Core view
In December, the economic momentum weakened. After the rebound in November, the real estate fell sharply again, which was a drag on the economy. The stable growth of infrastructure expected by the market was lower than expected, and the consumption also weakened again. Although there were bright spots in tertiary industry and industry, there was still a gap from the growth level before the epidemic.
The economy was weak and the tertiary industry rebounded. In the fourth quarter of 2021, the compound year-on-year GDP was 5.24%, of which the growth rate of the first and second industries was lower than that in the third quarter, and the year-on-year growth rate of the third industry was 5.65%, which was the high point of last year. Overall, although the economic growth in the fourth quarter rebounded marginally, it was mainly driven by the tertiary industry, and from the monthly data, the tertiary industry showed a weakening trend in December.
The service industry is resilient, but the drag is still not small. The epidemic situation in the fourth quarter of 2021 was much more serious than that in the third quarter, both in breadth and depth. In this context, the impact on the service industry was less than that in August, and the decline of catering seriously affected by the epidemic narrowed in December, further showing the resilience of the service industry. However, the social zero data in December reflected the overall weakening of consumption. The year-on-year growth rate of total social zero was 3.1%, weaker than 4.4% in November, or pointed to the lack of consumption momentum.
Industrial production continued to pick up, and manufacturing investment maintained a high growth. The two-year compound growth rate of industrial added value in December was 5.8%, a further increase of 0.4 percentage points compared with 5.4% in November. Black industry, automobile industry and mining industry are the main driving forces. Manufacturing investment maintained a high growth, with a compound year-on-year growth rate of 11.02%. On the one hand, it may benefit from the gradual appearance of the effect of credit easing. On the other hand, the annual profit of manufacturing industry maintained a high growth in 2021, which is also conducive to the acceleration of manufacturing investment.
Real estate fell sharply and infrastructure fell short of expectations. Real estate fundamentals deteriorated, and various indicators fell again. Weak policies led to a decrease of 1.21, 5.12 and 8.21 percentage points respectively in the sales of commercial houses, the newly started area of houses and the completed area of houses in December compared with November. In December, except for the high growth of manufacturing investment, other investment items lacked highlights. The compound year-on-year growth of real estate development investment and infrastructure investment were - 2.98% and - 0.32% respectively, down 6.01 percentage points and 0.22 percentage points from the previous value. The compound investment in fixed assets was 3.92% year-on-year, a slight increase of 0.33 percentage points over the previous value.
The central bank makes efforts to maintain stability. Despite the marginal recovery of GDP growth in the fourth quarter, considering the downward pressure of investment and consumption, the bottom of real estate has been reached again, and the kinetic energy of economic growth has weakened significantly, which urgently needs policy support. Or based on this, the central bank cut interest rates on January 17, and exceeded market expectations in rhythm and intensity. However, more and stronger policies may be required in the follow-up to form a joint force in order to truly stabilize the economy.
Risk tip: the global economic recovery is less than expected, and the epidemic situation is more than expected
