Macro comments: dynamic balance between "stability" and "prevention"

The prescriptions given by the 429 Politburo meeting to the current economy and market are 6 "prevention" and 16 "stability". Since 2022, the steady growth force has not been satisfactory. Superimposed on the worst rebound since the outbreak of the epidemic in China since March, the market has become more and more worried about economic growth. The minutes of the Politburo meeting on Friday were rarely released at noon, and made it clear that "the epidemic should be prevented, the economy should be stable and development should be safe".

We believe that the next epidemic prevention and control work is still the top priority, and the Guangdong model of "fast treatment and fast" may become the mainstream model of dynamic clearing; In terms of steady growth, infrastructure is still the main focus, the deregulation of real estate will be increased, and the supervision of some industries represented by platform economy will also enter the stage of "breaking" to "establishing".

"Treat the disease quickly" to balance the dynamic clearing and the impact of the epidemic on the economy and society. After the epidemic prevention practice in March and April, represented by Shenzhen and Guangzhou, the mode of "quick treatment and quick" may become the temsector for subsequent dynamic zeroing: after the epidemic is found, it will be sealed and controlled quickly in a short time (usually one week), and then gradually released according to the epidemic situation. Take Shenzhen as an example. One month after the end of the short-term closure, the traffic in the city basically returned to the level before the epidemic. We call this model "Guangdong model" for the time being.

We calculated the economic growth based on different sealing and control assumptions. Under neutral conditions: the fully closed cities will be cleared gradually from May, and other cities will adopt the Guangdong model in the face of epidemic spread. Due to the different economic costs of different sealing and control modes - based on the vehicle flow, it is inferred that the economic growth rate may drop sharply by 60% year-on-year under the fully closed mode, and the figure may be 30% or less under the Guangdong mode), We expect GDP growth in the second quarter to be dragged down by 1.3 percentage points. This requires the policy of stabilizing growth and ensuring logistics to play a greater role.

Infrastructure development and tax rebate and fee reduction are still the main starting points of fiscal policy in 2022. This year's fiscal rhythm has accelerated significantly. First, the new special debt quota of 1.46 trillion yuan issued in advance has been completed, and it is expected that all the issuance tasks of special bonds will be completed by the end of September. The second is to speed up the transfer payment. In March, the national Standing Committee urged local governments to implement the transfer payment of tax reduction and fee reduction, which can reach the grass-roots level of cities and counties in time. On the other hand, from the expenditure side, fiscal expenditure grew rapidly, with the growth rate of general public budget expenditure reaching 10.4% in March. In addition, on the income side, the government will further expand the scale of tax reduction and fee reduction, and give preference to key areas such as small and micro enterprises and people's livelihood in terms of income tax preference and retention tax rebate. It is expected that the tax rebate and tax reduction will be about 2.5 trillion Yuan throughout the year.

"Support rigid and improved housing demand", and the real estate policy will continue to be relaxed. From the request of the central economic work conference in 2021 to "meet the reasonable housing needs of home buyers" to the meeting of the Political Bureau in April to "support the rigid and improved housing needs", and made it clear to "optimize the supervision of commercial housing pre-sale funds". In terms of local policies and measures, the early stage is mainly focused on reducing loan interest rates and housing provident fund loan policies. We expect that after the epidemic is preliminarily controlled, more cities will support real estate and attract population by relaxing settlement, purchase and sale restrictions and other measures.

The development of platform economy has changed from "breaking" to "standing", which is of wind vane significance for preventing disorderly expansion of capital in the next stage. As shown in Figure 6, since "strengthening antitrust and preventing disorderly expansion of capital" was first mentioned at the Politburo meeting in December 2020, the central government's attitude towards the platform economy has been dominated by "breaking". However, at this Politburo meeting, "completing the special rectification of the platform economy and implementing normalized supervision" means that the previous "breaking" stage has basically come to an end, and "introducing specific measures to support the standardized and healthy development of the platform economy" shows that the central government's policy position will be more "stand" oriented, especially considering that the platform economy has made outstanding contributions to this round of combating the Omicron epidemic. We can expect more positive tone setting and favorable policies on platform economic development in the short term.

Risk tip: the spread of the epidemic exceeded market expectations, and the policy hedging economic downturn was less than market expectations

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