How to achieve the economic growth target in 2022 may be one of the most concerned issues in the market. The core content is how to effectively support the economy and avoid further decline under the background of substantial cooling of real estate and strict financial discipline. Exports are uncontrollable, while consumption is restricted by repeated epidemics and epidemic prevention policies, and investment is expected. How to track the trend of investment and policy? The successive convening of the local two sessions in January 2022 is an important time window. As of this weekend (January 7, 2022), three provinces and cities (Tibet, Beijing and Henan) have successfully held the two sessions. We mainly capture some important signals from the perspectives of growth and investment.
How are the economic growth and investment targets achieved in 2021? According to the published local government work report, in addition to the higher than expected growth in Beijing, the real GDP growth of Henan and Tibet in 2021 is lower than the target, which reflects the economic differentiation of the East, central and western regions under the impact of the epidemic. In comparison, the governance level of the East, especially the coastal areas, is better and the economic toughness is stronger. In terms of fixed asset investment, from the two-year compound average growth rate, as of November 2021, 19 provinces and cities that published the target data failed to meet the target (if the year-on-year growth rate was 13 failed to meet the target). In addition to the lack of infrastructure development, the cooling of real estate investment is an important factor hindering fixed asset investment.
What are the economic growth and investment targets for 2022? It may have become a consensus that there is great pressure to stabilize growth. It has become a major feature of the government's work to reduce economic growth and significantly increase the growth target of fixed asset investment. For the three provinces and cities that have published data, Beijing and Tibet have lowered the GDP growth target by 1 percentage point, and Henan Province has been revised from "more than 7% in 2021" to "7%". From the ranking of national and local growth targets in 2021, the national GDP growth target in 2022 is likely to be set at more than 5% (ranking before Beijing). In terms of investment, the willingness of local forces is relatively obvious. Compared with 2021, Tibet and Henan have significantly raised the growth target: Tibet has increased from 5% to 12%, while Henan has increased from 6% to 10%. In the direction of investment, there are significantly more major projects and traditional infrastructure. Tibet stressed the need to fully promote the construction of major projects, focusing on the establishment and improvement of a comprehensive transportation system; In addition to continuing to support the construction of new digital infrastructure, Beijing has also added a lot of municipal facilities, urban renewal and affordable housing.
In addition to investment, what else deserves attention? In terms of the effect of stimulating the economy, consumption may be the most efficient, but no matter from the central economic work conference in December 2021 or the announced two sessions of local governments, the support for consumption is not more active. Henan Province even lowered the growth target of social retail consumption in 2022. In addition, it is noteworthy that the wording of environmental protection and energy consumption seems cautious. For example, the formulation of "reducing energy consumption of 10000 yuan GDP by about 3% in Henan Province in 2021" does not appear, while the statement of "implementing eco-environmental quality, energy, water resources and other indicators according to national requirements" may be more in line with the unified thinking of the central economic work conference and the idea of carbon reduction and correction.
What is the performance of high-frequency data related to investment? The data on the real economy have not improved, which may be related to the drag of continued cooling of real estate. In December 2021, although the construction PMI remained above 50, it was at a relatively low level in the same period in history. It is worth noting that the new order data has fallen to the withering and flourishing line (50); As an important raw material for construction projects, the price of cement continues to fall from the high point (with seasonal factors). By the end of December 2021, the storage capacity ratio of cement is still at a historical high in the same period. However, there are signs of acceleration in local bond issuance. According to wind data, the local government plans to issue 56.6 billion yuan of bonds next week (January 10-14, 2022), of which 38.2 billion are special bonds and 18.4 billion are general bonds. Compared with the same period in 2021, there is only zero issuance. In addition, in the stock market, the market may have more confidence in infrastructure. Since the beginning of 2022, the A-share construction machinery index and infrastructure engineering index have rebounded significantly or accelerated upward compared with the broader market, with cumulative yields of 6.1% and 4.1% respectively.
Risk tip: the epidemic spread exceeded expectations, and China's foreign policies exceeded expectations
