, and the primary objective refers to "steady growth". First, the GDP growth target is about 5.5%, which is consistent with the judgment of our annual strategy report, reflects the idea of "taking economic construction as the center" of the central economic work conference, and establishes the working idea of steady growth throughout the year. We believe that driven by the steady growth policy, the real GDP growth rate can reach 5.6% in 2022, and the target value of 5.5% can be successfully achieved. Second, the urban survey unemployment rate is controlled within 5.5%, and 11 million new urban jobs are created, which is consistent with last year. Stabilizing the main body of the market and ensuring employment is the top priority of the government's work. Policies such as increasing tax cuts and tax rebates and increasing effective financial support to the real economy are carried out around this goal. Under the background of the employment priority policy, we believe that it is not difficult to achieve the goal of achieving the unemployment rate within 5.5%, which is expected to be about 5.2% for the whole year. Third, the CPI target is about 3%, which is consistent with last year. According to our prediction, the CPI will increase by 1.8% year-on-year in 2022 and the annual high point is 2.7%, which does not touch the threshold of 3%, so it is less difficult to achieve the CPI target.
We have made great efforts to reduce taxes and fees, and cross period allocation of financial resources to support the grass-roots level
The deficit ratio was 2.8%, and the fiscal policy was in line with the early prediction. The report calls for improving the efficiency of proactive fiscal policy and keeping it in line with the central economic work conference. The deficit ratio is arranged at 2.8%, which is consistent with our prediction of "breaking through the industrial siege first" in November 2021. The appropriately reduced deficit ratio reflects the normalization of fiscal policy on the one hand, and then can enhance the sustainability. On the other hand, the deficit ratio of 2.8% is arranged in line with 2019, It also reflects the determination to actively maintain economic stability against the cycle.
Special debt of 3.65 trillion yuan, make good use of government investment and maintain macroeconomic stability. In line with the tone of the steady growth policy, the fiscal policy has made active efforts. 1) The scale of new local special bonds in 2022 is 3.65 trillion yuan, which is consistent with that in 2021 and in line with our early prediction. 2) The general public budget expenditure in 2022 will increase by more than 2 trillion yuan compared with that in 2021. The growth rate of expenditure is expected to be more than 8.1%, significantly increasing. 3) The investment in the central budget is 640 billion yuan, up from 610 billion yuan and 600 billion yuan in 2021 and 2020. We believe that the significant acceleration of fiscal expenditure and government investment will help to attract and leverage private investment, so as to promote investment in an all-round way and maintain stable economic growth.
Implement the "Three Guarantees", reduce taxes and fees and make great efforts to transfer payments from the central government. The report calls for increasing the implementation effect of macro policies, stabilizing market players and ensuring employment. We believe that adhering to the "Three Guarantees" is still the focus of fiscal policy, focusing on the following aspects: 1) in 2022, the government will actively promote the combined tax support policy, adhere to the combination of phased measures and institutional arrangements, and promote both tax reduction and tax rebate, It is estimated that the scale of tax reduction and tax rebate will reach 2.5 trillion yuan in 2022, of which the scale of tax rebate will be 1.5 trillion yuan. In particular, the policies of value-added tax rebate will play an important role in improving the cash flow and reducing the operating burden of enterprises. 2) Increase the transfer payment. In 2022, the central to local transfer payment increased by about 1.5 trillion yuan, with a scale of nearly 9.8 trillion yuan, an increase of 18% year-on-year, the largest increase in many years.
