For a long time, excavator sales have been regarded as an economic "barometer". The growth of excavator sales often means active infrastructure and strong investment. However, in March, which was supposed to be the peak sales season of construction machinery, the sales of excavators fell sharply year-on-year, and the domestic sales even fell by more than 60%.
Recently, the 21st Century Business Herald reporter found that the decline in excavator sales reflects, to some extent, the delay in infrastructure construction under the influence of the current epidemic, but it is also related to multiple factors such as the ultra-high base of excavator sales last year, the current lack of funds on the demand side and the delayed delivery caused by poor logistics and transportation. In fact, the excavator industry also has a certain periodicity. At present, the signal of "weak cycle" has begun to appear, but the short-term cooling back of the excavator market can not fully represent the weakening of macro-economy, and the market still maintains a certain confidence in the development trend of follow-up infrastructure.
As an important starting point for steady economic growth, infrastructure investment is being promoted more and more. In the first quarter, major projects in many provinces across the country started one after another, and the State Council also requested that the remaining special debt limit be issued as soon as possible, so as to expand effective investment, stabilize the economy and form physical workload as soon as possible. Many interviewees told the 21st Century Business Herald that the supporting role of major projects on infrastructure investment will be significantly enhanced. Although the current impact of the epidemic has slowed down slightly, the overall project demand will only be delayed and will not decrease. The second quarter is a key window for steady growth. Major projects with implementation conditions and obvious economic and social benefits will be accelerated and constructed in advance.
Why did excavator sales decline?
According to the statistics of 26 excavator manufacturing enterprises by China Construction Machinery Industry Association, 37085 excavators of various types were sold in March, a year-on-year decrease of 53.1%; Among them, there were 26556 sets in China, a year-on-year decrease of 63.6%; 10529 sets were exported, with a year-on-year increase of 73.5%. LV Ying, Deputy Secretary General of the association, told the 21st Century Business Herald that last year's ultra-high base combined with the impact of the epidemic, poor logistics and delayed delivery made the sales of domestic excavators decline significantly in March.
"March is the traditional peak season of the domestic excavator market, but this year's heat is obviously lower than expected. In addition to the availability of funds on the demand side and the deterioration of equipment settlement, the recent epidemic spread in many places has led to the suspension of many projects, the decline of operating rate, the stop of sales and the stabilization of sales will take some time." A construction machinery sales manager said.
The start-up data of some excavator brands are also reflected. Komatsu's official website shows that after the year-on-year growth rate turned positive in February, the start-up hours of Komatsu excavator in China in March was 101.2 hours, a year-on-year decrease of 16.9%, and the growth rate showed negative growth again.
"Demand is only blocked by the epidemic and will not disappear. The transmission time from infrastructure construction to excavator sales is about 1-3 months, so the peak season of the industry may be postponed to May and June. The logic of low before high throughout the year has not changed." The above sales manager believes that.
LV Ying also pointed out that there is an obvious periodicity in the excavator industry. From 2017 to 2020, the sales volume of domestic excavators continued to develop at a high speed, with a year-on-year growth of more than 10%. After reaching the peak in March 2021, the trend of turning to the stock market was gradually obvious. This means that the situation of excavator sales as an economic "barometer" over the past few years may change, which only reflects the increase of market stock and does not substantially reflect the economic situation.
In addition, LV Ying stressed that the domestic market demand is far from the top. By the end of 2021, the number of excavators in China has exceeded 2 million, exceeding the sum of other countries and regions in the world. However, from the perspective of the number of excavators corresponding to the total output value of the construction industry, China has about 428 excavators per US $1 billion, only 32% of that of Japan, and there is still much room for growth. "In the short term, the industry should seek growth from the stock market, accelerate the transformation of digitization, intelligence and green energy conservation, and shorten the renewal cycle of construction machinery. With the high-quality development of China's economy and society, the demand for upgrading traditional infrastructure and expanding the coverage of livelihood projects will gradually be transmitted to the construction machinery industry."
Multiple factors form short-term constraints on infrastructure construction
The decline in excavator sales has attracted much attention to the situation of infrastructure investment.
Under the policy guidance of "moderately and ahead of schedule infrastructure investment", 2022 is defined as "infrastructure year" by many research institutions, but at present, the progress of infrastructure construction is not ideal. According to the incomplete statistics of Mysteel, 16740 projects were started across the country in March, with a month on month decrease of 18.2%, and the total investment of nearly 7 trillion yuan. The investment amount of projects started in many places decreased to varying degrees compared with the month on month, but the central and Western Regions less affected by the epidemic increased significantly.
Wu chaoming, vice president of Caixin Research Institute, told the 21st Century Business Herald that the epidemic and cost factors may restrict the recovery of short-term infrastructure investment. On the one hand, the epidemic affects the normal flow of people and logistics, is not conducive to the project site operation and material transportation, and forms a certain disturbance to the growth rate of infrastructure investment; On the other hand, foreign import pressure leads to the high price of domestic basic raw materials, or restricts the recovery of infrastructure investment growth from both cost and willingness.
Chen Zhongtao, chief economist of China Logistics Information Center, told the 21st Century Business Herald that the proportion of enterprises reflecting high logistics costs in March rose 7.5 percentage points to 43% from the previous month, the highest level in nearly 10 years. Large and medium-sized enterprises in the upstream raw material industry often adopt closed management, with stable production but poor transportation and logistics, blocking the mobilization of raw materials, seriously slowing down the progress of infrastructure construction.
From March 30 to 31, the Centennial construction network surveyed 230 cement automobile logistics enterprises and found that the departure rate was 50.56%, the average daily freight volume was 43.88% normal, and the average freight in March increased by 9.7% month on month. Among them, the departure rate in North China market was the lowest in China, only 28.8%. According to a building materials logistics company in Hebei, under normal circumstances, the departure rate of cement automobile logistics enterprises can reach more than 70%, but at present, truck drivers in some areas are isolated at home or unwilling to accept orders for safety reasons.
