"Everywhere in life knows what it is like, and it should be like flying flying in the snow." In the ups and downs of the economic cycle, each recovery is both similar and different, and the form and substance of macro policies are constantly changing with the times in discretionary decisions. Enter.

At present, China's economy is facing the internal and external pressure of "steady growth". As an old and effective method, infrastructure construction has once again been placed high hopes. Can the "old method" relieve the "new pressure"? Considering the characteristics of China's vast land and abundant resources, analyzing the strategic depth of new infrastructure and traditional infrastructure, the compatibility of incentives between state capital and social capital, and the parallel advancement of urban planning and rural revitalization, the prospects are still prudently optimistic.

According to data from the National Bureau of Statistics of China, infrastructure investment from January to April 2022 increased by 8.3% year-on-year, a decline from the growth rate in the first quarter, but it is still the main driving force for current economic growth. With the emergence of downward pressure on the economy, several important meetings such as the Central Finance and Economics Committee meeting and the National Standing Committee emphasized the importance of infrastructure construction to "stabilizing growth", clearly expanding the investment scope of infrastructure projects, and introducing social capital to broaden the sources of capital for infrastructure construction.

It is worth noting that compared with the public sector, social capital is more sensitive to the balance of benefits and risks. The capital increase in the traditional infrastructure sector may be limited during the year, while new infrastructure projects with relatively high potential returns and broader development prospects are expected to It has become an important direction for the influx of social capital.

Based on data analysis, we judge that the growth rate of traditional broad infrastructure (excluding information, technology, logistics and other new infrastructure construction) under the caliber of the Bureau of Statistics may remain between 6.4% and 8.2%. At the same time, affected by the epidemic, the second quarter The growth rate of infrastructure construction may decline in stages; while the strategic positioning of modern infrastructure construction has been comprehensively improved, advanced areas such as computing power networks, data centers, and intelligent logistics that have not been included in the calculation may achieve higher investment growth rates. The actual contribution to economic growth is expected to increase significantly.

The growth rate of infrastructure construction in the second quarter may fall in stages

The cumulative growth rate of infrastructure investment in April was 8.26%, down from the first quarter (10.48%), mainly due to the slowdown in project construction progress. According to a number of high-frequency indicators we track, the demand for infrastructure-related raw materials and terminals weakened in April. Although the recovery trend is still unclear, the resilience of infrastructure is still relatively strong in various real economic fields (as shown in Table 1). Show). From the observation of downstream industrial products, the overall demand release has been significantly restricted, and the specific performance is that both volume and price have fallen. Cement, rebar and petroleum asphalt are the main industrial products for infrastructure construction. High-frequency data shows that the consumption of the three has been relatively weak recently, and the prices have continued to operate at a low level. Although the cement shipment rate and the operating rate of petroleum asphalt plants have increased in early May, they are still only about 50%-60% of the same period in 2021. From the perspective of construction intensity, the operating hours of Komatsu excavators in April was 102.8, a year-on-year decrease of 16.6%. It is worth noting that although the construction business activity index of the civil engineering sub-item fell by 3.7% compared with March, it was still at a high level of 61%, while the new order index was 52.3%, indicating that the follow-up infrastructure momentum is still strong.

Judging from the above points, the outbreak of the epidemic may cause the peak season of infrastructure construction in 2022 to be delayed compared with previous years, and the growth rate of infrastructure construction in the second quarter will decline to a certain extent compared with the first quarter. Unlike consumption, the slowdown in infrastructure construction is likely to be made up after the epidemic is effectively controlled, so the growth rate of infrastructure construction throughout the year is not greatly affected by the delay in construction.

Modern infrastructure expands the scope of desired projects

Looking back at the performance of infrastructure funds in 2022, we find that there are three typical characteristics. First, the budgetary funds are actively increasing the inclination towards infrastructure. From the perspective of fiscal expenditure, the cumulative proportions of transportation and agriculture, forestry, and water affairs in March 2022 were as high as 10.9% and 8.4% year-on-year, compared with -7.8% and -5.5% in the same period in 2021. The allocation of new special bonds to the infrastructure sector has also increased simultaneously. According to our calculations, the proportion of new special bonds invested in infrastructure in January and February was 67.3% and 60.8% respectively, while in December 2021 the proportion was only 54.4%. In addition, although the financial constraints caused by the sharp decline in land transfer fees will still exist for a long time, this pressure is expected to gradually reduce in the next few months as the marginal relaxation of real estate policies is transmitted to the market performance.