The cross period allocation of financial resources supports the grass-roots level. Under the influence of the downward pressure of the economy, the repeated impact of the epidemic and the dynamic clearing policy, the pressure on grass-roots financial revenue and expenditure has increased. The report clearly requires the cross period allocation of financial resources to support the grass-roots. 1) In 2022, the scale of fiscal expenditure increased significantly. The report clearly requires that the new financial resources should sink to the grass-roots level, which is mainly used to help enterprises relieve poverty, stabilize employment and ensure people's livelihood. 2) The report requires the central government to bring more funds into the direct scope, and the provincial finance should also increase its support to cities and counties. We believe that the grass-roots financial revenue and expenditure will face great pressure in 2022, and the cross period allocation of financial resources will help alleviate the grass-roots pressure. Under the influence of the increase of financial expenditure and the increase of tax cuts and fees, the downturn of the real estate market has led to the overall reduction of the local land sales revenue budget. More than 200 billion carry forward surplus funds in 2021 can effectively fill the gap of the decline of land sales revenue in 2022 To reduce the funding gap of tax and fee reduction and support the scale of new expenditure, we can increase the scale of transfer payment and normalize the financial direct mechanism, give stronger support to the grass-roots finance, improve the grass-roots financial resources, and make the grass-roots more capable of implementing the policy of benefiting enterprises and the people.
The monetary policy should be flexible and appropriate, and the choice should be made according to the circumstances
First, it is expected that this year's monetary policy will be flexible, moderate and discretionary. The report requires that "prudent monetary policy should be flexible and appropriate, maintain reasonable and abundant liquidity" and "strengthen the implementation of prudent monetary policy". We believe that the primary goal of current monetary policy is steady growth, and the tone of monetary policy is steady and slightly loose, Continue to emphasize that the "four arrows" credit relief (manufacturing loans, carbon reduction loans, infrastructure loans and mortgage loans) in the first quarter increased significantly. The report also proposes to "strengthen cross cycle and counter cycle regulation". We believe that cross cycle and counter cycle will still be organically combined, which will be reflected in the dimension of monetary policy. If the economic trend stabilizes, monetary policy may once again focus on financial stability, that is, stabilize the macro leverage ratio.
Second, the report proposes to "expand the scale of new loans and keep the growth rate of money supply and social financing basically matched with the growth rate of nominal economy". The formulation of intermediate targets of monetary policy is in line with expectations. However, "expand the scale of new loans" appears in the government work report for the first time, reflecting the determination of the policy level to stabilize credit and credit, We expect that in addition to the "four arrows" wide credit in the first quarter, the annual credit growth is expected to reach about 12%, and the corresponding new credit scale this year will reach 23 trillion, an increase of more than 3 trillion over the same period last year.
Third, the report proposes to "give full play to the dual functions of the total amount and structure of monetary policy tools", and puts forward words such as "make good use of the inclusive small and micro loan support tools and increase small re loans for supporting agriculture". We expect that the monetary policy will still show structural characteristics in 2022, focusing on supporting small and micro enterprises, scientific and technological innovation, green development and other policy guidance areas. Operationally, it is possible to further increase the rediscount amount of targeted refinancing, and continue to make good use of carbon emission reduction tools and coal clean and efficient utilization refinancing, suggesting the possibility of further expanding the scope of carbon emission reduction tools.
Fourth, the report proposes to "promote financial institutions to reduce the actual loan interest rate and reduce charges". It is expected that financial support for the real economy will continue to promote the reduction of enterprise financing costs. In December 2021, the weighted average interest rate of China's general loans was 5.19%, which was 11bp lower than that in September. In January 2022, the LPR quotation for one-year and more than five-year periods decreased, which helped to continue to reduce the financing cost of the physical sector.
Real Estate focuses on urban renewal to meet the reasonable housing needs of property buyers
According to the government work report, real estate investment focuses on two directions: first, the policy investment represented by urban renewal is large, and the real estate investment will exceed expectations during the 14th Five Year Plan period. According to the definition of the 14th five year plan, urban renewal includes the transformation and upgrading of existing areas such as old communities, old factories, old blocks and villages in the city. We believe that Shenzhen New Land Tool Planning &Architectural Design Co.Ltd(300778) renewal areas other than the reconstruction of old factories and old urban areas will drive the real estate investment to exceed expectations in the future. At present, some provinces or provincial capital cities have announced plans, including Liaoning and Henan; The provincial capitals include Guangzhou and Chengdu; Only in some of the above regions, the urban renewal investment planning in the 14th five year plan has reached 4.7 trillion yuan. From the perspective of the types of participating enterprises, the current real estate enterprises are more active in urban renewal, and state-owned enterprises are the main force.
