The triple pressure superimposed on the disturbance of the epidemic situation may put the protection of employment in a more prominent position after the Politburo meeting, and the fiscal policy needs to be further strengthened: a new round of special anti epidemic government bonds can be issued, tax rebates and fees can be reduced, epidemic prevention and social security investment can be increased, and basic financial resources can be guaranteed.
The triple pressure superimposes the epidemic situation, which urgently needs to be strengthened by finance
The triple pressure still exists, and the disturbance of the epidemic situation rises again. It is urgent for the government to make further efforts. In December 2021, the central economic work conference pointed out that China is facing triple pressures of shrinking demand, supply shock and weakening expectations. Since this year, overseas countries have faced the impact of factors such as rising geopolitical risks, rising commodity prices and accelerated tightening of liquidity in developed economies. The effect of China's steady growth policy has moved forward in twists and turns, and once again faced the disturbance of the epidemic. Against the background of the good start of economic data from January to February, in March, Shenzhen, Shanghai The disturbance of the epidemic situation in Jilin and other regions led to a GDP growth rate of only 4.8% in the first quarter. The unemployment rate surveyed in March exceeded the annual threshold of 5.8%, and the data of real estate, consumption and import fell again. We believe that the triple pressure on the economy still exists and is facing the disturbance of the epidemic. After the Politburo meeting in April, we may put the protection of employment in a more prominent position, emphasize the priority of employment, protect the main body of the market and ensure the employment of residents, and urgently need further efforts of fiscal policy:
1) a new round of special anti epidemic treasury bonds can be issued. In 2020, in response to the unprecedented pandemic in a century, China issued 1 trillion special treasury bonds to fight the epidemic. At present, the economy is facing the impact of the epidemic and its secondary damage under triple pressure. We believe that a new round of special treasury bonds can be issued. Considering that the impact effect of the epidemic is lower than that in 2020 and the debt space of the central government is limited, the issuance scale is expected to be slightly lower than that in 2020.
2) further strengthen tax rebate and fee reduction. In 2022, the government implemented a large-scale tax rebate and fee reduction policy to cope with the triple pressure. At present, due to the impact of the epidemic, macro data such as service industry and employment have deteriorated significantly, and business pressure has increased sharply. We believe that we need to further strengthen tax rebate and fee reduction, focusing on two directions: 1) for regions greatly affected by the epidemic, we can refer to the relief policies of Shenzhen, Shanghai and other regions, We will strengthen tax rebate and fee reduction for enterprises in the region. 2) We will intensify tax rebate and fee reduction efforts for logistics, aviation, tourism, hotels and other industries that have been greatly impacted by the epidemic. Since April, the national Standing Committee has made arrangements, and the follow-up can pay attention to the implementation of relevant measures.
3) increase the investment in epidemic prevention and social security. Referring to the experience of 2020, the fiscal policy actively responded to the impact of the epidemic and hedged secondary injuries, focusing on increasing the expenditure in the fields of social security, employment and health, increasing the return of unemployment insurance, and giving wage subsidies. We believe that the current fiscal policy should further strengthen the expenditure in the above areas, ensure the "Three Guarantees" and support the people's livelihood.
4) increase transfer payment and support grass-roots finance. Under the impact of the epidemic, the mismatch between financial resources and powers of grass-roots finance has become more prominent. In the general public budget, the central government's transfer payment to local governments reached a record high of 9.8 trillion in 2022. We believe that under the impact of the epidemic, we should further improve the transfer payment, strengthen support for weak areas, tilt new financial resources to the grass-roots level, and make good use of the normalized direct financial mechanism to understand the people's livelihood at the grass-roots level, On April 14, Minister Liu Kun made it clear that "this year, transfer payments closely related to the financial operation of counties and districts will continue to be included in the scope of direct funds, and the total amount of direct funds will increase to more than 4 trillion yuan".
