5 provinces announce list of 7 trillion key projects

"The local 7 trillion investment" solution to the change and the implication hints that the economy is cooling

With the release of economic data in the first quarter, the discussion on the economic downturn has been buzzing. In April, many local governments successively held the first-quarter economic situation analysis meeting and stated that “the economic operation is still in a reasonable range”. However, when deploying the next working arrangements, local steady growth policies have been initiated, and Guangdong, Hainan, Tianjin, Jiangxi, Guizhou and other cities have issued investment plans for key projects totaling more than 7 trillion yuan.

The situation that local steady growth mainly depends on investment has not changed, but it is worth noting that the investment structure is changing. In the list of local policy investments, projects involving people's livelihood, environmental protection and structural adjustment are increasing. The focus on real estate investment is weakening, while the investment in urbanization is increasing.

Following the launch of a series of steady growth measures at the State Council's executive meeting held last week, five provinces announced the list of key projects this year, with a total investment of about 7.13 trillion yuan. People close to the SASAC stated that steady growth is the main task of central enterprises before the state-owned enterprise reform program was introduced, and a series of major construction projects, especially infrastructure projects, will be launched in the follow-up.

Promote infrastructure projects such as transportation and energy power
Guangdong, Hainan, Tianjin, Jiangxi, and Guizhou recently announced this year's list of key projects, with investment amounts of RMB 365.58 billion, RMB 1.795 billion, RMB 823.1 billion, RMB 600 billion, and RMB 249.9 billion. Among them, infrastructure construction and traditional industrial projects are still the key investment areas in these areas. Among the first batch of key projects arranged in Jiangxi Province, there are 43 traffic projects. There are 17 energy and transportation projects in Tianjin, of which the key energy power projects are: Tianjin Beitang Thermal Power Plant Phase I Project, Huaneng Tianjin Lingang Economic Zone Gas-fired Heat and Power Cogeneration Project, City Grid Construction and Renovation Project, Central City Coal-fired Boiler room reburning project, State Grid Customer Service Center, etc. This year, Jiangxi Province will increase the proportion of investment in energy and electricity, including 16 energy projects. Hangnan long passenger special supporting transmission and transformation projects. Continuation of the construction of Jiangxi Hongping Pumped-storage Power Station and its associated transmission project, Huaneng Anyuan Power Generation Co., Ltd., "Shangda Biguixiao" 2 sets of 600,000 kW generating units, and delivery of auxiliary projects, Datang Fuzhou Power Plant 2×1000MW new construction projects and supporting transmission Projects, wind farm projects, 500 kV power transmission and transformation projects (4 lines) and 220 kV supporting power transmission and transformation projects (5 lines). Newly started Shenhua Huajiang Guohua Jiujiang Coal Reserve (Transfer) Power Integration Project. This year will also continue to build the province's natural gas pipeline network project, the West-East Gas Pipeline project of the third-line natural gas pipeline in Jiangxi Province, and strive to start the construction of Sinopec Xinjiang coal gas transmission pipeline project in Jiangxi section. Hainan Province's key construction projects this year will focus on infrastructure and urbanization projects, including the Xihuan High-speed Rail, Changjiang Nuclear Power, and the Green Island project.

Other provinces that have announced major projects this year are still launching new investment projects. Local governments have placed greater emphasis on improving quality, increasing industrial efficiency, developing new industries, and fostering new growth points. Gansu Province plans to invest 260 billion yuan in the construction of a 100 billion yuan circular economy industrial chain of coal-fired chemical and metallurgical materials and civil-military-industrial combination in Baiyin. In recent days, Anhui Province announced that it has focused on the development of key service projects for the service industry. The province has invested nearly 3,000 items in the service industry, with a total investment of 620 billion yuan. The Guangxi Autonomous Region recently decided to invest 1.3 billion yuan to accelerate the development of major industries in the Beibu Gulf. Heilongjiang Province will invest 766 million yuan this year to implement 25 air pollution control projects.

