Event:
On January 10, Premier Li Keqiang chaired an executive meeting of the State Council to deploy and accelerate the major projects identified in the outline of the 14th five year plan and the special plan, and expand effective investment.
Core view:
The NSC has expressed a more positive and urgent demand for expanding effective investment. Compared with the statements made by the national Standing Committee and the Ministry of Finance on "reasonable arrangement" and "moderate acceleration" of special bond issuance and infrastructure investment since the third quarter of last year, this national Standing Committee has made a more positive statement. Special bonds should be "promptly issued", investment projects should be "accelerated", budget investment tends to "start as soon as possible" projects, and retained funds should be "implemented as soon as possible". In addition, "guide the places where the investment of new projects decreases to strengthen the work", and compact the responsibilities of all localities.
Pay attention to the change of infrastructure logic: the urgency of "steady growth" has been further improved, and the policy has been comprehensively accelerated. In the second half of last year, the issuance of special bonds, fiscal expenditure and infrastructure resilience were lower than expected, which also led to the continuous reduction of the market's expectations for infrastructure. However, we believe that with the changes in the domestic and foreign economic environment, the urgency of "steady growth" in the first quarter has further increased. The national standing committee will deploy funds to speed up the availability and simplify project approval, which will support the acceleration of infrastructure investment.
First, the task of stabilizing domestic demand in the "first quarter" is clear, and the urgency of infrastructure construction is further improved. The national Standing Committee clearly proposed to "strive to form more physical workload in the first quarter". On the one hand, overseas has gradually confirmed the low mortality rate of variant viruses, the European and American supply chains will accelerate the recovery, and the overseas supply and demand gap will accelerate the convergence. China implements the "dynamic clearing" policy, the continuous imported epidemic risk will restrict the recovery of residents\' consumption, and the rhythm of stabilizing domestic demand should be further accelerated; On the other hand, this year's fresh graduates broke through a record high, and the employment pressure was greater in the first half of the year.
Second, the national standing committee plans to "pay close attention to issuing bonds, simplify procedures and start construction as soon as possible" and speed up infrastructure construction in an all-round way.
First, "pay close attention to issuing" the special bonds issued this year; Second, we should "simplify procedures" for projects included in the plan and qualified, and ensure financing, land use and energy use; Third, investment in the central budget should focus on projects under construction and "can start as soon as possible", and major water conservancy projects should be "promoted and implemented as soon as possible". The meeting deployed from the aspects of approval, financing and commencement, pointing to the formation of physical workload in the first quarter as soon as possible. In addition, the meeting also proposed "implementing innovative measures such as commitment system and regional assessment", and it is expected that the procedures related to infrastructure projects are expected to be further simplified.
Third, local governments and the national development and Reform Commission actively promote the implementation of projects and become an effective starting point for the transformation of retained funds into physical workload. The national standing committee said that the 1.2 trillion yuan of special bond funds issued in the fourth quarter of last year should be allocated to specific projects as soon as possible. Recently, a number of major projects have been started and implemented, which is expected to promote the formation of physical workload of retained funds as soon as possible. Both Tibet and Henan sessions raised their fixed asset investment targets for 2021. With the centralized promotion of the two sessions in mid January, it is expected that more regions will raise the growth target of fixed investment and continuously improve market expectations.
It is estimated that the growth rate of infrastructure investment is expected to reach 10% in the first half of 2022 and 6% in the whole year. In 2022, it is expected that the financial support for infrastructure investment will increase by 790 billion yuan compared with that in 2021, of which special bonds are the main source of incremental funds. Without considering the supporting funds, it is expected that the financial funds will drive the infrastructure investment by 4.2 percentage points in 2022. If we encourage less debt pressure and economically developed areas to actively expand effective investment by increasing the loan investment of policy banks, it is expected that the supporting funds may increase marginally. Considering the supporting funds, the pull on the annual infrastructure investment will increase to about 6%.
Taking into account the increasing urgency of stable financial growth at present, the financial expenditure will be advanced and the issuance of special bonds will be accelerated in advance. The financial force will be more obvious in the first half of the year, and the growth rate of infrastructure investment is expected to reach 10% in the first half of 2022.
