Core view
In December, the economy was stable and positive, and energy storage Q1 made a good start. At the supply side, energy consumption is controlled and corrected, and the negative factors restricting industrial production are gradually improving; On the demand side, real estate confidence has recovered, manufacturing investment has remained strong, and social zero has been impacted by the local epidemic, but more consumer vouchers have been issued, which plays a certain role in supporting consumption. On the whole, due to the triple pressure of demand contraction, supply shock and weakening expectation, we expect GDP in the fourth quarter to be + 3.8% year-on-year. The economic work conference put forward clear requirements for steady growth, reiterated “taking economic construction as the center” and required “appropriate policy development”. We believe that in the first quarter of 2022, four arrows of credit will be launched simultaneously, namely manufacturing loans, carbon reduction loans, infrastructure loans and mortgage loans. The economy will stabilize rapidly. In the first quarter, the year-on-year growth rate of GDP is expected to rebound to 5.7%. The optimization of credit structure and social financing will occur simultaneously with the improvement of the economic situation.
Stable repair of industrial production, power storage Q1 has a good start
In December, the industrial production boom was slightly differentiated, but it was generally stable and positive, and the negative factors were gradually improving. The industrial production is expected to continue to repair, laying a solid foundation for the economic start in the first quarter of next year. It is expected that the year-on-year growth rate of industrial added value above Designated Size in December is 3.3%, compared with the compound growth rate of recent two years in 2019 is 5.3%.
It is expected that the cumulative year-on-year growth rate of fixed asset investment in December will fall back to 4.6%
From January to December, the fixed asset investment is expected to increase by 4.6% year-on-year, down 0.6 percentage points from the previous value. From the year-on-year growth rate in December, the growth rates of investment in real estate, infrastructure and manufacturing were – 3.8%, 0% and 11.8% respectively, and the previous values were – 4.3%, 3.6% and 10.0% respectively. Affected by factors such as the rising base and the spread of the epidemic, we predict that the year-on-year growth rate of national fixed asset investment from January to December will be slow and stable, but the manufacturing investment will continue to be adjusted and optimized.
The epidemic broke out locally and social zero fell again
It is estimated that the total retail sales of social consumer goods in December will increase by 3.0% year-on-year, and the compound growth rate from 2019 to 2021 will be 3.8%. Affected by the epidemic situation in some areas, the social zero growth rate will continue to decline.
With the superposition of triple pressures, unemployment continued to rise
It is expected that the national urban survey unemployment rate in December will be 5.2%, an increase of 0.2 percentage points month on month compared with November, the same as the same period in 2019. Under the triple pressure of shrinking demand, supply shock and weakening expectation, the production and operation of enterprises are under pressure and the demand for employment is weakening. Looking ahead, we will increase the upward pressure on the unemployment rate during the local Chinese new year or by stages.
Sufficient supply, weak demand, CPI and PPI both fell
CPI is expected to be flat month on month (MOM) in December, with a year-on-year increase of + 1.7%. The price of fresh vegetables has been significantly corrected, the price of pork has risen and dropped, and the tail warping factor has disappeared, so CPI has dropped significantly. It is expected that the PPI in December will be – 0.6% month on month and + 11.0% year-on-year. The central energy prices such as coal and crude oil will fall, the prices of industrial products in the middle reaches will generally fall, and the PPI will turn negative for the first time in 18 months.
Price factors support exports, and changes in domestic demand determine imports
Price factors, repeated overseas epidemics and other factors drive exports to be resilient in the short term. It is expected that exports denominated in RMB will grow by 15.4% year-on-year in December, with a trade surplus of US $75 billion. The gradual decline of domestic demand determines the pressure on imports. It is expected that the import growth rate denominated in RMB in December will be 24%.
It is estimated that in December, credit will increase by 1.3 trillion and social finance will increase by 2.83 trillion, with growth rates of 11.6% and 10.5% respectively
It is estimated that the new amount of RMB credit in December is 1.3 trillion, a slight increase over last year, and the corresponding growth rate is slightly lower than the previous value by 0.1 percentage points to 11.6%. The stable credit data is mainly supported by the impulse of on balance sheet bills and the centralized investment of small and micro enterprise loans at the end of the year. It is expected that the proportion of medium and long-term loans is still low. It is estimated that the new increment of social finance in December is 2.83 trillion, an increase of about 1.1 trillion over the same period last year, and the growth rate is 0.4 percentage points higher than the previous value to 10.5%. The growth rate of social finance has entered the upward channel, but the upward speed is relatively slow. In the social finance structure, the year-on-year increase is mainly from government bonds, corporate bonds and credit. It is expected that the growth rate of M2 will rise to 9% and that of M1 will rise to 3.8% in December. Continue to remind and pay attention to the “four arrows” wide credit in the first quarter of 2022. In January, the financing of credit cooperatives can be expected to make a “good start”. At the same time, Q1 has a slight probability of interest rate reduction. Wide credit + wide currency is good for the stock market, and work together to promote the restless market in spring. The bond market pays more attention to wide credit. It is expected that the yield of 10-year Treasury bonds may enter a reverse upward process, reaching a high of 3.2% in the first quarter, and the yield curve tends to be steep.
Risk tip: the friction strength between China and the United States exceeds expectations; Covid-19 virus mutation leads to vaccine failure