Stable growth into a central enterprise
In the steady growth in various places, state-owned enterprises take on the role of "drawing the big beam." In order to implement the provincial government's steady growth in decision-making and deployment, the Shaanxi Provincial State-owned Assets Supervision and Administration Commission recently held a signing ceremony for the strategic cooperation of state-owned enterprises in provinces and cities. A total of 42 state-owned enterprises signed 54 strategic cooperation projects with a contracted capital of 16.7 billion yuan. Shanxi Provincial State-owned Assets Supervision and Administration Commission has also convened a joint meeting of investment in provincial enterprises in 2014.

Close to the SASAC sources said that the 1-2 month profit data of central enterprises is not optimistic. The huge pressure of steady growth prompted the central enterprises to take into account the reform and steady growth. Before the general plan for the reform of state-owned assets and state-owned enterprises was introduced, steady growth was the main task of the central enterprises. Follow-up will be followed by the launch of a number of major projects, especially infrastructure projects. According to the data previously released by the Ministry of Finance, the profit growth rate of central enterprises in January-February increased by 3.9% year-on-year, compared with 17.4% in the same period of last year.

According to the source, the operating data of the central SOEs is expected to be released in the first quarter, and the SASAC is expected to focus on the growth of the central SOEs in accordance with the economic performance of the SOEs in the first quarter of the year. It will do a good job of assessing enterprises, strengthen incentive and restraint mechanisms, and strengthen investment management.

The SASAC held at the meeting of heads of central SOEs held at the end of last month clearly stated that SASAC and SOEs should effectively play their role in stabilizing growth, improving economic efficiency and upgrading, and fully realize the goal of maintaining growth this year.

Unchanged: Steady growth still depends on investment in infrastructure

Recently, the local provincial party committee and the provincial government successively held the first quarter economic or industrial economic situation analysis meeting and deployed the next working arrangements. Judging from the information from these conferences, many places have stated that stabilizing growth is the top priority, and the most important point in the next step of the work arrangement is to “grasp investment” and “accelerate the construction of key projects.”

On April 4, Chen Zhenggao, governor of Liaoning Province, emphasized at the video conference of Liaoning province's economic situation analysis that the second half of the year would require more than half (referring to time and economic growth) in the first half of the year. In order to accomplish the goal, he emphasized that "Catch investment."

On April 11th, Fujian Province held a seminar on the economic situation in the first quarter. When Governor Su Shulin talked about the next phase of economic work, the first point emphasized was also to “focus on investing, grasping industrial project construction, and accelerating the landing of existing projects. Create new project development."

On the same day, the Qinghai Provincial Government also held an analysis conference of the province's industrial economic operation in the first quarter. The meeting pointed out that "stability of growth should be the primary task." To this end, it is necessary to further increase investment to stimulate the development of the industry and the upstream and downstream industries.

"The key to steady growth is stable investment, including real estate investment and government infrastructure investment," said Zhang Liqun, the macroeconomic research institute of the Development Research Center of the State Council.

In order to stabilize investment, many local governments recently issued a list of key projects or local investment plans. According to rough statistics, Guangdong, Hainan, Tianjin, Jiangxi, Guizhou and other five provinces have announced this year's key project investment plans, with investment amounts of RMB 3,366.8 billion, RMB 1,795 billion, 823.1 billion, 600 billion, and 249.9 billion respectively. Yuan, the total investment exceeds 7 trillion yuan.

Among them, infrastructure construction is still the focus of investment in these areas. According to the "Guangdong Province 2014 Key Project Plan Summary Table," the Guangdong Province plans to invest 450 billion yuan in 2014, of which funds for infrastructure investment will account for half of the total, which is 229.8 billion yuan.

