Event:
According to preliminary accounting, China's actual GDP in 2022q1 was + 4.8% year-on-year, and + 1.3% month on month compared with 2021q4. By industry, the primary industry was + 6.0%, the secondary industry was + 5.8%, and the tertiary industry was + 4.0%. In Q1 2022, social zero was + 3.3% year-on-year, and + 1.3% year-on-year after deducting price factors. In March alone, social zero was - 3.5% year-on-year. In Q1 2022, the year-on-year fixed investment was + 9.3%, of which the year-on-year investment in manufacturing industry was + 15.6%, the year-on-year investment in real estate development was + 0.7%, and the year-on-year investment in infrastructure was + 10.48%.
General view:
(1) under the influence of internal and external factors, the economic momentum slowed down in 2022q1
2022q1 GDP was + 1.3% month on month, down from 1.5% of Q4 in 2021. Compared with the month on month growth rate in the first quarter of previous years, it was only higher than 2020q1 and 2021q1, indicating that the marginal economic kinetic energy of 2022q1 was weakened and not strong compared with the same period in history. However, due to the disturbance of the epidemic in the first quarter of last year and the relatively low base, the GDP of 2022q1 remained unchanged, achieving + 4.8% year-on-year, compared with + 0.8pcts in the fourth quarter of last year. Overall, the slowdown of GDP economic momentum in the first quarter reflects the comprehensive role of the resurgence of internal epidemic and external geopolitical conflicts. Structurally, consumption is a drag on the economy, and investment under the pre driving force of steady growth and resilient exports have played an important supporting role in the economy. At present, the epidemic is still spreading, geopolitical conflicts are still uncertain, the triple pressure of shrinking demand, supply shock and weakening expectation on China's economy is still heavy, and it is more difficult to achieve the annual economic growth target of 5.5%.
(2) the epidemic dragged down the consumption in March, and the consumption in April is still not optimistic
In Q1 2022, the total retail sales of social consumer goods increased by + 3.3% year-on-year, much lower than + 8.37% of the nominal growth rate of GDP, which dragged down the economic growth in Q1. In March 2022, social zero was - 3.5% year-on-year, and it was negative for the first time since August 2020, which was significantly weaker than - 10.2pcts from January to February. In March 2022, the social zero month on month ratio was - 1.93%, which was the first time in history that the social zero month on month ratio was negative. On the whole, the epidemic situation in March significantly dragged down the zero growth rate of social security in March, and then dragged down the zero performance of social security in the whole first quarter. Looking forward to April, we believe that the impact of the epidemic and strict nationwide sealing and control measures will be further reflected. Residents' consumption may be more impacted than that in March, and the social zero data in April is still not optimistic.
(3) investment in infrastructure and manufacturing supported fixed investment in the first quarter, and real estate played a negative role in driving fixed investment in March
In Q1 2022, fixed investment was +9.3% year-on-year, exceeding the market expectation of +8.6%. Among them, manufacturing investment was + 15.6% (January February + 20.90%), infrastructure investment was + 10.48% (January February + 8.61%), and real estate investment was + 0.7% (January February + 3.7%). Manufacturing investment and infrastructure investment supported fixed investment in the first quarter, driving the year-on-year rise of fixed investment in the first quarter by + 5.0pcts and + 3.1pcts respectively. Real estate investment contributed less to the year-on-year rise of fixed investment in the first quarter, only driving the year-on-year rise of fixed investment by + 0.2pcts. In March alone, fixed investment was + 6.6% year-on-year, significantly lower than + 12.2% from January to February. Among them, manufacturing investment was + 11.9%, infrastructure investment was + 11.8% and real estate development investment was - 2.4% year-on-year. According to the data in March, the growth rate of manufacturing investment slowed down, and the growth rate of real estate investment changed from positive to negative, which had a negative year-on-year pulling effect on fixed investment in March. Only the growth rate of infrastructure investment increased compared with that from January to February.
In 2022q1, the growth rate of manufacturing investment was high, but it showed a decline in a single month in March:
In Q1 2022, manufacturing investment increased by + 15.6% year-on-year, higher than the overall + 9.3% of fixed investment. According to historical data, this growth rate was also higher than that in Q1 20152019 before the epidemic. On the other hand, in March alone, manufacturing investment was + 11.9% year-on-year, down more than that from January to February, which was confirmed by the unsatisfactory PMI data in March. Overall, the weakening of manufacturing investment margin in March comprehensively reflects the supply side impact caused by overseas geopolitical conflicts and the disturbance of China's epidemic on manufacturing demand and production. Since the end of March, the serious situation of the epidemic has continued to intensify, and the superimposed overseas geopolitical conflict continues. It is expected that the manufacturing investment in April will still be disturbed. In the medium term, with the weakening of the epidemic and the continuous promotion of broad credit, it is expected that the investment in manufacturing industry will still maintain strong resilience.
