With the continuous recovery of the economy after the epidemic, government investment in various provinces has gradually increased. After entering August, short-term disturbances such as the flood season and the epidemic began to subside, the issuance of local government bonds was significantly accelerated, and the implementation of major projects continued to accelerate. The general view is that the growth rate of infrastructure investment will pick up in the second half of the year to help stabilize economic growth. But on the other hand, factors such as high raw material prices and the time lag between the issuance of special bonds and their effectiveness will drag down the rebound in infrastructure investment.

Experts interviewed by reporters believe that infrastructure investment is very important to maintaining economic resilience. With the economy seeking stable growth momentum in the second half of the year, a rebound in infrastructure investment growth is even more necessary, but short-term pressure on raw material prices is difficult to dissipate, and special debts are lagging behind and other factors It also restricts the strength of the growth rate. Under the requirement of coordinated cross-cycle adjustments, infrastructure investment is expected to "snap up" by the end of 2021, and continue to exert strength in early 2022, so as to make a good start in 2022 and start a new game.

Major projects accelerate, and infrastructure recovery can be expected

Due to flood conditions and epidemics in many parts of the country, the investment and construction progress of construction and installation projects has slowed down in July. According to data from the National Bureau of Statistics, the year-on-year growth rate of infrastructure investment from January to July was only 4.6%, a significant decline from the 7.8% growth rate from January to June.

After entering August, the issuance of local government bonds, which was slow in the first half of the year, accelerated significantly. According to statistics from the China-Thailand Securities Research Institute, local bonds issued in August totaled 879.7 billion yuan, an increase of 223 billion yuan compared to July, of which 593.0 billion yuan was newly added, and the scale of issuance hit a new high this year.

After disturbing factors such as the flood season and the epidemic subsided, the confidence of construction-related enterprises has also been boosted. According to statistics from the Bureau of Statistics, production activities in the construction industry accelerated in August, with a business activity index of 60.5%, 3.0 percentage points higher than last month, returning to a high level of prosperity. Among them, the civil engineering and construction industry business activity index was 60.8%, a sharp increase of 6.4 percentage points from the previous month. Zhao Qinghe, a senior statistician at the Service Industry Survey Center of the Bureau of Statistics, also pointed out that in terms of market demand and employment, both the new order index and the employment index are in the expansion range, indicating that the number of new contracts signed in the construction industry and the number of enterprises' employment has increased.

Lu Wenbin, deputy director of the Investment Department of the National Development and Reform Commission and a first-level inspector, introduced at the special press conference of the National Development and Reform Commission on September 8 that the major engineering projects in the "14th Five-Year Plan" are starting to be constructed. In the next step, the National Development and Reform Commission will focus on key areas to stabilize investment, give full play to the leading role of 102 major projects in the "14th Five-Year Plan" and "Outline". It will also speed up the implementation of the investment plan within the central budget and increase project construction. Push forward.

Ren Rongrong, an associate researcher at the Investment Research Institute of the China Academy of Macroeconomics, believes that more than 2 trillion yuan of special bonds will be issued in the second half of the year to provide more financial support for infrastructure investment. The listing of the first batch of infrastructure public offering REITs has opened up a new model of infrastructure financing, and the infrastructure investment and financing environment will tend to improve. In addition, the gradual implementation of major engineering projects identified in the "Outline" of the "14th Five-Year Plan" will promote a moderate increase in infrastructure investment.

Constrained by cost pressures, infrastructure recovery is constrained

Judging from the main economic data, in July, the year-on-year growth rate of the national industrial added value, the total retail sales of consumer goods, and the cumulative year-on-year growth rate of fixed asset investment all declined. The need for steady growth has increased.

While the growth rate of infrastructure investment is expected to pick up, the current continuously high raw material prices cannot be ignored. Statistics from the Bureau of Statistics show that the PPI (Ex-factory Price of Industrial Producers) rose 9.0% year-on-year and 0.5% month-on-month in July. Affected by the sharp rise in international oil prices, coal and related product prices, the PPI growth rate in July remained high.

