Data from the National Bureau of Statistics show that infrastructure investment increased by 4.2% year-on-year from January to October, significantly faster than the 3.8% in 2018, and the cumulative growth rate rebounded for the first time this year. As an economic counter-cyclical regulator, the role of infrastructure in supporting economic growth from January to October has finally revealed its true colors.
Looking at the "three golden flowers" of steel, cement and engineering machinery in the infrastructure industry chain, the characteristics of strong sales of steel, strong cement production and sales, and sustained high prosperity of engineering machinery are more obvious: my country's steel industry from January to October this year Apparent consumption (production plus net imports) reached 782 million tons, a year-on-year increase of about 7%; affected by market demand, national cement output from January to October was 1.907 billion tons, a year-on-year increase of 5.8%, and the growth rate increased by 3.2% year-on-year. ; Domestic total sales of various types of excavators in the first ten months were 196,200 units, a year-on-year increase of 14.4%.
With the current policy gradually increasing the tilt of special bond funds to support infrastructure investment, coupled with the combination of lowering the minimum capital ratio of infrastructure projects, infrastructure is expected to usher in a new round of development.
1. Special bonds were issued in advance to support infrastructure investment
Looking at infrastructure investment in the first ten months of this year, the overall structure shows the characteristics of structural differentiation: railway investment is relatively strong, public facilities Investment in the management industry, especially municipal engineering investments, performed weakly. In view of this, the National Standing Committee made it clear that the special bonds issued in advance will not only be used for transportation infrastructure such as railways, rail transit, and urban parking lots, but will also be used for energy projects such as urban and rural power grids, natural gas pipeline networks, agriculture, forestry, and water conservancy. , urban sewage and garbage treatment and other ecological and environmental protection projects, vocational education and child care, medical, elderly care and other livelihood services, as well as cold chain logistics facilities, water, electricity and heating and other municipal and industrial park infrastructure, the scope of application has been expanded.
The early issuance of 1 trillion local government special bonds is also the implementation of the requirement of the State Council executive meeting on September 4 to "accelerate the issuance and use of local government special bonds." According to the requirements of the meeting, the special bond quota issued in advance will not be used in land reserves and real estate-related fields, nor can it be used to replace debts and industrial projects that can be fully commercialized. Therefore, the special bonds will be more concentrated in infrastructure investment. It can be expected that its actual boosting effect on infrastructure construction will be significantly enhanced.
It should be noted that it will still take some time from the issuance of the special bond quota to the final completion of the formal issuance process. Therefore, the positive effect of policy hedging on infrastructure investment may not be evident until early next year. However, some industrial raw materials may begin to be vigorously produced in the fourth quarter of this year, as evidenced by the recent continued decline in steel inventories and the continued recovery in cement prices.
2. Lower the capital ratio to help infrastructure recovery
In mid-June, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the "On Providing Special Bond Issuance and Project Support for Local Governments" After the Notice on Financing Work" allows special bonds to be used as capital for qualified major projects, the State Council's "Notice on Strengthening Capital Management of Fixed Asset Investment Projects" lowers the minimum capital ratio for infrastructure projects and once again tilts the policy towards infrastructure. .
Adjusting the minimum capital ratio of projects will be of great help in adjusting the infrastructure investment structure: there are still many shortcomings in the current infrastructure fields such as transportation, water conservancy, energy, ecological environmental protection, and social and people's livelihood. These shortcomings can be supplemented. The decrease in the minimum capital ratio of infrastructure projects will reduce the demand for funds in project investment and attract special bonds and private capital to participate in infrastructure projects.
Adjusting the minimum capital ratio of projects can significantly promote the high-quality development of infrastructure investment: On the one hand, the decrease in the minimum capital ratio of infrastructure projects will fully mobilize the enthusiasm of social funds to participate in infrastructure investment in related fields and increase social capital. The investment capacity will support the improvement of shortcomings and the expansion of domestic demand; on the other hand, if inland river, coastal, highway, railway, ecological and environmental protection projects can achieve a 5% reduction in capital ratio, it is expected to leverage 1.19 trillion yuan in incremental funds.
3. Policy and market linkage, infrastructure development has stabilized growth
Currently, there are signs of a rebound in the start of infrastructure projects. Take the construction of transportation infrastructure as an example. Recently, Guizhou, Yunnan, Sichuan, Henan, Shandong, Jiangsu and other provinces have entered the stage of intensive construction. There is a surge in construction of "railway, highway, airport" (railway, highway, airport) and urban rail projects. As funds gradually become available, subsequent infrastructure projects are expected to start intensively to release demand.
At the same time, "new infrastructure construction" projects such as 5G, big data, artificial intelligence, cloud computing, industrial Internet and the Internet of Things have gradually entered the scope of policy encouragement and become investment highlights. Since the beginning of this year, Beijing, Shaanxi, Guangdong, Fujian and other provinces have deployed new infrastructure construction, and the investment model of "new infrastructure" is relatively flexible, providing many opportunities for market entities.
With the implementation of two fiscal countercyclical policies, special bonds and capital management, the financing capacity of infrastructure projects will be significantly improved, and the growth rate of infrastructure investment in 2020 is expected to pick up significantly. In the macro environment where multiple policies are being implemented to break the bottleneck of infrastructure investment, market enthusiasm will continue to rise. The current market's high attention to the cyclical sector is the best example.
Looking forward to 2020, infrastructure will be an important support for economic growth. Traditional infrastructure represented by "railway, public infrastructure", as well as medium and long-term projects such as "infrastructure making up for shortcomings" and "new infrastructure construction" will It is expected to boost the economy. Of course, in addition to substantial "increasing efforts", continuing to "improving efficiency" is still the focus of infrastructure development. Completing investment shortcomings and improving investment efficiency should be the focus of counter-cyclical adjustment in the next stage.
Under the pressure of economic downturn, current infrastructure investment is greatly restricted by insufficient local financial resources and strict control of hidden debts. Issuing special bonds in advance and reducing the proportion of project capital will help expand the scale of investment in infrastructure projects and strengthen countercyclical adjustments. Of course, whether the highly anticipated infrastructure investment can win back market expectations still requires the timely implementation of policies and the precise implementation of supporting measures.