Summary:
The growth rate of industrial added value continued to pick up year-on-year. In December, the industrial added value increased by 4.3% year-on-year, 0.5 percentage points higher than that of the previous month. By item, mining and manufacturing are the main driving items of industrial production. As China's supply constraints continued to relax and the demand for infrastructure investment increased, the mining industry increased by 7.3% year-on-year. The high-tech manufacturing industry maintained a high growth rate, coupled with the recovery of the production scale of the automobile manufacturing industry, the added value of the manufacturing industry increased by 3.8% year-on-year.
Investment in manufacturing industry has strong resilience, infrastructure investment has rebounded significantly, and real estate indicators have returned to the downward trend. The price of raw materials in the upstream decreased, superimposed with the price rise of some industries in the middle and downstream, and the investment toughness of the manufacturing industry was strong. The preliminary policy requires that the physical workload of infrastructure construction should be formed as soon as possible at the end of last year and the beginning of this year. In addition, the progress of special bond issuance has been accelerated. After the economic work conference in December, infrastructure construction has made significant efforts. From a year-on-year perspective, broad infrastructure investment rebounded rapidly to 3.5% from - 7.1% last month. After a slight recovery in November, the real estate index returned to the downward trend in December, indicating that the policy relaxation has not been effective at present. In November, driven by the improvement of lending speed in many places and the reduction of housing loan interest rate, real estate sales picked up slightly. The decline in sales area in the current period expanded again. First, due to the centralized release of real estate demand in November, second, the rising fear of future house completion and the weakening expectation of house price rise, some house buyers chose to wait and see. Weak sales also led to a continued downturn in other real estate data.
The multi-point outbreak of the epidemic has once again dragged down the repair of consumption. In December, the total retail sales of social consumer goods increased by 1.7% year-on-year, down 2.2 percentage points from the previous month. In terms of structure, the drag items of consumption in this period include: first, the epidemic affects offline consumption and travel; Second, the post cycle consumption of real estate is weak; Third, the year-on-year growth rate of automobile consumption decreased due to the high base.
According to the economic data in December, the interest rate was cut. The year-on-year growth rate of GDP in the fourth quarter was slightly higher than expected, mainly due to the high boom of industrial production and manufacturing investment. Industrial production and manufacturing investment are closely related to the high prosperity of exports, which means that while China's economic growth slows down, it also has the characteristics of strong dependence on foreign demand. But looking back, the decline in export growth in the future is a high probability event, which will have an impact on industries that have benefited from high export growth since last year. At the same time, real estate and consumption are weak, reflecting the increasing pressure on domestic demand. We speculate that the central bank's interest rate cut on January 17 has three purposes: first, if residents' expectations for real estate are unstable, it is difficult for the real estate industry to reverse the downward trend. After the interest rate cut, it is expected that the 1-year LPR and 5-year LPR will be reduced accordingly on January 20 (Thursday), which is expected to boost real estate sales and investment and promote the stable and healthy development of the real estate market. Second, the financial development in 2022 has become the consensus of the market. The broad finance needs the wide monetary cooperation to stabilize the capital cost of financial bond issuance; Wide money also needs fiscal power to achieve the purpose of wide credit. Third, the Fed's attitude has changed to "Eagle" recently, which may raise interest rates as early as March 2022. Therefore, the central bank seized the window period of the first quarter and cut interest rates in advance.
Risk factors: vaccine failure caused by epidemic variation; China's policy exceeded expectations.
