Economic data is affected by factors such as COVID-19, and the downward pressure on the economy has accelerated Sep 07, 2021

On August 29, the National Bureau of Statistics of China released the latest economic data. The results revealed by the data are: the growth rate of social zero, investment, and industrial added value has fallen across the board, and the only thing that has risen is the unemployment rate.

Friends who often pay attention to data know that under normal circumstances, a series of macroeconomic data indicators are published with good or bad, and there is rarely a one-sided situation. After all, the subdivision areas of data detection are different. In such a complex economic world, it is really difficult to achieve "uniformity".

However, the current data uniformity difference once again reflects the great downward pressure on the economy in the second half of the year.

It's still the same, we look at it from the major sub-items. Let's first look at fixed asset investment. The cumulative fixed asset investment increased by 10.3% year-on-year, the expected value was 11.4%, the previous value was 12.6%, and the two-year average was 4.3%.

The three most important sub-items in fixed asset investment: manufacturing, real estate and infrastructure.

From January to July, manufacturing investment increased by 17.3% year-on-year, and the two-year average growth rate was 3.1%. Although manufacturing investment continued to recover, the rate of recovery began to weaken rapidly. The average two-year average was 2.8% in July and June. It was 6%, a decrease of 3.4 percentage points. The repeated epidemics certainly have an impact on the decline in investment of manufacturing companies. After all, the frequent recurrence of the epidemic has greatly increased the uncertainty of the production and operation of enterprises. In an uncertain economic environment, companies can only take one step at a time.

In addition to the epidemic, uncertainty on the demand side and pressure on the cost side have also inhibited manufacturing companies from investing in expansion. At present, raw material prices and freight prices are still the two big mountains weighing on manufacturing investment. In July, PPI increased by 9% year-on-year, and the year-on-year trend rose again. While the cost side is under pressure, the demand side of enterprises is not optimistic. Previously, there were orders, even if the cost rose a little, the company could still afford it. But now the uncertainty on the demand side is increasing. The domestic economy is likely to continue to decline in the second half of the year, while overseas demand is also weakening. New export orders and on-hand orders have all declined in July.

Let's look at real estate again. In July, real estate investment grew by 6.4% year-on-year in two years, and the previous value was 7.2%. Real estate investment also continued to decline. This is mainly due to the influence of the "three red lines" of real estate financing and the "two red lines" of centralized management of housing loans, and the upgrading of real estate regulation in many places. They have taken big credit measures, raised mortgage interest rates and tightened mortgage approvals, leading to real estate development. Funds are limited.

The main support for real estate investment now is the completion cycle. In order to reduce the pressure on the "three red lines", real estate companies have been speeding up construction in recent months to allow the project to be completed quickly. The reason for this is very simple. After the completion of the project, the pre-sale payment can be confirmed, the sales data can go up a little, and the leverage ratio can go down a little. According to the data, the year-on-year growth rate of real estate completion in July was 4%, while the two-year growth rate of new construction and construction area was -6.5% and -7.8% respectively.

When the external financing of the real estate company was stuck, its source of funds was mainly maintained by the sale of the house, but the problem is that because of the tightening of mortgage approval in many places, even real estate sales have begun to decline. Reflected in the data, in July, the sales area of commercial housing was 130 million square meters, the previous value was 220 million square meters, the two-year average growth rate was 0.06%, and the previous value was 4.8%. The real estate sales market has seen a significant decline.

The few good news for the real estate market is the policy change for the second centralized land auction. For the first time centralized land auctions, high-quality land parcels in core cities have been hailed by the market, and the land premium rate has risen sharply. More importantly, the premium rate is too high, coupled with first-hand housing price restrictions, self-holding bidding, and matching construction have increased the hidden costs of real estate companies. Many cities have to postpone the land auction and limit the premium rate. For example, Fuzhou and Tianjin have set the upper limit of land premium to 15%. However, there will be a long time lag from the completion of the land auction policy to the acquisition of land and development and investment by enterprises. In the context of a decline in sales, real estate investment will continue to fluctuate downward.

At the same time, the Bureau of Statistics also announced the housing prices in 70 large and medium-sized cities. The year-on-year growth rate both fell. The number of cities where the price of second-hand housing increased fell four times in a row. Among them, the price increase of new and second-hand housing fell in first-tier cities, and the housing market was significantly cooling down. . It is expected that the dual-track regulation of housing prices in hot cities will continue to increase the supply of new houses and strictly limit prices. Second-hand houses will implement a transaction reference price mechanism. Banks will extend loans based on the guide prices of second-hand houses to reduce leverage and weaken the financial properties of real estate.


In February this year, after the implementation of the second-hand housing guidance price in Shenzhen, the property market has rapidly cooled down, and transactions have shrunk significantly. In July, the number of signed second-hand housing sites in Shenzhen fell by 84.5% year-on-year, and the price of more than half of the houses fell. At present, Shanghai, Xi'an, Chengdu, Ningbo, Sanya, Dongguan, Wuxi and other cities have successively introduced control measures such as second-hand housing guidance prices. It can be said that the "era of comprehensive house price control" has arrived, and the property market turning point has been officially confirmed.

Looking at infrastructure investment again, from January to July, infrastructure investment increased by 4.6% year-on-year, and the two-year average growth rate was 0.9%, which was significantly lower than the 2.91% in the same period in 2019. Moreover, the two-year average year-on-year growth of infrastructure investment in a single month in July was -1.6 %, this is mainly due to the limited financing of local governments, the issuance of special bonds is obviously post-positioned, and only 37% of the annual target has been completed in the first 7 months, and infrastructure funds have not been in place. Looking at the future, the follow-up of infrastructure is expected to be exerted. The previous Politburo meeting clearly requested that: fiscal policy should reasonably grasp the progress of budgetary investment and local government bond issuance, and promote the formation of physical workload at the end of this year and early next year.

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