China's 50 trillion rescue plan is coming

2020 On May 23, workers were working at the construction site of the Jiayan Water Conservancy Project in Panuohe Village, Tianba Town, Qixingguan District, Bijie City, Guizhou Province. Picture comes

Under the influence of the epidemic, the importance of steady growth in infrastructure investment has once again become prominent.

In order to promote economic recovery, various local governments have announced intensive investment plans for major projects in 2020, and a wave of infrastructure investment is already on the way.

Incomplete statistics from reporters found that as of March 10, 25 provinces, autonomous regions, and municipalities announced their future investment plans, with a total investment of 22,000 projects reaching 49.6 trillion yuan, of which the total planned investment in 2020 is 7.6 trillion yuan.

Wen Laicheng, the executive director of the Zhongcai-CSI Securities Pengyuan Local Finance Investment and Financing Research Institute of Central University of Finance and Economics, said that this year is likely to be more than last year. Significantly increase the deficit rate, increase the issuance of long-term national debt, increase the issuance of local government bonds, and raise a portion of funds through debt, thereby increasing public investment to drive economic growth.

Text | Xie Wei

This article is reproduced from WeChat public account”China Economic Weekly” (ID:ChinaEconomicWeekly)

50 trillion investment plan layout

The meeting of the Political Bureau of the Central Committee held on February 21 emphasized that it is necessary to actively expand effective demand, promote consumer replenishment and potential release, play a key role in effective investment, increase the start of new investment projects, and accelerate the progress of projects under construction. . We will increase research and development support for reagents, drugs, and vaccines, and accelerate the development of biomedicine, medical equipment, 5G networks, and industrial Internet.

The deployment meeting on February 23 to coordinate the prevention and control of the new crown pneumonia epidemic and economic and social development pointed out that it is necessary to coordinate the epidemic prevention and control and economic and social development. Work, comprehensively do a good job of”six stability”. Actively expand domestic effective demand, accelerate the construction progress of projects under construction and new construction, and strengthen the guarantee of labor, land and funds.

At a very moment, many provinces intensively announced plans for investment in major projects in 2020.

 China's 50 trillion rescue plan is coming

With the resumption of key projects in various places and the release of a list of key projects, nearly 50 trillion yuan of investment has surfaced. .

However, the nearly 50 trillion yuan infrastructure investment plan is really an”unprecedented” huge figure?

In fact, the investment plans of these major projects refer to the future total investment plans of the provinces, and do not just mean the total investment scale of the year. These include the total scale of projects that have started construction in the previous year and need to continue construction, and plan to start construction this year, even at the stage of record approval.

In fact, the total scale of investment plans that fall into 2020 is only 7.5 trillion yuan.

The research of Zhongtai Securities found that if the comparison is based on the total planned size, the planned project size announced this year will not only not increase but also decrease. According to statistics, the scale of investment in key projects announced in 11 provinces such as Yunnan, Sichuan, and Fujian in 2020 totals about 27.68 trillion yuan, which is more than 50 billion yuan less than the 27.74 trillion yuan announced in 2019.

From the specific investment projects announced by various provinces and cities, infrastructure investment still has a place.

 China's 50 trillion rescue plan is coming

For example, the “Four One Hundred” key project plan for Yunnan Province in 2020 is about to be released, and 525 key projects will be launched in 2020 with a total investment of about 5 trillion yuan. Plan to complete investment of more than 440 billion yuan.

Guo Jinhua, director of the Fixed Assets Investment Division of the Yunnan Provincial Development and Reform Commission, said that the “Four One Hundred” project in 2020 has a prominent feature:large projects. The proportion has increased significantly. Among the 525 projects, 232 projects with a total investment of 5 billion yuan or more and 146 projects with a total investment of 10 billion yuan or more. A number of key projects such as the Shangri-La to Lijiang Expressway, Dali to Lincang Railway, Tengchong Aisiqi Cadre Training Institute will be completed within the year. In addition, a number of key projects such as the Lancang-Menglian Expressway and Qingshuihe large-scale water conservancy projects will be started.

The”Beijing 2020 Key Project Plan” includes 300 projects covering three major areas and plans to complete an investment of about 252.3 billion yuan. Among them, 100 infrastructure projects are planned to complete an investment of 66.2 billion yuan, including 7 national railway projects, 5 suburban railway projects, 16 subway projects, 12 highway projects, and 16 urban road projects.

Accelerate progress, speed up approval, and speed up work.

Under the pressure of steady growth, the speed of approval of recent infrastructure projects is also increasing.

Data released by the National Development and Reform Commission show that as of March 3, the infrastructure projects approved by the National Development and Reform Commission amounted to 228.605 billion yuan, 93.029 billion yuan more than the same period last year; As of February 25, the resumption rate of 533 major transportation projects nationwide was 70.17%.

 China's 50 trillion rescue plan is coming

Singapore has established important investment directions

Under the epidemic, dozens of trillions of infrastructure projects have arrived on schedule. New infrastructure construction (hereinafter referred to as”new infrastructure”) projects are particularly eye-catching and have become a hot spot in this round of investment.

