Event:
On March 5, Premier Li Keqiang delivered the government work report (hereinafter referred to as the report) to the representatives and members of the two sessions. The 5.5% annual economic growth target, fiscal deficit ratio and other aggregate indicators are in line with expectations. Considering the carry over use of financial funds, the actual government deficit may be significantly higher than that in 2021, and active finance will also provide favorable support for steady growth. The report also disclosed the specific arrangements and areas for tax reduction and fee reduction and moderately advanced implementation of infrastructure investment, and proposed the establishment of a financial stability guarantee fund and promoting social equity in education and other fields.
Key investment points:
The total index basically meets the expectation
The economic growth target of 5.5%, the deficit ratio of 2.8% and the scale of 3.65 trillion special bonds basically met expectations. We believe that when China's economy is lower than the potential growth rate, achieving a relatively high economic growth rate (such as about 5.5%) is conducive to stabilizing employment and creating a suitable economic environment for the convening of the 20th National Congress. In fact, the report acknowledges that "the setting of expected targets for economic growth mainly considers the need to stabilize employment, ensure people's livelihood and prevent risks". Of course, achieving a growth rate of more than 5.0% this year is quite challenging.
The fiscal policy is actually more active
Although the nominal deficit ratio of the general public budget decreased by 0.4% compared with 2021, the scale of special debt remained unchanged from last year. It seems that the fiscal policy has shrunk, but it is not. From the perspective of the broad fiscal deficit, the transfer of funds from the budget stabilization fund and other funds, the transfer of the budget funds of government funds that could not be used in 2021 to this year, and the profits handed over by specific non-commercial state-owned financial institutions and franchised institutions for fiscal expenditure all expanded the actual broad fiscal deficit in 2022. If we consider that the balances of the general public budget and the fund budget in 2021 are higher than expected, the deficit expansion and fiscal relief in 2022 are more obvious than that in 2021. Of course, from the budget report submitted by the Ministry of Finance for consideration, the growth rate of budget revenue of local government funds this year is only 0.4%, implying that the growth rate of land transfer fees may be low. The low growth rate of the government's financing in the broad sense may also be a drag on the net growth of land transfer, especially in the broad sense.
Some highlights worthy of attention
The report first proposed the establishment of a financial stability guarantee fund, which is conducive to resolving potential risks by means of marketization and legalization. According to the report, it is estimated that the annual tax rebate and tax reduction will be about 2.5 trillion yuan, of which about 1.5 trillion yuan will be retained, which will not only help to bail out enterprises, but also help to stimulate the capital expenditure of enterprises. In the moderately early implementation of infrastructure investment, the report lists key areas: key water conservancy projects, comprehensive three-dimensional transportation network, important energy bases and facilities, urban gas pipelines and other pipe network renovation, improve flood control and drainage facilities, and continue to promote the construction of underground comprehensive pipe gallery. In addition, in terms of social equity, it is proposed to allocate educational resources according to the size of permanent population. The tone of real estate regulation was also relaxed as scheduled.
Risk warning: the economy and policies are lower than expected; Epidemic situation and deterioration of international situation
