Core view:
On April 26, 2022, the meeting of the central financial and Economic Commission emphasized comprehensively strengthening infrastructure construction and clearly defined five areas of modern infrastructure. We believe that although the meeting focuses on medium - and long-term layout, it may also boost short-term aggregate demand. The measures deployed at the meeting may support infrastructure investment and economic growth during the year from three aspects: project reserve, improving the risk appetite of financial institutions for infrastructure projects and paving the way for policy adjustment. Infrastructure investment has rebounded significantly in the first quarter, and we expect the annual infrastructure investment to increase by 5-8%. If the fiscal policy is further adjusted in the future, it can not be ruled out that the growth rate of infrastructure investment may be revised.
Key investment points:
China Finance Commission: building a modern infrastructure system in five areas
On April 26, 2022, the 11th meeting of the central financial and Economic Commission pointed out that "China's infrastructure does not meet the needs of national development and security", and proposed to comprehensively strengthen infrastructure construction. The meeting clearly pointed out five areas of modern infrastructure: network infrastructure, industrial upgrading infrastructure, urban infrastructure, agricultural and rural infrastructure and national security infrastructure.
Focus on medium and long-term layout, taking into account short-term demand hedging
We believe that the "modern infrastructure system" is not based on short-term pressure, but the long-term strategic layout of the 14th five year plan. In the medium and long term, building a modern infrastructure system is of great significance to boost China's total demand and realize industrial upgrading under the background of weakening real estate demand. In the short term, under the pressure of stable growth, the meeting of the Chinese Finance Committee may support the economic growth during the year from three aspects: project reserves, improving the risk appetite of financial institutions for infrastructure projects and paving the way for policy adjustment.
The capital construction started significantly in the first quarter and can be expected in the future
Due to the impact of the epidemic, the downward pressure on the economy has further increased, and the policy demand for steady growth has been heating up. With the advance issuance of special bonds and the investment of special bonds in key supporting infrastructure investment, the infrastructure investment in the first quarter has rebounded significantly, and we expect the infrastructure investment in the whole year to remain at the level of 5-8%. If the fiscal policy is further adjusted in the future, it can not be ruled out that the growth rate of infrastructure investment may be revised.
Risk tips
The economy is lower than expected, the policy is lower than expected, and the epidemic situation outside China has worsened
