The year-on-year GDP growth rate of 4.8% in the first quarter of 2022 is higher than the market expectation. We think that what is more noteworthy than this figure is the month on month growth rate of 1.3% in the first quarter. Under this growth rate, the GDP in the remaining three quarters of 2022 is likely to continue to be higher than the market expectation. Especially considering that the previous quarter on quarter GDP growth rate in the third quarter of 2021 was revised up from 0.2% to 0.7%. If we assume that the economy gradually recovers in the second half of the year when the epidemic is under control, it shows that even if the month on month growth of GDP stagnates in the second quarter of 2022, the annual GDP growth is still expected to reach 5%.
Therefore, we expect that the future steady growth will gradually weaken the growth target of 5.5%, but turn to the bottom line thinking, which is the annual economic growth rate of more than 5%. From the first quarter of 2022, although infrastructure (with a year-on-year growth rate of 10.5% in the first quarter, the same below) and manufacturing investment (15.6%) have become the main drivers of economic growth, the weakness of real estate (0.7%) and consumption (3.3%) is still a drag on the economic stabilization and recovery, especially the continued weakness of residents' Consumption Willingness under the epidemic. In addition, in the short term, as 17 provincial administrative regions face local change in the second quarter, the coordinated development of steady growth from the central to the local level is likely to wait until the third quarter (Table 1).
In a race against time, the resumption progress is the key to affecting the industrial growth. In March 2022, the industrial added value fell back to 5%, and the growth rate of 6.5% in the first quarter was not bad. Among them, the manufacturing industry was most affected by the epidemic prevention and control and export slowdown, while the mining industry continued to accelerate under the policy of ensuring supply and price stability. From March to April, Shanghai and Jilin Province, as the focus of national sealing and control, were also important cities of automobile manufacturing, which directly led to the year-on-year contraction of 1.0% in the added value of automobile manufacturing industry in March, and became the main drag of manufacturing industry together with black smelting. Combined with the Baicheng congestion index, we found that the logistics constraints brought by the current epidemic are the main contradiction of the slowdown of industrial production. The year-on-year decline of the congestion index in the first ten days of April is more obvious. If the resumption of work and production in the second ten days of April is poor, the industrial added value may have zero or even negative year-on-year growth.
Deregulation is accelerating and transmission is unfavorable, and the stabilization of real estate may take until the third quarter. Affected by the epidemic situation and the base figure, real estate investment shrank by 2.4% year-on-year in March 2022, dragging down the cumulative growth rate in the first quarter, and the year-on-year growth rate further fell to 0.7% (3.7% from January to February). Under the comprehensive cooling of area data, dynamic zeroing and strict prevention and control policies, real estate sales, construction and construction were blocked. Although since 2022, especially since March, local governments have frequently relaxed the real estate due to urban policies, the real estate will still be an important drag on the economy in the second quarter due to the risk of epidemic spread, policy time lag and base number.
Consumption fell to the freezing point, and the trend of social zero falling below the market expectation in the second quarter may continue. In March 2022, social zero decreased by 3.5% year-on-year (Bloomberg unanimously expected to decrease by 3%) and increased by 3.3% year-on-year in the first quarter. With the escalation of the blockade caused by the multi-point outbreak of the epidemic, catering consumption fell by 16.4% (8.9% from January to February). From the perspective of products, social zero was dragged down by travel and consumption upgrading products (gold and silver jewelry, clothing, furniture and cars) in March, and residents' must choose consumer goods led the rise (beverages, grain and food, Chinese and Western Medicine) under the hoarding of materials. In terms of contribution, it mainly comes from grain and food, petroleum products and Chinese and Western medicine. Our previous report pointed out that in the epidemic area, Jiangsu, Zhejiang and Shanghai alone accounted for more than 20% of the national social zero. The optional consumption represented by services in the second quarter is expected to continue to drag down consumption.
The power investment has made great efforts, and the growth rate of infrastructure investment in March was double. In the first quarter of 2022, broad infrastructure continued to accelerate, with a year-on-year growth rate of 10.5%, of which the year-on-year growth rate of a single month in March was more than 3 percentage points higher than that from January to February. Excluding the abnormal values during the epidemic, it has reached the highest level since 2018. Among them, the growth rate of investment in electric power and other public utilities is the top (more than 24% year-on-year in March). Together with manufacturing investment, it has become an important guarantee for the economic growth to reach 4.8% in the first quarter. In the first quarter, special bonds have been issued in advance to support infrastructure investment, and the scale of new special bonds is nearly 1.3 trillion yuan, compared with 26.4 billion yuan in the same period in 2021. Meanwhile, the raised funds are mainly inclined to infrastructure fields such as municipal and industrial park construction and transportation infrastructure, accounting for more than 50%. Driven by 102 major projects in the 14th five year plan, infrastructure investment is expected to maintain a high growth rate in 2022.
Risk tip: the spread of the epidemic exceeded market expectations, and the policy hedging economic downturn was less than market expectations
