Research conclusion
Since March, the local epidemic in China has recurred, superimposed with international geopolitical instability factors, and the phased downward pressure on the economy has been amplified. This series of reports will focus on the direct impact of this round of epidemic on different fields. Previously, we discussed the impact of the epidemic on medium and long-term consumption trends Through the analysis of online consumption, it is found that after the epidemic, residents' consumption habits have further moved towards electronization. Looking forward to the follow-up, the approximate rate of fiscal expenditure will become the most important starting point for steady growth in the next stage. In this context, what impact will the epidemic have on the fiscal space of the whole year? What is the starting point to increase efforts to protect 150 million market players? How to understand the draft budget? This paper mainly discusses these problems.
In the process of quota allocation in advance this year, the degree of regional differentiation is relatively large, or it is related to the financial situation of each region and the preparation degree of major projects. After the epidemic, the regional concentration of special bond issuance may further increase: (1) compared with the first half of 2021 (the issuance in the first quarter of that year was too small), the proportion of special bond issuance in Guangdong, Jiangsu, Hubei, Shanghai, Zhejiang and other major economic provinces increased significantly in the first quarter of 2022, Meet the requirements of strong financial strength and low debt risk; (2) The proportion of special bonds issued by Guizhou, Hunan, Shaanxi and other provinces also increased in the first half of 2021. The possible reason is that there are abundant projects in these regions. On April 12 this year, Xu Hongcai, Vice Minister of finance of China, said at the regular policy briefing of the State Council held by the State Council Information Office that for the use of special bonds, we should give preference to areas with mature and many key projects, resolutely not "sprinkle pepper", not too small and scattered, and improve the concentration of funds.
From the perspective of some public information, the construction started well before the epidemic, laying a foundation for post epidemic repair: (1) from the perspective of projects, as of March 5, more than 2600 projects have been broken down in the 102 major projects of the 14th five year plan, of which 96% have been started; (2) From the perspective of commencement, the commencement rate of projects that have issued special bonds this year has reached 75%; (3) From the perspective of approval speed, Ou Hong, director of the investment department of the national development and Reform Commission, introduced at the press conference of the national development and Reform Commission on April 15 that the national development and Reform Commission approved 32 fixed asset investment projects with a total investment of 520 billion yuan, compared with 40 and 246.4 billion yuan as of June 2021.
The epidemic has a certain impact on the construction progress of the project, but the annual infrastructure growth rate is still guaranteed. According to our calculation in "how the prevention and control of first tier cities affects the national economy - monthly macroeconomic review and Outlook", compared with consumption, the impact of the epidemic on investment is more controllable. The annual funds are abundant, and it is far from the off-season of construction, so there is room for compensation for the follow-up infrastructure construction progress.
In this context, is it necessary to issue special treasury bonds this year? We believe that there is a certain possibility, but what can not be ignored is the fact that the financial funds themselves are already relatively abundant this year. Based on the progress and time requirements of the use of special bond funds, the government fund expenditure in the first three quarters has sufficient capital guarantee. Therefore, even if it is issued, it may be transferred into the general public finance in a larger proportion for people's livelihood security purposes such as stabilizing posts and promoting employment.
From the annual frequency data, the proportion of health-related expenditure in general public finance has increased significantly after the epidemic, increased by 0.8 percentage points in 2020 compared with 2019, and remained basically the same in 2021 and 2020. Taking the epidemic situation in Shanghai as a sample, we can see that the current round of epidemic prevention and control in Shanghai has incurred relevant expenses. However, it is worth mentioning that the epidemic situation in Shanghai is significantly more severe than that in other provinces in the past. As an international metropolis and an important foreign port in China, the flow of people and logistics on the sea is very large, and the prevention and control difficulty is much higher than that in ordinary provinces. Therefore, the cost of epidemic prevention in Shanghai has its particularity.
On April 16, Liu Kun, Minister of finance, mentioned in an article in Qiushi magazine that fiscal policy should adhere to the unity of two points and key points. How to understand this? We believe that it includes the following points: (1) give consideration to the short-term and long-term: while increasing the total amount of expenditure in the short term and protecting the market players, we should also strengthen the cross cycle policy design around the national medium and long-term development plan; (2) Taking into account the total amount and structure, on the basis of the central government's increasing transfer payments to local governments, the central and local governments have jointly strengthened efforts to launch various policies to stabilize employment and promote consumption, give full play to the traction and driving role of consumption on the economic cycle, and carry out larger-scale investment in key areas.
Risk tips
The impact of the epidemic exceeded expectations and reduced the fiscal revenue of the whole year;
The risk of the impact of changes in assumptions on the measurement results.