In December 2018, the Central Economic Working Conference put forward the concept of new infrastructure for the first time, stating that”it is necessary to increase manufacturing technology transformation and equipment upgrades and accelerate 5G commercial use.” Step to strengthen the construction of new types of infrastructure such as artificial intelligence, the industrial Internet, and the Internet of Things. ”Therefore, the new infrastructure mainly refers to infrastructure related to high-tech industries.

Since this year,”new infrastructure” has been raised to new heights.

The State Council executive meeting on January 3, and the Political Bureau meetings on February 21 and March 4 all mentioned new infrastructure. On March 4th, the executive meeting of the Political Bureau of the Central Committee once again emphasized”the need to speed up the construction of new infrastructure such as 5G networks and data centers.”

 China's 50 trillion rescue plan is coming

 China's 50 trillion rescue plan is coming

It is generally believed that the new infrastructure is different from the traditional”iron public infrastructure” (ie, railway, highway, infrastructure) projects, and refers to the infrastructure construction that focuses on the”technological end”. The new infrastructure includes seven major sectors, including 5G infrastructure, UHV, intercity high-speed railways and intercity rail transit, charging piles, big data centers, artificial intelligence, and industrial Internet.

Among them,”5G” is undoubtedly a bright spot, and it has become one of the key points for the steady growth of each province.

According to incomplete statistics, the government work reports of 19 provinces and cities currently include”promoting the construction of 5G communication networks” as a key task in 2020, of which 6 Provinces and cities have clearly planned the number of 5G base stations to be built in 2020, totaling more than 178,000.

China Mobile proposes to complete the construction target of 300,000 5G base stations by the end of 2020. China Unicom and China Telecom strive to complete the annual 250,000 seats in the first three quarters in advance The construction goal of the base station.

“We must focus on the complexity of the current epidemic prevention and control and the economic and social development situation, fully understand the importance and urgency of accelerating the development of 5G, and practically promote the rapid development of 5G”Said Chen Zhaoxiong, deputy minister of the Ministry of Industry and Information Technology.

The 5G construction itself includes hardware such as chips, devices, materials, and precision processing, as well as software such as operating systems, cloud platforms, and databases. The combination of 5G with big data, artificial intelligence and other related technologies will drive many industries and lay the foundation for digital transformation in many fields.

According to the forecast of the China Academy of Information and Communication Technology, it is estimated that by 2025, China’s cumulative investment in 5G network construction will reach 1.2 trillion yuan. In the next five years, the scale of investment in network transformation of industrial enterprises is expected to reach 500 billion yuan. The construction of 5G networks will drive the upstream and downstream of the industrial chain and the application investment in various industries to exceed 3.5 trillion yuan.

As a barometer of the economy, the performance of the capital market is undoubtedly the projection of economic activity.

In the A-share market, the concept of”new infrastructure” stocks, such as 5G and cloud computing, has been hot for several days.

 China's 50 trillion rescue plan is coming

On March 10, due to concerns about the close linkage of global capital markets, most people expected that the Chinese stock market would be plunged by European and American stock markets. influences. However, the Shanghai and Shenzhen markets only opened slightly lower in the early morning and then began to rebound. In the afternoon, all the main indexes of the two cities turned red. The Shanghai Stock Index, Shenzhen Stock Exchange Index and ChiNext Index rose 1.82%, 2.14%, and 2.66%, respectively. Among them, the 5G sector has become a pioneer of rebound. The CSI 5G communication theme index rose by 6.51% in a single day.

Special debt boosts investment

However, under the epidemic, financial pressures on places where financial resources are already tight are even greater. Where does the money come from is a question to be solved in a new round of big infrastructure investment.

How much local financial pressure?

On February 10, the Ministry of Finance announced the fiscal revenue and expenditure in 2019. In 2019, the general public budget revenue of the country was 19,828.3 billion yuan, a year-on-year increase of 3.8%, which failed to meet the targets in the budget report. In addition, tax revenue in 2019 was 15,799.9 billion yuan, accounting for 83% of fiscal revenue, with a growth rate of 1%, which is the slowest growth rate since 1969, that is, half a century.

In recent years, the economic downturn has been superimposed on tax and fee reductions, and the contradiction between fiscal revenue and expenditure has continued to stand out. Local governments, especially local governments at the grassroots level, are under pressure. It is not uncommon for teachers to ask for salaries and for civil servants to owe salaries.

 China's 50 trillion rescue plan is coming

In the context of the three guarantees— “guaranteeing basic people ’s livelihood, guaranteeing wages, and guaranteeing operation”, the central government temporarily “loaned” to local governments 110 billion yuan, requiring”repayment” at the end of the year.