Real estate investment continued to drag down fixed investment, and there was no improvement in March:
Real estate development investment in 2022q1 was + 0.7% year-on-year, down 3.0pcts from + 3.7% from January to February, and the driving force for fixed investment in the first quarter was only + 0.2pcts. In March alone, the completed area, construction area and new construction area of houses were - 15.5%, - 21.5% and - 22.2% respectively year-on-year, significantly lower than the - 9.8%, + 1.8% and - 12.2% from January to February, and the real estate construction situation continued to be depressed. According to the sales data, the sales area of commercial housing in Q1 was - 13.8% year-on-year, and - 17.7% in March alone. Compared with - 9.6% from January to February, the decline was deepened. In terms of land acquisition area, Q1 was - 41.8% year-on-year and - 41.0% in March alone, which was basically the same as the - 42.3% decline from January to February. Real estate investment in 2022q1 is a serious drag on fixed investment. In March alone, the real estate investment data did not improve, and both the construction of real estate enterprises, the purchase of houses by residents and the purchase of land by real estate enterprises continued to decline. In addition, in 2022q1, the development funds of real estate enterprises were - 19.6% year-on-year, still declining, and the decline was further deepened compared with - 17.7% from January to February. After entering April, according to the disclosed data, the premium rate of residents' house purchase, real estate enterprises' land purchase and real estate enterprises' land purchase is still significantly weaker than that in the same period last year. At present, although local governments are relatively active in land supply, residents' willingness to buy houses and real estate developers' willingness to acquire land are still low, the prosperity of the real estate industry is still not high, and it still takes some time for credit and other policies supporting real estate to be transmitted to the real estate industry.
Infrastructure investment will continue to make efforts and will continue to support the growth rate of fixed investment in the future:
In 2022q1, infrastructure investment increased by + 10.48% year-on-year, driving the growth rate of fixed investment up by + 3.1pcts. In March alone, infrastructure investment increased by + 11.8% year-on-year, up from + 8.6% from January to February. It is the only one of the three major areas of fixed investment that continued to increase in growth in March, and the effect of "making efforts in advance" is obvious. A large number of new special bonds issued this year have formed an effective connection with the special bonds issued centrally at the end of last year, providing sufficient funds for infrastructure projects. In the context of the intensification of China's epidemic and the continuation of overseas geopolitical conflicts, the pressure on China's steady growth has increased significantly. At the same time, facing the dislocation of China US cycle under the tightening cycle of the Federal Reserve, China's monetary policy has been limited to a certain extent, and the importance of fiscal policy is highlighted. It is expected that the follow-up infrastructure investment will continue to increase efforts to promote the realization of steady growth to the greatest extent.
(4) disturbed by internal and external factors, the margin of industrial production weakened in March
In Q1 2022, the industrial added value was + 6.5% year-on-year, down 1pcts from + 7.5% from January to February. In March alone, the industrial added value was + 5.0% year-on-year, basically in line with the market expectation of + 5.1%, down 2.5pcts from + 7.5% from January to February.
In terms of molecular industries, among the 17 industrial sub industries that have announced industrial added value, in March 2022, upstream industries such as nonferrous metals, ferrous metals and non-metallic minerals improved compared with January February, and the growth rate of added value of other industries decreased compared with January February, reflecting the overall disturbance of the epidemic and overseas geographical conflicts on China's industrial operation since March. On the whole, the weakening of the year-on-year growth rate of industrial added value in March reflects the impact of the intensification of internal epidemic and overseas geographical conflicts on China's industrial operation. Since April, the epidemic has been spreading, and it is expected that industrial production will still be disturbed. In the medium term, the growth trend of industrial added value depends on the efficiency of epidemic prevention and control and the promotion of wide credit.
(5) with the weakening of economic momentum, the importance of fiscal policy and the continued moderate relaxation of real estate regulation is highlighted
The economic data in the first two months of this year performed well and generally exceeded market expectations. However, according to the economic data in March, consumption, export, manufacturing investment and real estate investment weakened in an all-round way, and only infrastructure investment improved from January to February. The spread of the impact of international geopolitical conflicts and the significant intensification of the epidemic in China have posed all-round pressure on China's economic operation in the short term. The triple pressure of shrinking demand, supply shock and weakening expectation is still heavy. Although the total amount of social finance data in March is relatively bright, the structure is still poor, reflecting the core obstacles still existing in the continuous promotion of wide credit: first, under the real estate recession, the demand for residents' housing loans and medium and long-term loans of real estate enterprises has been suppressed, which has a weak pulling effect on social finance; Second, the spread of the epidemic and the continuation of overseas geographical conflicts affect the medium and long-term confidence of enterprises, and the demand for medium and long-term operational loans is insufficient. At present, under the situation that the epidemic is still spreading and there is still great uncertainty in overseas geographical conflicts, it is significantly more difficult to achieve the annual economic growth target of 5.5%, which requires more active policies and more emphasis on the steady growth policy. The prevention and control of the follow-up epidemic is still the key. Last week, the expectation of small-scale RRR reduction and interest rate reduction by the central bank failed, which reflects that the central bank is more cautious in monetary easing. In this case, the importance of fiscal policy and continued moderate relaxation of real estate regulation is more prominent. It is expected that the follow-up market focus will be the gradual confirmation of the epidemic peak and economic bottom.