Fiscal expenditure increased significantly, focusing on government investment and consumption
Fiscal expenditure maintained a high growth and made efforts to implement steady growth. In the first quarter, the national general public budget expenditure was 6358.7 billion yuan, an increase of 8.3% year-on-year. Meanwhile, the budget expenditure of national government funds was 2478.7 billion yuan, a year-on-year increase of 43%. We have made a detailed analysis in the report "significant acceleration of fiscal expenditure, government consumption and investment" issued in March. In order to implement the goal of stable growth, the scale of fiscal expenditure in 2022 is increased and the pace is ahead. The scale of new expenditure in broad sense is more than 4.5 trillion compared with that in 2021, and the pace of expenditure is significantly accelerated, In the first quarter, the expenditure progress of general public budget and government fund budget reached 23.9% and 17.8% respectively, both higher than that in 2020 and 2021. After the government expenditure is overweight and advanced, focus on the support of government investment and consumption:
Pay attention to the supporting role of government consumption. Government consumption is mainly divided into two parts: one is the government's own consumption, which is mainly reflected in financial general public service expenditure and other subjects; the other is social consumption, which mainly includes public services and public goods consumed by the public, such as social security and social undertakings expenditure such as education, medical treatment, pension, child care and culture. The overweight of fiscal expenditure promotes government consumption and helps to support the economy: 1) since 2011, the proportion of government consumption in the final consumption expenditure has been stable at 30%, and the proportion of government consumption has increased in the period of great downward pressure in 2018 and 2020. 2) The higher the proportion of government consumption in economically underdeveloped areas, according to 2017 data, the proportion of governments in Tibet, Xinjiang, Qinghai, Ningxia and other regions is far ahead. In 2022, the scale of central to local transfer payments reached 9.8 trillion, focusing on benefiting enterprises and the people, grass-roots finance and weak areas. 3) In 2022, the government consumption fiscal expenditure showed a positive performance. In terms of the proportion of government consumption in various industries in 2017, social security, transportation, scientific and technological research, health and other aspects are highly dependent on government consumption. From January to February 2022, government consumption fiscal expenditure showed positive performance, and social security employment, health and transportation expenditure progressed rapidly, reaching 19%, 15.3% and 15% respectively.
The government has invested heavily, and the epidemic has little impact on infrastructure. In the "economic data for March and the first quarter: target or switch to employment protection" issued on April 18, we proposed that under the influence of the acceleration of fiscal expenditure, the acceleration of the issuance of special bonds and the expansion of credit and the support of supporting loans, infrastructure investment maintained a high growth rate in the first quarter and was relatively limited disturbed by the epidemic. The main reasons are that infrastructure investment in Jilin, Shanghai and other epidemic areas accounted for a relatively small proportion, At the same time, there are expectations of catching up in other areas where there is no epidemic, so as to avoid the spread of epidemic in the future and disturb the construction. We continue to maintain the judgment that the financial and quasi financial front force will drive the positive growth of infrastructure investment.
Fiscal revenue has maintained a high growth and is under pressure in the follow-up or stage. There is no need to worry about disturbing expenditure
The main reason for the high growth of fiscal revenue is the strengthening of tax collection and management. In the first quarter, the national general public budget revenue was 6203.7 billion yuan, a year-on-year increase of 8.6%, and the national tax revenue increased by 7.7%. Among them, China's value-added tax, consumption tax, enterprise income tax and individual income tax were 1923.1 billion yuan, 596.8 billion yuan, 1067.3 billion yuan and 464.5 billion yuan respectively, with growth rates of 3.6%, 15.8%, 9.8% and 16.5% respectively. We believe that the higher growth rate of tax revenue is mainly due to two reasons:
1) strengthen tax collection and management and increase tax revenue. The Golden Tax Project is one of the national e-government projects approved by the State Council. Its purpose is to build a unified tax management information system covering the whole country. So far, it has four phases. The comprehensive promotion of Golden Tax phase IV will help to improve the efficiency of tax collection, management and inspection through higher-level technical means, so as to reduce unreasonable "reasonable tax avoidance". Therefore, when the growth rate of residents' income is relatively stable, the growth of tax revenue is more positive.
