The economic data of the first two months of the 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. We estimate that in order to achieve the annual GDP growth target of + 5.5%, the average quarterly GDP from Q2 to Q4 should reach at least + 1.54% month on month, and the corresponding GDP from Q2 to Q4 should be at least + 5.13%, + 6.01% and + 6.05% year-on-year respectively. The current round of China's epidemic has had a significant impact on the economy. There is still uncertainty superimposed on overseas geopolitical conflicts. The triple pressure of shrinking demand, supply shock and weakening expectation facing China's economy is still heavy, and it is not easy to achieve the economic growth goal. April data show that consumption and real estate investment may continue to be under pressure, making it more difficult to achieve the annual economic growth target of 5.5%. The recent continuous decline of A-Shares also reflects the lack of market confidence.
In this case, the recent intensive introduction of all-round steady growth policies including infrastructure, real estate, consumption and foreign trade, and the steady growth continues to increase, which is expected to reshape market confidence and help China form the expected bottom of the market economy as soon as the epidemic eases.
(1) infrastructure: the central finance and Economic Commission meeting further clarified the core role of infrastructure in steady growth
On April 26, Xi Jinping presided over the 11th meeting of the central financial and Economic Commission to study the issue of comprehensively strengthening infrastructure construction and the implementation of the decisions and arrangements of the meetings of the central financial and Economic Commission since the 19th CPC National Congress. The meeting stressed that at present and in the future, we should take a long-term perspective, strengthen the support of infrastructure development for the development and protection of land and space, the layout of productive forces and major national strategies, accelerate the construction of new infrastructure and improve the level of traditional infrastructure. We should be moderately advanced. The layout is conducive to the infrastructure leading industrial development and safeguarding national security. At the same time, we should grasp the degree of advanced construction.
In the field of major infrastructure, the meeting proposed to strengthen the construction of five aspects, including: 1. Strengthen the construction of network infrastructure such as transportation, energy and water conservancy. Specific coverage: coastal and inland port channel planning and construction; Distributed smart grid and new green and low-carbon energy base; Oil and gas pipeline network; Construction and modernization of key water sources, irrigation areas, flood storage and detention areas, etc. 2. Strengthen the infrastructure construction of information, science and technology, logistics and other industrial upgrading. Specific coverage: new generation supercomputing, cloud computing, artificial intelligence platform, broadband infrastructure and other facilities; Layout and build a number of regional airports, general airports and freight airports. 3. Strengthen urban infrastructure construction. Specific coverage: inter city railway network, urban (suburban) railway and urban rail transit construction; Urban flood control and drainage, sewage and garbage collection and treatment system, disaster prevention and mitigation infrastructure construction; Construction of public health emergency facilities; Intelligent infrastructure construction such as intelligent road, intelligent power supply and intelligent public transportation. 4. Strengthen the construction of agricultural and rural infrastructure. Specific coverage: high standard farmland construction; Construction of urban and rural cold chain logistics facilities; Implement large-scale water supply projects; Construction of rural sewage and garbage collection and treatment facilities. We should strengthen the construction of national security infrastructure and accelerate the improvement of our ability to deal with extreme situations. 5. We should strengthen the construction of national security infrastructure and accelerate the improvement of our ability to deal with extreme situations.
General Secretary Xi's statement further clarified that in the face of the objective economic environment with increasing downward pressure on the macro economy and increasing internal and external uncertainty, infrastructure investment will play a core role in steady growth, and infrastructure investment is expected to further accelerate.
