12 high-risk debt provinces should fully suspend infrastructure projects.
At the beginning of 2024, a policy "nuclear bomb" has landed.
At the same time, the first-tier city of Shanghai will also suspend the approval of shopping malls, offices, industries, and R&D projects. The relevant departments emphasized: "no more large-scale demolition and construction" to improve the utilization efficiency of stock assets.
Many people may not know that infrastructure accounts for a larger proportion of China's economy than real estate.
In 2023, China's infrastructure industry will invest as high3 trillion yuan"., is a real estate investment1 trillion yuan".is exactly twice as much, accounting for 18% of our GDP.
The suspension of such a large industry will have a far-reaching impact on ......
1. Twelve provinces and municipalities have suspended infrastructure construction
According to the report of the Financial Associated Press and a number of **, recently, a policy document on "Measures for the Management of Investment Projects in Key Provinces by Classification (Trial)" has attracted attention from many parties.
This document requires that China's 12 key provinces, including Tianjin and Inner Mongolia, should strictly control new investment projects. Including transportation, municipal, industrial parks, all kinds of buildings and halls and shantytown renovation.
Schools, hospitals, gas, water supply and other livelihood facilities are excluded.
That is to say, starting today, these 12 provinces, unless the state approves it, can no longer be launched at the local level such as high-speed, subway, light rail and other projects.
The document further calls for the liquidation of existing projects in accordance with the investment completion rate of infrastructure projects:
Among them, if the total investment completion rate of the project is less than 50%, the construction will be delayed or stopped in principle, and if it is higher than 50% but there are major problems, the construction shall not be continued.
According to the statistics of the Financial Associated Press, the effect of the policy document was immediate.
Taking Chongqing as an example, as of January 29, there have been 16 project bidding termination announcements on its official website, far exceeding the number of previous years.
Why have infrastructure projects been halted on a large scale?
On the one hand, of course, it is because in many places now, there is a lot of debt pressure.
Like the 12 provinces mentioned above, they are all provinces with high local debt leverage. The document requires that after the local debt risk is reduced to a medium and low level, the development and reform department will report to the top management and then adjust the relevant policies.
The problem of local debts has been issued many times before the Bo year.
For example, in January last year, I talked about "tax reform month" and "state-owned enterprise reform", in June I talked about urban investment bonds, and in October I talked about special national bonds, all of which were related to local finance.
If you are interested, you can follow me to watch it back, and I won't talk about it in detail here.
But what is more noteworthy is that even a region like Shanghai, which has a low debt ratio and abundant fiscal funds, has called for a slowdown in infrastructure.
Then the significance of this round of policy adjustment is not as simple as "repaying debts".
It also involves that China's economic development mode, represented by the "troika", is facing profound adjustments.
The second and third carriages ushered in a sea change
What is the "Troika"?
It refers to the three components of GDP, investment, consumption, and imports and exports.
Among them, investment accounted for 43% of China's GDP in 2022. Compared with other countries, China's investment in GDP is too heavy.
On the other hand, people's consumption as a share of GDP is unusually low - only 53% in 2022, and has shown a downward trend since 2019.
For comparison, in the United States, the figure is 80%. Even Vietnam is 10 percentage points higher than us.
Why is investment accounting for such a large proportion of China's economy?
Because for a long time after the founding of the People's Republic of China, our country was in a state of "lack of infrastructure".
Anyone born before the 90s should have experienced the frequent power outages at home.
According to statistics, in 1992, even places like the capital Beijing had more than 100 days a year, and there were power outages in different areas and to varying degrees.
Behind this is the lack of power infrastructure in China.
The Spring Festival is coming soon, and 20 years ago, China's green train was engaged in the Spring Festival, and there were often news of "squeezing people to death".
Behind this is the lack of road infrastructure.
The lack of infrastructure constrained the development speed of China's economy at that time, so we had to build infrastructure on a large scale. All of the above-mentioned conditions have taken a marked turn for the better after the new century, and have also achieved the title of China's "infrastructure madness."