In terms of infrastructure, all places have focused on investment in railways, urban rail transit, and municipal public service construction. Jiangxi's first batch of provincial key projects this year arranged 200 projects and 43 transportation projects were included in the plan. Among them, 5 expressways will be built (quotations market zone), 6 highways will be built, and 13 new highways will be planned. In terms of railways, Jiangxi Province will build the Jiangxi section of the Hangnan-Long passenger line and the Jiangxi section of the Suining Railway this year. It will start the new section of the Changji passenger special train and the Jiangxi section of the railway coal transportation channel from the west of Mengxi to central China. Hainan Province's key construction projects this year will focus on infrastructure and urbanization projects, including the Xihuan High-speed Rail, Changjiang Nuclear Power, and the Green Island project.

Change: Investment structure optimization "environment", "people's livelihood", "urbanization" is popular

The policy of steady growth can be described as “similar to the age of year old”, but there are also differences between “years of age are different”. In this year's local government investment goals and high-level meetings, it is no longer just “real estate”, but rather more “urbanization”.

The "2014 Tianjin Key Construction Project Arrangements Opinions" specifically refers to small town construction projects. The "Guangdong Province 2014 Key Project Plan Summary Table" has invested 31.9 billion yuan in the new urbanization plan.

Li Xueyong, governor of Jiangsu Province, recently presided over the executive meeting of the provincial government and pointed out that the second quarter must focus on the key points of the annual reform work and strive to make substantial progress in the reform of important areas and key links. One of the key points is to "solidly promote new urbanization and promote the integration of urban and rural development."

In addition, "people's livelihood" and "environment" have also become more attractive to local investment guidance. There are 64 major livelihood projects in this year's key projects in Jiangxi, accounting for about one-third of this year's project volume. There are five major categories of investment in Guangdong this year, and green development is one of the cornerstones.

In fact, comparing the central and western regions and the economically developed eastern provinces, the investment structure is more optimized. Take Beijing as an example. According to the public information of the Beijing Development and Reform Commission, in 2014, Beijing has arranged four major types of key construction projects. It involves resources and environment, improvement of people's livelihood, basic load-bearing, structural adjustment projects.

“From the point of view of local investment, the local investment structure is also undergoing positive changes. This is consistent with the central government's emphasis on a stable growth policy that takes into account the overall tone of structural adjustment and reform.” Institute of Economics, Academy of Social Sciences Scholars said.

The loosening of real estate in the past all played an important role in the steady growth. But so far, only the cities in Wenzhou, Changzhou, and Hangzhou, where housing prices have declined, have heard news of real estate loosening. Wang Yiming, vice president of the Institute of Macroeconomic Research of the National Development and Reform Commission, went to the Shanghai Securities Exchange. Said, "In the past nine years of the real estate market adjustment, but in the past two years the government rarely involves the policy of real estate. Real estate is loose, especially the first-tier cities."

Change: local finances are holding on to private capital
On the one hand, in recent years, due to the sharp decline in land revenue, local fiscal revenue has declined. Local governments have to face steady growth to some extent. On the other hand, local governments also need large investments. Under such contradictions, Some analysts have warned that local investment incentives should be guarded against local government debt risks.

Wang Yiming said, "At present, local government debt has entered the peak of debt repayment. If it is not handled well, there may be a capital-chain break and partial project."

UBS chief China economist Wang Tao also suggested that steady growth should use private funds. “Utilizing policy banks or issuing railways to build bonds can all attract private capital. At the same time, we can increase the cooperation between the public sector and the private sector through various methods such as participation, contract, and revenue sharing.”

Wang Yiming also stated that local governments should liberalize access to private capital for the service industry, encourage private capital to enter the government-led municipal public infrastructure construction area, and develop a mixed ownership economy.

As a matter of fact, many places have tried to leverage on people’s capital. The Department of Housing and Construction of Jiangxi Province recently issued the "Opinions on Further Encouraging and Guiding Private Capital into Municipal Public Utilities," and Guangxi also issued a document encouraging private capital to enter the municipal public sector, and introduced rules to encourage private capital to participate in the construction of affordable housing.