Since the beginning of this year, the national development and Reform Commission has approved 32 fixed asset investment projects with a total investment of 520 billion yuan, mainly in transportation, water conservancy, energy, high technology and other industries, according to the press conference of the national development and Reform Commission on April 15. In Q1 last year, the national development and Reform Commission approved 16 fixed asset investment projects with a total investment of 45.4 billion yuan. In H1 last year, the national development and Reform Commission approved 40 fixed asset investment projects with a total investment of 246.4 billion yuan. Since the beginning of the year, the investment amount of projects approved by the national development and Reform Commission has reached more than twice that of the first half of last year. In terms of project funds, in 2022q1, the scale of newly issued special bonds nationwide was 1298.1 billion yuan, accounting for 89% of the amount approved in advance of 1.46 trillion yuan and 36% of the annual issuance plan of 3.65 trillion yuan. This year, the issuance of special bonds was significantly accelerated, superimposed on the effective connection of 1.2 trillion yuan of special bonds issued at the end of last year, and the capital construction funds were sufficient in the first half of the year. Throughout the year, Wang Xiaolong, director of the Treasury Department of the Ministry of finance, said that the Ministry of finance will continue to strengthen its guidance to local governments to ensure that the issuance of special bond quotas issued this year will be completed by the end of September. Compared with last year, the trend of advancing and accelerating the development of infrastructure this year is more obvious. It is expected that the follow-up major projects are expected to continue to be launched, and there is still room for the growth of infrastructure. Infrastructure will become the main starting point for the steady growth of financial development this year.
(2) consumption: 20 measures to stabilize consumption
On April 25, the general office of the State Council issued the opinions on further releasing consumption potential and promoting the sustainable recovery of consumption to release consumption potential and promote the sustainable recovery of consumption. The opinions cover five aspects and include 20 policies and measures, specifically as follows: 1. Deal with the impact of the epidemic and promote the orderly recovery and development of consumption. It includes three policies and measures focusing on market players, strengthening the rescue of enterprises, ensuring the supply and price stability of basic consumer goods, and innovating consumption formats and modes. 2. Comprehensively innovate and improve quality, and strive to stabilize the basic consumption market. Including five policies and measures to actively promote the upgrading of physical consumption, strengthen the promotion of service consumption such as healthy elderly care, continue to expand cultural and tourism consumption, vigorously develop green consumption, and fully tap the consumption potential of counties and townships. 3. Improve the support system and continuously enhance the comprehensive ability of consumption development. Including four policies and measures to promote the healthy and sustainable development of consumption platforms, accelerate and improve the circulation system of consumer goods, increase employment income, improve consumption capacity, and reasonably increase public consumption. 4. We will continue to deepen reform and make every effort to create a safe, secure and honest consumption environment. It includes four policy measures: breaking down barriers restricting consumption, improving the consumption standard system, strengthening law enforcement and supervision in the field of consumption, and Comprehensively Strengthening the protection of consumers' rights and interests. 5. Strengthen safeguard measures and further consolidate the foundation for high-quality development of consumption. Including strengthening fiscal and tax support, optimizing financial services, strengthening the guarantee of land and housing, and compacting the responsibilities of all parties.
In 2022q1, final consumption boosted GDP by + 3.3pcts, compared with + 3.4pcts in Q4 last year, and the marginal driving force of consumption on the economy decreased. 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. From the high-frequency data in April, under the influence of the epidemic, the consumption data in April is still not optimistic. In the case of serious pressure on consumption, the introduction of "consumption 20 articles" is conducive to stabilizing consumption and thus stabilizing economic expectations. In particular, measures such as reasonably increasing public consumption, strengthening fiscal and tax support and optimizing financial services are expected to provide some support for consumption in the short term.
However, on the whole, the real recovery of consumption also depends on the progress of epidemic prevention and control. The mitigation of epidemic situation and the gradual relaxation of strict sealing and control measures are important prerequisites for the full play of stable consumption policy.
(3) export: increase export tax rebate and strive to stabilize foreign trade
On April 20, the State Administration of Taxation and other ten departments issued the notice on Further Strengthening the support of export tax rebate and promoting the stable development of foreign trade (hereinafter referred to as the notice). Including further strengthening the policy support for enterprises, further improving the convenience of tax rebate handling, and further optimizing the business environment of export enterprises, covering 15 measures. Specifically: 1. Further strengthen the policy support for helping enterprises. It covers three measures: strengthening the connection between export credit insurance and export tax rebate policy, improving the export tax rebate policy of processing trade and tapping the potential of departure tax rebate policy. 2. Further improve the convenience of tax refund. It covers seven measures: vigorously promoting the "non-contact" handling of export business, continuously streamlining the submission of materials in the link of export tax rebate, actively promoting the electronization of export tax rebate filing documents, greatly improving the intelligent declaration level of export tax rebate, continuously improving the quality and efficiency of export tax rebate handling, further improving the efficiency of customs clearance for the return of export goods, and optimizing and simplifying the handling process of export tax rebate. 3. Further optimize the business environment for export enterprises. It covers helping enterprises improve the efficiency of export business handling, supporting the healthy and sustainable innovative development of cross-border e-commerce, and guiding foreign trade
Five measures to comprehensively serve the healthy growth of enterprises, strengthen information sharing, guide enterprises to operate in good faith, and actively create a fair and just business environment. In 2022q1, net exports of goods and services boosted GDP by + 0.2pcts, compared with + 1.06pcts in Q4 last year. The pulling effect of net exports on the economy weakened. In terms of exports alone, RMB denominated exports were + 12.9% year-on-year in March and + 13.7% from January to February. The export growth slowed down. This year, the external is facing the weakening demand under the global liquidity crunch and the continuous recovery of the industrial chain under the foreign "epidemic coexistence" strategy. The internal is facing the industrial chain and logistics congestion caused by the uncertainty of the epidemic, and the export is facing great downward pressure. The policy measures of increasing export tax rebate are conducive to stabilizing the expectations of foreign trade enterprises and playing a certain role in stabilizing export growth.