However, in the last 5 to 10 years, China's infrastructure has gone to the other extreme, from "lack of infrastructure" to "excessive infrastructure".
According to research by the National Development Institute, in 2011 and before, China increased by an average of 05 units of GDP, the economic benefits are better.
However, after 2012, the GDP-driving effect of new infrastructure has declined significantly.
Between 2013 and 2014, the marginal pull of infrastructure fell to 013 units of GDP, almost zero in 2015 and 2016.
Infrastructure has not played a big role in promoting the economy, so why have we been doing it for so many years since then?
There are two important reasons for this.
At the macro level, the country needs to rely on infrastructure to promote employment.
The expenditure of an infrastructure project can easily be billions or tens of billions, which can bring a large number of related jobs. When the economy is bad, the state usually launches a number of major projects.
This line of thinking was first found in Keynesianism and Roosevelt's New Deal during the Great Depression.
We can also call infrastructure "night pot", a "night pot" larger than real estate.
At the micro level, Bai Nian believes that the more critical reason is that after thirty or forty years of the country's vigorous investment in infrastructure, a huge number of local governments have been formed"Infrastructure Interest Groups".
Including infrastructure approval personnel, building construction units, building materials merchants, earthwork bosses and contractors. Therefore, there are not a few people who get rich.
The contractor of an infrastructure project generally has a general contractor, a second contractor, and a third contractor. Some even have four, five, six or seven packs, which are not new.
Some contractors just turn their hands and have a handful of pork in their hands, and they take advantage of the oily.
They divide the cake around infrastructure projects, and even influence local decision-making.
Obviously, in some places, they are "so happy" and like model projects, and these infrastructure interests are singing and flattering next to them.
Secretly, there are even corrupt elements who engage in power rent-seeking and erode state financial funds.
According to the "2022 Audit Report" released by the National Audit Office in June 2023, 49 regions across the country have added 41.5 billion yuan of hidden debts in violation of regulations by promising buybacks and advancing funds for construction by state-owned enterprises.
That is to say, in a certain field of infrastructure projects, it was not allowed to invest in construction and increase the debt burden.
However, in order to forcibly get the project started, the relevant personnel secretly sold their positions and promoted the construction of the project by promising capital contributions and state-owned enterprises advancing funds.
At the same time, according to the circular, 20 regions issued 19.8 billion yuan of special bonds by falsely reporting project income and underestimating costs, and "packaging" projects into a balance between income and financing scale.
In other words, under normal conditions, these infrastructure projects would not have passed the review because the income was too low.
However, in order to pass the project, the relevant personnel blatantly falsified the finances, saying that it was a project with a high return on investment.
In addition, 5 regions have invested 5 billion yuan in prohibited fields such as landscape engineering and commercial projects in violation of regulations; There are 47 regions that illegally misappropriated 15.8 billion yuan of special bonds; This involves the illegal use of infrastructure funds.
These infrastructure violations, although not universal, can be said to be widespread. However, when the Audit Office checked, it was dozens of regions**, and it could not be said to be an "individual phenomenon".
Therefore, today the state issued a document to completely suspend infrastructure construction.
Many projects now have to be re-opened, sun-dried and washed.
3. Impact on ordinary people
What are the next implications after the full suspension of infrastructure projects?
In a narrow sense, the most influential are the "infrastructure interest groups", that is, the pan-civil engineering industry.
China's infrastructure investment is twice as large as real estate investment. The suspension of many infrastructure projects directly affects downstream demand.
In 2024, there is a high probability that the business of many earthwork bosses will not be easy.
Coupled with the fact that the real estate industry itself is not good, China's civil engineering industry will completely become a "sunset industry".
Further, in response to the problem of corruption involving infrastructure, the state will conduct a major inspection of the project during the period of shutdown.
A round of anti-corruption actions against infrastructure-related units and personnel has begun.
Just now, Bai Nian mentioned the June 2023 Audit Commission Circular. In December 2023, the Audit Commission disclosed the preliminary rectification results.
In response to the problem of illegal new debts in the process of infrastructure construction, 428 people have been held accountable, and 24 typical cases have been disclosed. In response to the illegal use of local government bonds, 44 people were held accountable.