2) the government continues to promote the policy of protecting the main body of the market, which helps to protect the tax base and stabilize tax revenue.
The early prediction confirms that the subsequent financial revenue or phased pressure, but there is no need to worry about disturbing the expenditure. In the report "significant acceleration of fiscal expenditure, government consumption and investment" in March, we pointed out that we should pay attention to the service industry and employment risks caused by the spread of the epidemic. When we look at the fulfillment of the early prediction, the spread of the epidemic has a strong impact effect. In March, the unemployment rate soared to 5.8%. Referring to the historical experience of 2020, we expect that under the background of the impact of the epidemic and the overweight of tax reduction, tax rebate and fee reduction, the fiscal revenue will be under pressure from the second quarter. In addition, as China adheres to the fiscal discipline of determining expenditure by revenue, will income pressure suppress expenditure? We suggest that there is no need to worry. In 2022, the central and local carry over balances and transferred funds are arranged to reach 2.3 trillion yuan in the financial budget to escort the financial expenditure. For example, on April 18, the central bank made it clear that "600 billion yuan has been handed over as of mid April... A total of more than 1100 billion yuan of balance profits will be handed over in the whole year".
The growth rate of land transfer income is sluggish, and the policy of stabilizing real estate is on the way
In the first quarter, the budget revenue of national government funds was 1384.2 billion yuan, a year-on-year decrease of 25.6%. Among them, the income from the transfer of state-owned land use rights was 119.58 billion yuan, a year-on-year decrease of 27.4%. The growth rate of land transfer income is low, and the market is more concerned about two aspects: 1) under the background of steady growth, will the low land transfer income become a constraint on expenditure? 2) Whether the growth rate of land transfer income can be gradually repaired in the follow-up?
First, the transferred funds can gradually fill the capital gap caused by the decline of land transfer income. The 2022 financial budget report does not disclose the scale of land transfer income. Considering the gradual repair of the real estate market, we expect that the scale of land transfer income in 2022 is expected to remain above 8 trillion, about 700 billion less than the final accounts in 2021. The market is concerned about how to make up for the decline of land transfer income? Mainly through the support of transferred funds, 1650 billion yuan of central government funds will be transferred through the profits handed over by specific state-owned financial institutions and franchised institutions in 2022, bringing the total revenue of central government funds to 210713 billion yuan. We believe that the transferred funds can effectively compensate for the decline of land transfer income, and will not lead to insufficient income as a constraint to the acceleration of expenditure.
Second, can the growth rate of land transfer income be gradually repaired in the follow-up? In the report "significant acceleration of fiscal expenditure, government consumption and investment" in March, we proposed that the meeting of the Financial Committee on March 16 indicates the end of the policy, and the subsequent relaxation of policies in the real estate field will help the real estate market return to a virtuous circle. Combined with the real estate data in the first quarter, although the overall land market remains depressed, there have been obvious marginal changes recently. Taking the meeting of the financial committee as the dividing line, after the meeting of the Financial Committee on March 16, the policy expectation was further clarified, the market confidence was significantly enhanced, and the centralized land supply in many cities has performed well: the auction rate in Hefei, Xiamen, Chongqing and other cities has decreased to 0%, while the proportion of land acquisition by state-owned enterprises has remained below 50%, The activity of private enterprises has increased significantly. At present, there is great pressure to deal with the epidemic, and further measures to stabilize growth may be introduced in the short term. In the future, the real estate field is expected to usher in further policy relaxation and promote the continuous recovery of the land market, and the land transfer income will be repaired in an orderly manner.
Risk tip: the implementation of policies was less than expected, the economy went down more than expected, and the global economic and financial crisis broke out
