Main points:
In China’s macro perspective, this week’s policies focused on stabilizing growth, expanding investment, epidemic relief and other aspects, supporting rural revitalization, energy reform, ensuring food security and increasing efforts to stabilize growth, boosting market expectations. The national Standing Committee clearly put forward that steady growth should be placed in a more prominent position, no measures detrimental to stabilizing market expectations should be taken, the scope of use of special bonds should be reasonably expanded, and it decided to start a number of new water conservancy projects with mature conditions; The central bank proposed to strengthen the implementation of prudent monetary policy, emphasize food security and financial guarantee, increase financial support for important Shenzhen Agricultural Products Group Co.Ltd(000061) supply, optimize the allocation of credit resources and continue to increase credit investment; In terms of financial risk prevention and control, the central bank proposed to strengthen the construction of the network security system of the financial industry, do a good job in the security management of financial data, and stressed that there should be no slack in the prevention and control of financial risks. The national development and Reform Commission and the Ministry of ecological environment emphasize cooperation in the fields of green infrastructure, green energy, green industry and green finance, and encourage private green investment; The national energy administration proposed to vigorously develop wind power photovoltaic, orderly promote the construction of major hydropower and nuclear power projects, and actively develop the new energy Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) model, emphasizing the tackling of advanced renewable energy, and the construction of large-scale renewable energy infrastructure remains the focus of attention; The Ministry of Finance and others implemented tax cuts and fee reductions for science and technology-based small and medium-sized enterprises. Local government policies are mainly loose in real estate, and Shanghai issued relief policies to support enterprises to tide over difficulties due to the impact of the epidemic.
1. Li Keqiang presided over the executive meeting of the State Council, made good use of government bonds, expanded effective investment, and decided to start a number of new water conservancy projects with mature conditions. At present, there are disturbances from the Russian Ukrainian war and the Fed’s interest rate increase and contraction table, and there are many outbreaks rebounding in China, “the downward pressure on the economy is further increased”, and the national standing committee will once again consolidate the signal of stabilizing economic growth. First, the meeting stressed that “setting targets and not relaxing”, which means that the annual economic growth target of 5.5% should be achieved; The first
Second, the meeting stressed that “when formulating macro policies this year, we have taken forward-looking consideration of many changes in China’s external environment. Policies to stabilize the economy should be issued early and quickly, measures that are not conducive to stabilizing market expectations, and plans to deal with greater uncertainty may be formulated”, which means that the policies with “forward-looking consideration” may be launched faster; The formulation of the plan means that the strength of follow-up policies may also be increased. In combination with the requirements of the meeting of the financial committee of the State Council on March 16 that “monetary policy should take the initiative to respond”, we believe that the reserve requirement and interest rate may be reduced in the future. In view of the fact that the Federal Reserve may raise interest rates continuously from May to June and may raise interest rates by 50bp, it is expected that China may implement the reserve requirement and interest rate reduction as soon as April; The pace of fiscal expenditure may be ahead; In addition, in view of the poor real estate boom and sluggish sales, the follow-up real estate policy is also expected to be broadened. Third, the meeting pointed out that “make good use of government bonds, expand effective investment, pay close attention to issuing the amount of remaining special bonds, give better play to the efficiency of special bonds, speed up project commencement and construction, and form physical workload as soon as possible”, and “another batch of water conservancy projects can complete an investment of about 800 billion yuan in the whole year”, which means that the certainty of high growth of infrastructure construction is further enhanced. Maintaining the previous judgment, the steady growth policy should have continuity. In the future, the macro main line will still focus on “counter cyclical and steady growth”, and the effect of steady growth will gradually appear, but we still need to pay close attention to the disturbance of the epidemic to the economy.
2. The general office of the CPC Central Committee and the general office of the State Council issued the opinions on promoting the construction of social credit system and high-quality development and promoting the formation of a new development pattern (hereinafter referred to as the opinions) and issued a notice. The opinions proposed to smooth China’s big cycle with a sound credit mechanism, support China’s international double cycle with a good credit environment, promote mutual promotion, promote financial services to the real economy with a solid credit foundation, and improve the integrity level of the whole society with effective credit supervision and credit services. Among them, the part on promoting financial services to the real economy, It emphasizes “developing Inclusive Finance, expanding the scale of credit loans, solving the financing problems of small, medium-sized and micro enterprises and individual industrial and commercial households”, and “encouraging banks to innovate credit products in special fields such as service manufacturing, strategic emerging industries, agriculture, rural areas and farmers, ecological environmental protection and foreign trade”. We believe that this is to provide credit system support for steady economic growth through innovative credit financing services and products Strengthen the integrity construction of the capital market and strengthen market credit constraints, strengthen the sorting and standardization of credit information of small, medium-sized and micro enterprises, improve the information asymmetry of banks and enterprises, and solve the financing difficulties of small, medium-sized and micro enterprises from the aspect of credit.