And this is just the appetizer of the "big inspection" in 2024.
Broadly speaking, the country is "scraping bones to cure poison" in the field of infrastructure at the same timeNot only was the construction delayed, but many projects were directly stopped— even areas like Shanghai have taken the lead in halting construction.
It proves that our country is determined to abandon the path of economic development that "relies on infrastructure".
The "night pot" of infrastructure construction is used a lot, and it is not small.
The traditional development model of the troika has also ushered in profound changes.
After abandoning the "infrastructure economy", what about the new economic growth point?
It is worth noting that while the relevant leaders in Shanghai stressed the need to "no longer carry out large-scale demolition and construction," they also demanded that state-owned enterprises improve the operating efficiency of existing assets and strengthen the handover of profits.
What is "Profits of State-Owned Enterprises"? It is the "third account" of finance. The annual profits of state-owned enterprises are mainly used to:Replenishment of social security funds
Shanghai is the second largest region in the country for "transfer payments", second only to Guangdong.
In recent years, with the intensification of population aging, the gap in social security funds has gradually expanded.
In 2023, China's pension base will only be **38%。This number is not only a distance of 5The GDP growth rate of 2% is far away, and it is also the lowest increase in the history of pensions, which proves that our social security needs to be replenished urgently.
Just now, Bai Nian also mentioned that in China's GDP structure, investment is too heavy and consumption is abnormally light.
The reason for this phenomenon is that in the annual ** expenditure, there aretrillion yuan(2022 data) was invested in fixed asset investment such as infrastructure.
This money accounts for 23 of the total revenue of the "three accounts" (taxes, sexuality, and profits of state-owned enterprises).8%。
Correspondingly, the annual national financial subsidy for social security ** is only.3 trillion yuan".
By comparison, U.S. fixed asset investment accounts for 14 percent of federal and state revenues5% (2021, excluding social security income), which is 9 percentage points lower than in China.
To put it more intuitively,The fiscal revenue of the United States, converted into 3 percent more than ours, but the scale of people's investment in fixed assets is 1 percent less than ours.
Among them, the surplus financial funds can be invested in areas such as people's livelihood.
That's why, in recent years, the U.S. infrastructure has been in the news, too. The last ** Trump has been clamoring to "engage in infrastructure".
But let's not forget that before China, the United States was also an "infrastructure maniac".
The Empire State Building, the world's tallest building, was completed in 1931 and the Hoover Dam in 1936, when China was still in the midst of a civil war.
Since then, the title of "infrastructure madness" in the United States has been handed over to Japan.
From the 60s to the present, Japan has built 98 airports, 250 Shinkansen, 2,800 dams, 10,000 tunnels and 680,000 bridges, with an average annual investment of 20 trillion yen.
At its peak in the 90s, Japan's infrastructure investment exceeded that of its American counterparts by 3 to 5 times.
But since then, Japan's infrastructure has also been in decline. The title of "infrastructure madness" has been transferred to China.
Why did the United States and Japan stop building infrastructure in the future?
In addition to the debt problem, it may be these countries that have found outAfter the economic development reaches a certain level, compared with excessive investment in infrastructure, investing funds in people's livelihood, social security and other fields can stimulate people's consumption and economic development.
The same is true in today's China, where we ordinary people have never lacked the willingness to consume, but only the guarantee of consumption.
For example, according to the Ministry of Transport, 9 billion people will travel across the country during the Spring Festival this year.
Of these, 80% were self-driving, a record high.
Rail travel 4800 million person-times, 18% year-on-year in 2019, a record high.
The volume of civil aviation traffic was 80 million, an increase of 9 compared with 20198%, an all-time high.
Behind the record high of all data is the desire of the Chinese people to consume.
However, to really let the people make consumption decisions, we also need to add a hand to social security and solve the new "three mountains" of housing, education and medical care.
We should really use the financial funds in a practical way and use them where the people are most concerned.
At that time, even if the title of "infrastructure madman" is swept into the dust of history, what does it matter?