On March 3, the State Council executive meeting pointed out that it supports grassroots governments in ensuring basic livelihood, wages, and operations. The meeting decided that the first is to gradually increase the local fiscal retention ratio. From March 1 to the end of June, based on the approved retention rates of the provinces that were approved for the year, they were unifiedly increased by 5 percentage points, and about 110 billion yuan of new retention funds were all reserved for county-level use. The second is to speed up the transfer of payment funds, and guide localities to give priority to the epidemic prevention and control and”three guarantees” payments in full and on time. Areas with gaps shall all reduce other project expenditures. The third is to further reduce general expenditures and, in addition to the need for epidemic prevention and control, strictly control the new policy of increasing expenditures.

“The pressure on fiscal revenue and expenditure this year is indeed relatively great. Because the economy has been declining in recent years, fiscal revenue in 2019 has increased by only 3.8% year-on-year, and taxes have almost There is zero growth. In addition to tax and fee reductions, fiscal 2020 is indeed quite tight.”Said Wen Laicheng, executive director of the Zhongcai-CSI Securities Pengyuan Local Finance Investment and Financing Research Institute of Central University of Finance and Economics.

In this case, why”tighten the belt and bring the item”?

From Wen Laicheng’s point of view, from the harmfulness of the new crown pneumonia epidemic, the global spread of the epidemic and its further deterioration will cause serious economic shocks and social impacts. . If the global economy is affected, it will further affect China’s foreign trade, and then affect domestic fiscal revenue.

“Therefore, in the face of such uncertain factors, we must first keep the domestic economy relatively stable and stable, and we cannot follow the arrangements for fiscal revenue and expenditure. The usual way.”Wen Laicheng bluntly.

However, fiscal investment in the government budget does not account for the”big head” of infrastructure investment.

Wen Laicheng also pointed out that from the perspective of the investment pattern of social infrastructure in recent years, the main investment is still social investment, and government budgetary investment accounts for this infrastructure. The proportion of investment is only about 5%.”Government investment mainly plays a role in driving, demonstrating, and stimulating private investment.”

 China ’s 50 trillion rescue plan is coming

The research report of China and Thailand Securities also shows that the proportion of fiscal expenditures invested in infrastructure in the budget is not high. Looking at the historical trend, the proportion of funds invested in the infrastructure in the budget has increased. From 2015 to 2017, the proportions were 10.87%, 11.54%, and 11.86%, respectively.

“From your judgment, the current economic situation may not be better than during the 1997 Southeast Asian financial crisis or the 2008 financial crisis. Therefore, this year When making budget revenue and expenditure arrangements, we may need to take some unconventional measures, cope with the crisis, increase fiscal deficits, expand debt issuance, etc., and overcome the current difficulties before adjusting.”He bluntly said.

From the perspective of funding sources, special bonds and policy bank financial bonds may become the main source of “boosting” for infrastructure.

Since the second half of last year, policies such as clarifying the purpose of issuing special bonds, issuing 1 trillion yuan of special debt in advance, and allowing special bonds to be used as capital for some major projects have been successively adopted. The introduction is intended to boost infrastructure investment and stabilize growth.

Recently, the public statements of relevant departments have also clearly released this signal.

On February 24, Assistant Minister of Finance Owen Han publicly stated that it is necessary to centralize the use of some central department stock funds, increase transfer payments, and expand local special debt. Issuance scale to ensure that funds follow the project. On February 27, Luo Guosan, the director of the Basic Department of the National Development and Reform Commission, said in an interview with the media that the central budget investment should be speeded up, loan support from financial institutions should be actively sought, and more social investment should be attracted to participate in the construction of major projects.

On March 4, Ou Hong, the director of the Investment Department of the National Development and Reform Commission, revealed that in the next step, in order to promote the construction of major projects, the National Development and Reform Commission will adopt corresponding policies with relevant parties. Measures to accelerate the release of investments within the central budget and organize local governments to step up preparations for special debt projects.

As the scale expands, the issuance of special bonds is also accelerating. Data show that as of the end of February, the nationwide issue of local government bonds amounted to 12,223 billion yuan, and the progress of the local wholesale bond advance has reached 66%.

Analysis of Zhongtai Securities believes that from the perspective of the capital structure of the infrastructure, budget funds, domestic loans and self-raised funds, these three major funds account for the source of infrastructure funds About 90%. The development of funds in the budget is mainly due to the increase in the deficit rate and the increase in transferred funds. Among self-raised funds, special bonds and policy bank financial bonds may become the main source of infrastructure development this year. Benefiting from the reduction in the project capital ratio, Sector loans will improve marginally.

Specifically, the scale of budgetary funds (fiscal revenue + deficit size + other net transferred funds) is 3.4 trillion yuan, and self-raised funds (special debt , Policy bank financial debt) was 2 trillion yuan, and domestic loans were about 3.4 trillion yuan. On the whole, the major funds may increase by 1.5 trillion yuan over last year, driving the growth rate of infrastructure investment back to 8%.

In a very unusual period, will a new round of large-scale infrastructure construction be able to take on the task of steady growth? Perhaps for the Chinese economy, the test has just begun.