3. The monetary policy committee of the people’s Bank of China held its regular meeting in the first quarter of 2022 (the 96th general meeting). This regular meeting continued the “triple pressure of economic development facing demand contraction, supply shock and weakening expectation” since the central economic work conference at the end of 2021, and continued to point out that “stability is the first and progress is made in stability”. Compared with the 2021q4 regular meeting of the central bank, this meeting will “strengthen cross cycle regulation and combine it with counter cycle regulation” to “strengthen cross cycle and counter cycle regulation” (the same as the formulation of the two sessions); Change “prudent monetary policy should be flexible and moderate” to “strengthen the implementation of prudent monetary policy” (the same as the formulation of the two sessions), and change “be more active and promising and increase support for the real economy” to “actively respond, boost confidence and provide more powerful support for the real economy”, pointing to that monetary policy will be stable and loose, and then the reserve requirement and interest rate cuts can be expected. The meeting continued to point out that “we should enhance the stability of total credit growth, strengthen the supervision of deposit interest rates, give play to the efficiency of the reform of quoted interest rates in the loan market, and promote the reduction of comprehensive financing costs of enterprises”. However, the new “focus on stabilizing the cost of bank liabilities” points out that the loan cost of subsequent entity enterprises will still decline, but under the requirements of “stabilizing the cost of bank liabilities”, we also need to release cost space for banks, that is, we need to reduce reserve requirements With the support of lowering MLF interest rate or other structural instruments, credit easing will also gradually appear.
4, one belt, one road, is the joint development of the “one belt and one way” green development by the national development and Reform Commission, the Ministry of foreign affairs, the Ministry of ecology and environment and the Ministry of Commerce. One belt, one road, is to further develop green development, including green infrastructure, green energy, green transportation, green industry, green trade, green finance, green technology, green standards and climate change. First, as the top-level design of the construction of the green silk road, the opinions is of great significance for practicing the concept of green development, promoting the construction of ecological civilization, actively responding to climate change, maintaining global ecological security and building a community of human and natural life. Second, one belt, one road, is still facing challenges and risks. Therefore, we must support international negotiations on climate change, promote green and low-carbon transformation of infrastructure, energy and transportation, improve the green supply chain, build green finance and green color industry, and strengthen international cooperation and exchanges in environmental protection. Third, one belt, one road and one green development, should be built up to support and guarantee the capability.
5. Notice of the National Energy Administration on printing and distributing the guiding opinions on energy work in 2022. This opinion emphasizes that for vigorously developing wind power photovoltaic, orderly promoting the construction of major hydropower and nuclear power projects, and actively developing the new energy Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) model, we believe that the construction of large-scale renewable energy infrastructure such as photovoltaic and wind power generation is still the focus of attention. At the same time, “double carbon” is difficult to achieve overnight, and traditional energy is difficult to exit in the short term. Therefore, “the goal of energy consumption intensity should be flexible”, and we should pay attention to orderly promoting the green transformation of high energy consumption and the construction of new energy.
6. The people’s Bank of China issued the opinions on doing a good job in the key work of financial support and comprehensively promoting rural revitalization in 2022. The impact of the epidemic has intensified, and food security remains a key concern. The opinions emphasized the financial guarantee of food security, increased financial support for the important Shenzhen Agricultural Products Group Co.Ltd(000061) supply of soybeans and oil, steadily improved the financial service level of rural construction, and proposed to optimize the allocation of credit resources and continuously increase credit investment. We believe that the opinions is not only the maintenance of food security, but also a signal of directional and continuous “wide credit”.
In terms of overseas macro-economy, overseas focus on energy issues this week. Putin proposed to settle natural gas in rubles, which has been rejected by the G7. However, Germany has high inflation and high dependence on Russian energy imports. Therefore, Putin and the German Chancellor agreed to discuss the purchase of natural gas in rubles. IEA launched a new round of emergency oil reserve release. The United States announced that it would release 1 million barrels of oil a day in the next six months, and Britain has agreed to join the emergency oil reserve release plan; OPEC + adheres to the steady production increase plan, and the contradiction with IEA has increased. It is considered to eliminate IEA oil data. Germany’s high inflation has put pressure on the European Central Bank; Britain falls into “stagflation” and its real income will suffer a “historic shock”; The US non farm data in March showed that the current US employment not only continued to recover in quantity, but also improved in employment structure, which has reached the setting of full employment by the Federal Reserve. At present, the inflation level in the United States remains high, and it is expected to continue to rise in the future, and the decline rate is slow. In addition, the further fermentation of the “wage inflation spiral” may prompt the Federal Reserve to raise interest rates by 50bp at the May meeting, and the contraction is expected to proceed faster.