The second is the policy dividend under the background of "simultaneous development of rent and purchase". In terms of "rent", the long-term rental housing system dominated by indemnificatory rental housing will become an important supplement to the existing housing system. It is expected to leverage the real estate investment of Hpf Co.Ltd(300350) billion yuan in 2022, contributing about 1.4% - 1.7% to the growth rate of real estate investment. In terms of "purchase", it is expected that in 2022, the purchase and loan restriction policy will be gradually relaxed in the field of commercial housing, especially in the first and second tier cities, so as to meet the needs of the net inflow of population to urban housing; Reasonable demand for improved housing mortgage will also be effectively met. The relaxation of sales side policies will stimulate demand and help stabilize real estate investment. This trend has been gradually realized in 2022.
The central government has stepped up infrastructure construction and kept the pace ahead
The government work report pointed out that infrastructure investment should be carried out moderately in advance around the major national strategic deployment and the 14th five year plan. We believe that the central government's increased efforts in infrastructure construction will play a positive role in stabilizing growth this year and move forward in pace. The infrastructure investment in the "four arrows" wide credit that we continue to prompt is active and will be realized in the first quarter.
On the one hand, we believe that the total investment in the 14th to 2022 years is moderately ahead of the total investment structure. The government work report pointed out that the investment arrangement in the central budget was 640 billion yuan, an increase of 30 billion yuan or 5% over last year. On the other hand, from the perspective of rhythm in 2022, we think it will also have the characteristics of forward rhythm, focusing on Q1. The reason is that the downward pressure on China's economy gradually increased in the fourth quarter of last year, and infrastructure projects were reserved in advance and intensively started in the first quarter. In addition, in order to reverse the contraction of demand and achieve a good start to the economy, new orders for infrastructure projects will also be signed in the year, and the physical workload will be formed as soon as possible, leading to the rhythm of infrastructure investment in the year. However, from the perspective of the total amount of infrastructure investment in the whole year, under the requirements of strict financial discipline and Resolutely Curbing new implicit debt, it is difficult for local governments to continue to promote infrastructure. It is expected that the annual infrastructure investment will increase steadily by 4% in 2022.
In terms of infrastructure investment structure, the renovation of key water conservancy projects, comprehensive three-dimensional transportation network, important energy bases and facilities, urban gas pipelines and other pipe networks, and the construction of flood control and drainage facilities and underground comprehensive pipe gallery are expected to benefit. In addition, the government work report requires the joint promotion of infrastructure construction at the county and rural levels, which is conducive to promoting the integrated development of urban and rural infrastructure services. In terms of rural construction, we will strengthen the construction of infrastructure such as water, electricity, gas, letter and mail, and promote the transformation of toilets and sewage and garbage treatment in rural areas according to local conditions. In terms of infrastructure construction in the county, we will steadily promote the construction of urban agglomeration and metropolitan area, and promote the coordinated development of large, medium-sized, small cities and small towns.
The importance of national defense will be further improved to boost investment in manufacturing
The government work report pointed out that we should speed up the construction of modern military logistics system and modern asset management system of the army, build a modern management system of weapons and equipment, continue to deepen the reform of national defense and the army, strengthen national defense scientific and technological innovation, deeply implement the strategy of strengthening the army with talents in the new era, promote the rule of law and strict management of the army, and promote the high-quality development of the army. Optimize the layout of Defense Science, technology and industry. We judge that in order to adapt to the complexity and uncertainty of the international geopolitical situation, the probability of state-owned capital and related incremental funds is inclined to the agglomeration of national defense and military industry, and the core is equipment upgrading and domestic substitution, which is bound to effectively support the higher trend of manufacturing investment since 2021.
Risk warning: the effect of policy implementation is less than expected; Geopolitical risk interpretation exceeded expectations.
