Core conclusion
In February, the construction of construction projects did not rebound significantly, and the mileage of expressways in the central and western regions increased significantly. Satellite data showed that in February, the construction area of the three economic belts of Beijing Tianjin Hebei, Yangtze River Delta and Pearl River Delta under construction increased by 2.6% year-on-year, up 0.9 percentage points from January, indicating that the construction of the three economic belts is in a slow recovery trend. However, the new construction area of construction projects in the three economic belts in February decreased by 60% year-on-year and 77% month on month, or related to factors such as the Spring Festival holiday and the impact of the epidemic. In addition, in February, the new length of expressways in 13 provinces in central and Western China was 613 kilometers, an increase of 84% month on month and 209% year-on-year. The average value of the index in January and February 2022 increased by about 27% compared with the same period last year, and also increased significantly compared with December 2021.
The new road mileage increased significantly, which is consistent with the investment structure of Q4 special bond issuance last year. In Q4 of 2021, a total of 1.22 trillion local government special bonds were issued. Taking the investment direction classification published by the Ministry of finance as the statistical standard, the proportion of transportation infrastructure in the investment structure of newly issued special bonds is higher than Q3. Considering that the workload from the issuance of special bonds to the formation of a certain physical workload is about three months behind, This also shows that the special bonds invested in the field of transportation infrastructure issued by Q4 have begun to be transformed into physical workload, resulting in a significant increase in the mileage of new expressways in the central and western regions.
From the perspective of special debt investment, new and old infrastructure in Q2 has strength. Among the newly issued special bonds from January to February, the proportions of nine investment fields are: 1) municipal and industrial park construction (25.8%); 2) Transport infrastructure (18.8%); 3) Social undertakings (18.2%); 4) Affordable housing projects (14.6%); 5) Urban and rural cold chain logistics (9.6%); 6) Agriculture, forestry and water conservancy (8.1%); 7) Ecological and environmental protection (3.5%); 8) Energy (0.8%); 9) National strategic projects (0.5%). Carry out infrastructure investment in an appropriate and advanced way. On the one hand, continue to promote the construction of traditional infrastructure such as transportation, energy, water conservancy, agriculture, environmental protection and logistics. On the other hand, strengthen the construction of new infrastructure such as 5g, data center and industrial Internet, and promote the digital transformation of traditional infrastructure.
Under the resonance of internal and external factors, the uncertainty of steady growth increases. We once pointed out in the most deterministic first quarter that 2022q1 may be the high point of economic growth in the whole year under the resonance of strong domestic demand, loose credit and strong external demand. Since February, major economic zones such as the Pearl River Delta and the Yangtze River Delta have successively broken out, which will not only restrict consumption again, but also have a certain negative impact on infrastructure and real estate construction. In addition, the Fed’s interest rate increase and table contraction may interfere with China’s policies. The recent continuous flow of funds going north indicates that the situation in Russia and Ukraine has also disturbed China’s liquidity environment. It is uncertain whether China will immediately increase its efforts to stabilize growth on the premise that there are variables in both internal and external situations. We believe that we need to be cautious about the equity market. Looking back, the emergence of three situations is expected to restore confidence in the market. The first situation: the epidemic has cooled down and reversed the pessimistic expectations of the market for the economy; The second situation: the economic and financial data are stronger than expected, allowing the market to eliminate the pessimistic expectation that factors such as the epidemic will restrict the economic outlook; The third case: cheap enough.
Risk tip: the spread of the epidemic in China exceeded expectations; The Fed’s monetary policy exceeded expectations; The situation in Russia and Ukraine has changed more than expected.