1. Putin asked “unfriendly countries” to supply natural gas and use ruble for settlement. The G7 rejected the request, while the German Chancellor agreed that experts from both sides should discuss the purchase of natural gas in ruble. Russian President Vladimir Putin asked to use rubles to settle the supply of natural gas to “unfriendly countries”. The G7 has rejected this request. In order to reduce its dependence on Russian energy, the EU will buy at least 15 billion cubic meters of liquefied natural gas from the United States to replace Russian supply by the end of this year. However, this is only one tenth of Russia’s pipeline gas supply. Germany’s inflation rate rose by 7.3% year-on-year in March, much higher than the expected value of 6.2%, compared with the previous value of 5.1%. Among them, the energy price index rose by nearly 39.5% year-on-year, which has doubled compared with 18.3% in December 2021. Moreover, Germany has a high dependence on Russian energy imports. In 2020, Germany’s dependence on Russian natural gas imports was about 46%, and the dependence on Russian imports of crude oil and refined oil was 37.2%, Therefore, the German Chancellor agreed to discuss the ruble purchase of natural gas with Russian experts. Affected by this, the euro against the ruble and the US dollar against the ruble both fell to lows on March 30.
2. The White House announced the release of 1 million barrels of oil per day in the next six months, and IEA members agreed to release a new round of emergency oil reserves. OPEC + adheres to the original production increase plan and considers excluding IEA oil data. The Biden administration announced the release plan of the largest strategic oil reserve (SPR) in U.S. history, which will release an average of 1 million barrels of strategic oil reserves on the market every day in the next six months. Affected by this news, the settlement price of WTI crude oil futures fell 6.99% on the 31st and Brent crude oil futures fell 4.88%. The 31 member states of the international energy agency agreed on April 1 to release new oil from emergency reserves in response to the market turmoil caused by the conflict between Russia and Ukraine. OPEC + insisted on increasing production step by step. At the online meeting on the 31st, it approved the production increase plan of increasing 432000 barrels of oil supply per day in May. At the same time, OPEC + decided to exclude any data provided by IEA from its crude oil production estimation at this meeting. Although the United States increases the release of oil reserves, it can only make up for the short-term oil supply and demand gap. The tight balance between long-term oil supply and demand is difficult to break. We expect that the oil will still fluctuate at a high level this year.
3. The United States released the latest employment data in March. Among them, 431000 new non-agricultural employees were added, slightly lower than market expectations; The labor participation rate was 62.4%, in line with market expectations; The unemployment rate was 3.6%, and the average hourly salary increased by 5.6% year-on-year, both exceeding market expectations. Compared with before the epidemic, the current labor market gap in the United States is less than 1.6 million. According to the current employment level, the gap will be closed soon. The continuous recovery of employment, the improvement of employment structure and the rapid increase of wage growth have changed the Fed’s judgment on the labor market. Powell said in his latest speech that the employment improvement rate is much faster than expected, the nominal wage is increasing at the fastest rate in decades, and the US labor market is very strong and extremely tense, which is even more tense than before the epidemic. In February, US inflation reached a new high of 7.9%. Affected by the conflict between Russia and Ukraine, US inflation is expected to continue to rise and fall slowly, which further worsens the inflation outlook. We expect that under the rising inflation level and strong employment situation, the Federal Reserve will act faster, raise interest rates by 50bp at its meeting in May, and implement the table contraction process faster than the previous round of table contraction.
In addition, important documents issued by local governments and ministries this week include:
1. Action plan for promoting steady growth of industrial economy in Fujian Province
2. Several policies and measures of Chongqing Municipality to promote the steady growth of industrial economy
3. Tianjin 2022 state owned construction land supply plan
4. Action plan of Zhejiang Province to promote the steady progress and quality improvement of industrial economy
5. Action plan for special treatment of agricultural materials counterfeiting in Qinghai Province in 2022
6. Policy opinions of Zhejiang Province on promoting the recovery and development of difficult industries in the service industry
7. Opinions on doing a good job in the key work of financial support and comprehensively promoting rural revitalization in 2022
8. Several policies and measures on effectively responding to the epidemic and helping small and medium-sized enterprises to relieve difficulties
9. Several measures for building a high standard market system in Tianjin
10. Notice of the general office of the State Council on printing and distributing the development plan of traditional Chinese medicine in the 14th five year plan
11. Several policies and measures of Heilongjiang Province to support the accelerated development of digital economy
12. Notice of Chongqing Municipality on measures to implement several policies on promoting the recovery and development of difficult industries in the service industry
13. Notice on rent reduction and exemption for small and micro enterprises and individual industrial and commercial households in the service industry in 2022
Some measures for market construction in Hubei Province
15. Several policies of Hunan Province to promote the steady growth of industrial economy
16. Several policies of Hunan Province to promote the recovery and development of some difficult industries in the service industry
17. Policy opinions of Zhejiang Province on promoting the recovery and development of difficult industries in the service industry
Risk tip: China’s epidemic growth exceeded expectations, the international situation changed, and the uncertainty in the future increased.