The sales volume of excavators known as the "weathervane" of infrastructure also performed poorly in July. According to the statistics of 25 excavator manufacturers from the China Construction Machinery Industry Association, 17,345 excavators of various types were sold in July, a year-on-year decrease of 9.24%. Among them, domestic sales of 12,329 units, a year-on-year decrease of 24.1%. CICC believes that the start of domestic projects and sales of excavators have been suppressed by factors such as demand pre-deployment, environmental protection inspections, funding levels, and steel prices.

Wu Chaoming, chief economist of Caixin Securities, told reporters that most of the infrastructure projects are resource-intensive industries, which are highly dependent on raw materials such as cement and non-ferrous metals. Rising raw material prices will increase the cost pressure on infrastructure construction and inhibit further increases in local governments. Motivation for investment. It is expected that the PPI will remain relatively high in the future, and the pressure on the cost of raw materials may be difficult to weaken in the short term.

In addition to cost pressures, Tao Jin, deputy director of the Macro Center of Suning Financial Research Institute, told reporters that in the short term, policy changes such as strict fiscal revenue and expenditure audits, enhanced accountability of local debt, and strict control of local hidden debts have restricted infrastructure. The power of investment.

Policy has limited effect in boosting infrastructure, or force it to end 2021

Recently, the Ministry of Finance proposed in the "Report on the Implementation of China's Fiscal Policy in the First Half of 2021" that the Ministry of Finance will speed up the budgetary expenditure and the issuance of local government bonds in the second half of the year. At the same time, we will improve the cross-cycle adjustment mechanism, maintain the continuity, stability, and sustainability of macroeconomic policies, make overall plans for fiscal policy convergence in the next two years, and deal with cyclical risks that may occur. The State Council executive meeting held on September 1 also pointed out that cross-cycle adjustments should be coordinated.

The previous Politburo meeting put forward the requirement of "promoting the formation of physical workloads at the end of 2021 and early 2022" and the recent mention by relevant departments of "doing a good job of cross-cycle adjustment" may mean that a considerable scale of special bonds will be issued at the end of the year and the beginning of 2022 will be effective. . In fact, since August, the financial departments of Zhejiang, Sichuan, Yunnan and other places have clearly set aside some new special bond quotas for issuance in December.

Zhou Yue, chief fixed-income analyst at Zhongtai Securities, said that the reserved quota may be based on the policy needs of "cross-cycle adjustment". Considering that the new special debt limit in 2022 may be less than 3 trillion, the reserved quota will help reduce The risk of fiscal decline, balance the spending intensity this year and next, and deal with greater pressure for steady growth in 2022. According to the disclosures of some provinces and cities, if the 15% reserve ratio is estimated, the funds corresponding to the special debt of more than 500 billion yuan may be used in early 2022. From this perspective, the acceleration of the issuance of new special bonds during the year may have limited boost to infrastructure and social finance.

Tao Jin believes that the implementation of infrastructure projects in the second half of the year will gradually accelerate, and the corresponding investment growth rate will also show a gradual recovery trend. But overall, the growth rate of infrastructure investment is constrained on the one hand by the weakening of the low base effect, and on the other hand by the time lag of capital investment. For example, it often takes months for special bonds to be issued to form effective investment, thus supporting the recovery of infrastructure. The space is limited.

In addition, the construction of major engineering projects is affected by many factors, and some major projects are difficult to advance in the early stage. In Wu Chaoming's view, in the second half of the year, fiscal support for infrastructure investment will form a moderate support, and there is little possibility of a substantial push. Compared with the second half of 2021, the economic downturn pressure in early 2022 will be greater. The two-year average GDP growth rate in the fourth quarter of 2021 is expected to be around 5.5%, which is still near the potential growth rate and is in a reasonable growth range. Therefore, the effective point of infrastructure investment after the introduction of the inter-cyclical adjustment policy should be at the end of 2021 and early 2022 . Editor/Xu Shengpeng