In 2021, GDP increased by 8.1% year-on-year, with an average annual growth of 5.1% in two years. The real GDP in the fourth quarter increased by 4% year-on-year, slightly lower than the 4.9% in the third quarter. According to the data of December, industrial production continued to improve, exports were still high, infrastructure turned negative to positive, but real estate was still a significant drag. Under the influence of repeated epidemics, consumption was still down.
In December, industrial production continued to improve under the background of ensuring supply and stable price. Structurally, under the background of ensuring supply and price stability, the growth rate of black smelting in the upstream cycle industry has increased significantly. The core manufacturing industries such as general equipment and special equipment are less affected by the high level of export and energy consumption. The overall high growth has driven the middle reaches manufacturing industry to continue to grow rapidly. The downstream pharmaceutical manufacturing industry has slowed down due to the gradual stable epidemic, but it still maintains an absolute high of more than 10%. The negative effect of core shortage on production has been mitigated, and the automobile manufacturing industry has rebounded compared with the previous month.
In December, the sub items of the real estate investment side continued to fall, and the policy end has been out, but the economic end may depend on the middle of this year. The completion high fell slightly, sales continued to cool, and new construction was weak. The newly started area, construction area and completed area of real estate increased by - 11.4% (former value - 9.1%), 5.2% (former value 6.3%) and 11.2% (former value 16.2%) year on year. Since the second half of last year, real estate investment has maintained the combination of strong completion and weak newly started construction. Although the decline rate of each sub item has converged under the loosening of the policy margin recently, it is difficult to see a more than expected repair before the middle of this year from the end of the policy to the expected improvement to the recovery of sales investment or facing a longer cycle. Looking back, the end of the policy has come out, but the end of the economy may look at the middle of this year. Real estate investment has declined in the medium and long term and continued to be marginal loose in the short and medium term. Under the background of great downward pressure on the economy in the first half of this year, there is more room for policy easing. The sales side is weak or continues until the middle of this year. The government's continuous guarantee of housing delivery and stable house prices or cautious expectation of residents' house purchase has improved. The credit side is expected to continue to relax, but it needs the cooperation of financial institutions. The investment side has improved or looks at the second half of the year. The affordable housing will accelerate and start construction or advance the time point.
Infrastructure construction improved in December. Since the meeting of the Political Bureau in the middle of last year proposed that under the "formation of physical workload" at the end of last year and near the beginning of last year, fiscal expenditure began to accelerate, and infrastructure investment rebounded in December. From January to December, infrastructure investment (excluding power, heat, gas and water production and supply industries) increased by 0.21% year-on-year (from January to November was - 0.17%), turned negative to positive, and increased by 1.81% on average in two years (the previous value was 1.58%). In terms of breakdown, investment in water conservancy management increased by 1.3%, investment in public facilities management increased by - 1.3%, investment in road transportation increased by - 1.2%, and investment in railway transportation increased by - 1.8%. The investment growth rate of water conservancy management investment, information transmission industry, ecological protection and environmental governance industry and transportation industry was narrower than that of the previous month.
In December, the epidemic situation was repeated, and the consumption was down. Among them, the mandatory choice was still resilient, and the optional choice fell significantly. In December, the total retail sales of social consumer goods increased by 1.7% (the previous value was 3.9%) year-on-year, with an average of 3.15% (the previous value was 4.45%) in two years, down from the previous month.
Among them, the required one still has toughness, and the optional one has a large drop. In terms of sub items, clothing, shoes, hats, knitwear, textiles and beverages fell by a small margin. Except for cars, optional consumption fell by a large margin. At the real estate end, due to the lack of aftereffect after completion (completion decline), the consumption related to the post real estate cycle such as construction and decoration materials and furniture fell. In addition, the growth rate of optional consumption such as communication equipment also fell. The impact of core shortage gradually subsided, and the decline in the growth rate of automobile consumption converged. In December, automobile consumption increased by - 7.4% year-on-year (the previous value was - 9%), and the two-year average growth was - 0.5% (the previous value was 1.4%). Under the disturbance of the epidemic, the catering income is still negative, but the range has converged. In December, the catering revenue averaged - 0.9% (the previous value was - 1.65%) year-on-year, and the decline converged.
As mentioned in our previous report, repeated outbreaks in the past have led to negative consumption year-on-year. The main factor in the rhythm and amplitude of offline catering repair is attributed to the epidemic. It is expected that the epidemic will gradually stabilize and accelerate the recovery of offline catering consumption. However, with the approaching of winter and spring Festival, the further change of the virus is still unfavorable to offline catering repair. Considering that the impact of the epidemic on low - and middle-income people is too large, the Consumption Willingness of low-income residents depends more on income and income expectations. However, the progress of residents' income restoration may still be slow, and the epidemic is repeated, which is still not optimistic about service consumption, so it is difficult to repair beyond expectations within the consumption year (repair to normal in 2019).
In December, China's exports to the world still maintained high growth under the high base, and the export share is expected to remain high until the global supply chain is basically repaired. In December, the export value was US $340.5 billion, with a year-on-year increase of 20.9%. Under the high base, it still maintained a high growth. Excluding the base effect, the two-year compound growth rate of exports in December was 19.5%, slightly lower than that of 21.2% in November.
On January 17, 2022, the central bank cut interest rates more than expected. On January 17, the people's Bank of China carried out 700 billion yuan of medium-term lending facility (MLF) and 100 billion yuan of open market reverse repurchase, reducing the one-year MLF interest rate by 10bp to 2.85% and the seven-day reverse repurchase interest rate by 10bp to 2.10%.
We believe that the higher than expected reduction of policy interest rate is mainly due to weak domestic demand at present and in the next 1-2 quarters, and the fall in foreign demand is in line with the greater downward pressure on economic growth. Based on the strong policy significance of cutting interest rates all the time, the central bank's reduction of MLF interest rate this time will also boost enterprise expectations and stabilize employment. According to the data of December, the current economic characteristics of weak domestic demand (real estate and consumption) and strong external demand (export) are still obvious, and the vitality of the economy is not strong.
According to the laws of previous periods, it is expected that the LPR quotation announced on Thursday (20th) will be reduced accordingly, and the 1-year LPR and 5-year LPR will be reduced accordingly. Real estate financing (mortgage loan) is expected to recover significantly. Looking back, monetary policy is dominated by China, with equal emphasis on aggregate and structure. There is still room for aggregate policy under the bottom line thinking.
Monetary policy is inclined to steady growth, the bottom line thinking is still the focus, and it is loose in stability. Despite the tight external policy this year, the policy "focuses on me" and the focus is still growing steadily, mainly due to the obvious pressure of the real estate department. When the bottom line thinking is touched (for example, the real estate department has a significant drag on the economy, it is difficult to stabilize employment and wage payment, the profit of industrial enterprises is negative year-on-year, etc.) is the key time point for reducing the policy interest rate.
In terms of tools, pay equal attention to both structure and total amount. There is great downward pressure on the economy in the first half of this year, and it is expected to continue to reduce reserve requirements and interest rates
Risk tips: unexpected macroeconomic changes, intensity of demand recovery, secondary epidemic outbreak and vaccine progress, etc