(4) real estate: the Symposium on financial support for the real economy emphasizes maintaining the stability and order of real estate financing
On April 19, the people's Bank of China and the China Banking and Insurance Regulatory Commission jointly held a symposium on financial support for the real economy. With regard to real estate, the meeting once again stressed that "housing is not fried", but also expressed the following: 1. Implement differentiated housing credit policies due to urban policies to better meet the reasonable housing needs of home buyers. 2. Implement the macro Prudential Management System of real estate finance, distinguish between project risks and enterprise group risks, do not blindly withdraw, cut off and suppress loans, and maintain the stability and order of real estate financing. 3. In accordance with the principles of marketization and rule of law, we should do a good job in the financial services of mergers and acquisitions of risk disposal projects of key real estate enterprises. 4. We should timely optimize credit policies and flexibly adjust the repayment plans of individual housing loans for people affected by the epidemic. The statement of the meeting, combined with the media's report that on April 25, the central bank convened 6 state-owned banks, 12 joint-stock banks and 5 AMC institutions to hold a special meeting to discuss the relevant reports on the rescue of problematic real estate enterprises, which indicates that the real estate policy is further relaxed, and the supervision of real estate enterprises by regulators is changing from "controlling leverage" to "stabilizing expectations".
Although more than 60 cities have issued deregulation policies on the property market this year (the policy mainly involves canceling / relaxing purchase and sales restrictions, reducing the proportion of down payment, reducing housing loan interest rate, provident fund loan preference, house purchase subsidy, financial support of real estate enterprises, etc.), the real estate industry is still building a bottom. The investment in real estate development from January to February was + 3.7% year-on-year, and the investment in real estate development in March was - 2.4% year-on-year. The growth rate continued to decline. According to the high-frequency data, since the beginning of April, there is a large gap between the commercial housing transaction area of 30 large and medium-sized cities, the land transaction area of 100 large and medium-sized cities and the land premium rate of 100 large and medium-sized cities compared with the same period last year. Among them, the transaction area of commercial housing in 30 major cities was - 56.8% year-on-year (as of the third week of April, it was - 46% in March), and the transaction area of land in 100 large and medium-sized cities was - 54.0% year-on-year (as of the second week of April, it was - 32.7% in March). At present, the policy attitude towards real estate has obviously changed from tight to loose, and some cities have even turned to strong support. We have always stressed that stable growth is inseparable from stable real estate. On the one hand, real estate should be "stable" and there should be no large-scale debt risk outbreak. On the other hand, on the basis of "stability", we should give full play to the driving role of real estate sales and investment in the economy without triggering the risk of sharp rise in house prices, This puts forward higher requirements for the ability of policy regulation. At present, the trend of "loosening" of real estate policy has been relatively clear, but the degree of "loosening" needs to be further observed. The recent introduction of relevant policies is conducive to continue to provide reasonable financial support for real estate enterprises, stabilize the expectations of real estate enterprises, and then stabilize real estate investment. We believe that further favorable policies should be expected before real estate sales and investment stabilize and recover.
Risk tip: the change of epidemic situation exceeded expectations, the change of economic fundamentals exceeded expectations, and the change of monetary policy exceeded expectations.
