Event:
On April 26, 2022, Xi Jinping General Secretary presided over the 11th meeting of the central financial and Economic Commission and stressed that we should comprehensively strengthen infrastructure construction, build a modern infrastructure system and lay a solid foundation for building a modern socialist country in an all-round way.
Comments:
The meeting heard reports from the national development and Reform Commission, the Ministry of industry and information technology, the Ministry of communications, the Ministry of housing and urban rural development, the Ministry of agriculture, the Ministry of water resources and other ministries on comprehensively strengthening infrastructure construction. It was pointed out that since the 18th CPC National Congress, China has made a number of world leading achievements in major scientific and technological facilities, water conservancy projects, transportation hubs, information infrastructure and national strategic reserves, and the overall level of infrastructure has achieved leapfrog development. But at the same time, compared with the needs of national development and security, China’s infrastructure does not meet the needs of national development and security. Comprehensively strengthening infrastructure construction is of great significance to ensure national security, unblock China’s great cycle, promote China’s international double cycle, and expand domestic demand.
Strengthen multi wheel drive, mobilize the strength of the whole society, and moderately advance the construction of new and old infrastructure:
The meeting stressed the need to optimize the layout, structure, functions and development mode of infrastructure, mobilize the strength of the whole society and build a modern infrastructure system; Based on the long term, we should strengthen the support of infrastructure development for the development and protection of land and space, the layout of productive forces and major national strategies, speed up the construction of new infrastructure and improve the level of traditional infrastructure; We should be moderately ahead of schedule and lay out the infrastructure that is conducive to leading industrial development and safeguarding national security; We should be driven by multiple wheels, give full play to the multiple roles of the government and the market, the central and local governments, state-owned capital and social capital, and strengthen infrastructure construction by layers and classifications.
Strengthen the construction of network infrastructure such as transportation, energy and water conservancy, as well as the infrastructure construction of industrial upgrading such as information, science and technology and logistics:
The construction of national three-dimensional infrastructure and transportation network should be accelerated; Develop distributed smart grid; We will strengthen the planning and construction of coastal and inland ports and waterways, and optimize and upgrade the national water transport facilities network.
At the same time, the meeting stressed the need to strengthen the upgrading infrastructure construction of information, science and technology, logistics and other industries: layout and build a new generation of supercomputing, cloud computing, artificial intelligence platform, broadband infrastructure and other facilities; Promote the layout and construction of major scientific and technological infrastructure, and strengthen the construction of comprehensive transportation hubs and collection and distribution systems. In addition, the meeting pointed out the need to strengthen urban infrastructure construction, promote the transportation integration of urban agglomeration, and develop urban (suburban) railways and urban rail transit.
The construction direction emphasized at the meeting covers new and old infrastructure. We believe that the directions related to water network, road network and energy network benefit the most.
Multiple measures provide guarantee for infrastructure construction:
The meeting pointed out: 1) element coordination: under the unified leadership of the central government, establish a coordination mechanism for major infrastructure construction, coordinate the planning and construction of infrastructure in various fields and regions, and strengthen the guarantee of resource elements such as land, sea and energy. 2) Sources of funds: we should meet the financing needs of infrastructure construction, broaden long-term financing channels and increase financial investment; At the same time, we should promote the standardized development and sunshine operation of the cooperation mode (PPP) between the government and social capital, and guide social capital to participate in the investment and operation of municipal facilities.
Investment suggestions:
We believe that this meeting will verify the high-level’s determination to increase infrastructure investment and raise the market’s view of “infrastructure as a means of supporting the short-term economy” to a higher strategic level of “ensuring national security, unblocking China’s great cycle and promoting China’s international double cycle”.
The meeting pointed out the main direction of this round of infrastructure investment, namely the construction of water network, road network and energy network. The central level takes the lead in coordination to solve the problems faced by infrastructure: 1) factor review (such as land use index, energy use index, environmental impact assessment, etc.); 2) Source of funds; 3) Inter regional planning coordination and other issues. The solution of the above problems will effectively promote the rapid implementation of infrastructure projects.
In addition, the “PPP capital operation mode” is mentioned. The capital duration of social capital is short and has high requirements for the rate of return of the project; REITs, as an equity financing tool, will greatly enhance the enthusiasm of social capital to participate in infrastructure investment.
What’s your investment target: what’s your investment target: what’s the highlight to highlight: highlights to highlight: the China Communications Construction Company Limited(601800) \ , China National Chemical Engineering Co.Ltd(601117) , etc Shandong Donghong Pipe Industry Co.Ltd(603856) and other pipeline companies (water conservancy pipe network, municipal pipe network), Zhejiang Huatie Emergency Equipment Science & Technology Co.Ltd(603300) (engineering equipment leasing service); Suggested attention: China Petroleum Engineering Corporation(600339) (oil and gas backbone network).
Risk warning: infrastructure investment is less than expected, order collection is less than expected, and the promotion of public raised REITs of infrastructure is less than expected.
