China's GDP growth target in 2022 is set at about 5.5%, which is at the upper limit of the market expectation that China's GDP growth in 2022 will be in the range of 5.0% - 5.5%, reflecting the determination and confidence of the central government to stabilize the economy. But so far, the strength and effect of the steady growth policy are not as good as expected. What is the reason for setting a growth target of about 5.5% this year? What are the constraints and paths to achieve this goal? This paper will focus on the above problems.
The GDP growth target is set relatively high. The possible reasons are as follows: first, maintain the consistency of GDP growth target. The GDP growth target in 2021 is set at more than 6.0%, and the median target in 2022 is reduced by 0.5 percentage points, which is in line with the historical law. Second, the GDP growth target in 2022 is higher than the actual compound growth rate of 5.1% in the previous two years, which reflects the weakening impact of the epidemic and the convergence of the GDP growth center to potential economic growth. Third, the need to ensure the main body of the market and stabilize employment. In 2022, about 16 million new urban labor forces need to be employed in China, which is higher than the actual 12.69 million new urban employment in 2021.
The triple pressure is still the constraint to achieve the growth target of 5.5% in 2022. In terms of demand, real estate investment and export, the two driving forces supporting China's rapid economic recovery after the epidemic, are facing the risk of deceleration in 2022, and the sustainability of China's consumption recovery remains to be seen. On the supply side, geopolitical events have exacerbated global supply risks. In the first ten days of March, Nanhua industrial products index and Nanhua Shenzhen Agricultural Products Group Co.Ltd(000061) index both hit record highs, which have recently dropped but are still high, which may increase the procurement difficulty and production cost of Chinese enterprises. In terms of expectations, there are many internal and external uncertainties in the economy, and the impact of structural problems on the expectations of enterprises and residents is still ongoing. From the new medium and long-term loans in February, enterprises and residents lack confidence.
Achieve this year's GDP 5.5 5% growth target path. First, after "over revenue and less expenditure" for two consecutive years, the main revenue and expenditure indicators for 2022 determined in the government work report and the draft budget report are more positive than expected by the market. Using the fiscal expenditure multiplier and tax multiplier, it is estimated that the fiscal expenditure will increase by 2.08 trillion and the tax reduction will increase by 1 trillion in 2022, which will contribute about 1.5 trillion of GDP and drive China's GDP growth by 1.3 percentage points in 2022. Second, historically, China's credit stabilization is more advanced than the economic stabilization. At present, the quality of broad credit is not enough. Stabilizing the economy requires further policies to help broaden credit. As structural inflationary pressures remain and direct differentiation with major overseas central banks such as the Federal Reserve is avoided, overall monetary policy tools such as RRR and interest rate cuts may not be the main carrier of credit easing in 2022. The focus of credit easing in the future may focus on guiding financial institutions to increase support for the real economy and take multiple measures to reduce comprehensive financing costs. Third, through industrial policy adjustment, avoid the introduction of policies with contraction effect on the economy at both ends of supply and demand. We believe that important industrial policy adjustments include: promoting carbon emission reduction in a scientific and orderly manner, adjusting real estate regulation in more cities under the framework of urban implementation policies, and promoting the stable and healthy development of platform economy.
Risk tip: geopolitical events escalate, imported inflation intensifies, and steady growth is less than expected.