Second, the principle of preventing local hidden debt risks has not been loosened. Since 2022, the review and approval of urban investment bond issuance has remained strict, and the main tone of curbing the increase in hidden debt has not changed. From January to April, urban investment bond financing was 738.92 billion yuan, a significant decrease from the same period in 2020 and 2021. According to Wind's caliber, under the tightening tone of "controlling the increment + stabilizing the stock" of urban investment debt in 2021, the urban investment debt stock will still increase by more than 2 trillion yuan, and the net financing amount will even exceed that in 2020. The risk of sexual debt should not be taken lightly, and the market generally expects that the possibility of a substantial loosening of supervision in 2022 is low.

Third, guide social capital to expand effective investment. The National Standing Committee meeting on May 11 pointed out that "in accordance with the principle of marketization and the rule of law, through the issuance of real estate investment trust funds and other means, the stock assets such as infrastructure should be revitalized, so as to broaden social investment channels, expand effective investment, and reduce government debt risks." Since 2022, there has been only one public REIT offering that mainly invests in transportation infrastructure. It is expected that under favorable policies, the issuance of public REITs will be greatly accelerated. It is worth noting that public REITs are sold to the public and often have higher requirements for future cash flow income. Although my country's existing infrastructure projects have a scale of trillions, a large number of projects serve social and ecological benefits, and the low economic benefits are difficult to meet the issuance qualifications of REITs. The scale of incremental funds brought by the public offering of REITs during the year may be relatively limited. To sum up, under the policy signal of comprehensively strengthening infrastructure construction, the situation of "lack of projects" in infrastructure construction in 2021 will be greatly improved in 2022, but the financial constraints under the budget still need to be broken through.

Social capital may bring better-than-expected performance to new infrastructure

According to the evaluation of the World Economic Forum Global Competitiveness Index, China's infrastructure competitiveness score reached 77.9 in 2019, close to the average of high-income economies (80.8), indicating that China's infrastructure construction has been relatively complete. Therefore, the current proposal to comprehensively strengthen infrastructure does not mean "flooding irrigation" and "repetitive construction", but to check for leaks and fill gaps according to the actual situation, and build scientific and technological infrastructure moderately ahead of schedule.

Compared with the traditional "iron public foundation", the above-mentioned new infrastructure fields are more likely to become the target of the influx of social capital. On the one hand, new infrastructure offers high-yield options. For a long time, the reason for the low initiative of social capital to participate in the field of infrastructure construction is mainly due to the imbalance between project risks and benefits. Traditional infrastructure projects have a strong “franchise” nature. When local governments transfer the project income of infrastructure projects to social capital, their willingness to “get the bottom line” for authorized bidding will drop significantly. However, high risk does not correspond to high return. Given that most infrastructure projects have a long operating period and consider social benefits rather than economic benefits, it is common for operating profits to be negative for many years, even if the internal rate of return (IRR) of high-quality projects ) will not be too high. Taking a high-speed REIT listed in 2022 as an example, the issuance scale is 9.399 billion yuan. According to its future cash flow calculation, the IRR is 6.61%. In contrast, the degree of marketization and return on investment of new infrastructure projects is significantly higher. For example, the IRR of IDC data center projects is generally 10%-20%, and the IRR of 5G projects is mostly higher than 10%. Keywords: infrastructure, infrastructure construction, domestic engineering news, planning and investment

On the other hand, new infrastructure is closely linked with the digital transformation of the real economy, and is expected to form a synergy (Synergy) with other investment projects of social capital. In the last round of infrastructure construction, railways, highways and airports were intertwined to form an efficient industrial chain and supply chain, which provided important soil for China to develop industrial manufacturing and strengthen export resilience. With the advent of the era of the digital economy, the new generation of infrastructure represented by the industrial Internet and data centers will also bring a lot of benefits to the digital transformation of the real economy. If social capital has invested in the target of the relevant track, it will also benefit from the upgrade of public infrastructure at the same time, and the investment momentum is expected to be stimulated. Since the new infrastructure has not yet been included in the statistics of the Bureau of Statistics, the investment of social capital in the above-mentioned fields will not be fully reflected in the growth rate of infrastructure, but the performance of advanced infrastructure such as computing power networks, data centers, and intelligent logistics is worth looking forward to. Editor / Xu Shengpeng