The same is true of steel transportation. The person in charge of a steel trading enterprise said that affected by the epidemic, some steel mills stopped shipping, and the company's steel distribution business in Jilin, Tangshan, Langfang and other places was affected. The company's shipment volume in March was only a few hundred tons, compared with thousands of tons in the same period of previous years.
In this regard, recently, many national departments have issued documents calling for full guarantee of smooth transportation of freight logistics, especially medical and prevention and control materials, daily necessities, government reserve materials, postal express and other livelihood materials, as well as important production materials such as agriculture, energy, raw materials and key industrial products.
At the same time, many respondents are generally confident that the follow-up infrastructure investment will maintain a high growth rate. Wu chaoming believes that since this year, policies have been strengthened to improve efficiency, and the characteristics of early commencement and early construction of infrastructure projects are still obvious. The growth rate of infrastructure investment in the first quarter is expected to remain at about 8%.
Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, told the 21st century economic report that infrastructure projects are basically order demand, which will not disappear due to the impact of the short-term epidemic, but more demand is delayed. After the domestic epidemic is gradually controlled, the suppressed demand will be released faster.
In the second quarter, news of the commencement of major projects around the country came out one after another. For example, on the first working day after the Tomb Sweeping Day holiday, Henan held the fourth phase of the "three batches" project construction activities in the province, which was further expanded compared with the number of projects in the third phase. A total of 560 projects were signed, 1009 projects were started, 785 projects were put into operation, and the total investment of projects started reached 632.8 billion yuan. According to incomplete statistics of the 21st Century Business Herald, from April 1 to 15, Anhui, Heilongjiang, Henan, Inner Mongolia, Gansu, Chengdu Chongqing Shuangcheng economic circle, Tianjin and other places announced the commencement of more than 4500 major projects, with a total investment of more than 2 trillion yuan.
Special debt to support investment
At the same time, as an important source of infrastructure investment funds, the issuance and use of new local bonds this year has been accelerating. It is understood that by the end of 2021, the Ministry of finance has issued the new special debt amount of 1.46 trillion yuan this year in advance, and there are still 2.35 trillion yuan of remaining special debt to be issued.
At the executive meeting of the State Council on March 29, it was clearly required to speed up the issuance of the remaining special debt limit and give preference to areas with strong solvency and sufficient reserves for projects. The quota issued in advance last year will be issued before the end of May, and the quota issued this year will be issued before the end of September. Subsequently, on March 31, the national development and Reform Commission also required to do a solid job in promoting the preliminary work of the project, increase the guarantee of funds, land and other elements, speed up the construction of projects under construction, and form the physical workload as soon as possible.
Zhou Maohua pointed out that the domestic steady growth policy was pushed forward to ensure that the economic operation in the first half of the year was within a reasonable range, and the issuance of special bonds of local governments was significantly ahead. We should keep the transmission chain of "financial policy signal, local bond issuance, financial fund allocation, project start-up and physical workload" smooth. This year, we have repeatedly stressed "promoting the formation of physical workload", which means that most of the funds will be invested in projects that can start as soon as possible to avoid idle financial funds due to insufficient project preparation.
"In theory, after the issuance, the capital can be started, and the growth rate of infrastructure investment will also be significantly accelerated." Zhou Maohua said.
In view of further accelerating the issuance and use of special bonds, song Qichao, head of the budget department of the Ministry of Finance and director of the government debt research and evaluation center, said at the press conference of the state information office on April 13 that at present, all localities have been required to speed up communication with relevant working institutions of the Standing Committee of the provincial people's Congress, fulfill the legal procedures such as budget adjustment as soon as possible, and decompose the new government debt limit issued at the end of March to cities and counties as soon as possible. According to the data of the Ministry of finance, as of the end of March 2022, all provinces have basically organized the issuance of quotas issued in advance, with a cumulative issuance of about 1.25 trillion yuan, accounting for 86% of the quota issued in advance, which is the fastest year in history.
Wang Xiaolong, director of the Treasury Department of the Ministry of finance, said that although the recent epidemic situation in various regions has shown the characteristics of many points, wide range and frequent occurrence, all regions have overcome difficulties and accelerated the construction of infrastructure projects. According to preliminary statistics, the operating rate of projects supported by special bond funds issued this year has reached 75%.
Further, among the 1.25 trillion yuan of new special bonds issued, support for municipal and industrial park infrastructure was 415.7 billion yuan, transportation infrastructure was 231.6 billion yuan, social undertakings was 225.1 billion yuan, affordable housing projects was 2016 billion yuan, agriculture, forestry and water conservancy was 100.4 billion yuan, ecological and environmental protection was 46.8 billion yuan, and logistics infrastructure such as energy and urban-rural cold chain was 25.1 billion yuan. Luo Zhiheng, chief economist of YueKai securities, told the 21st Century Business Herald that since this year, the investment direction of special bond funds has been more clear and optimized, the support for infrastructure has been improved, and more attention has been paid to industrial guidance. New energy, new infrastructure, biomedicine and digital economy have become highlights. The proportion of investment in infrastructure related fields reached 61.6% in the first quarter, an increase of 2.3 percentage points over the whole year of 2021, which is related to the financial force to stabilize infrastructure.
Wu Yaping, director of the institutional policy office of the Investment Research Institute of the national development and Reform Commission, pointed out in an interview with the 21st Century Business Herald that traditional infrastructure is still the main part of infrastructure investment, with improving people's livelihood and "stable growth" as the main goal, while new infrastructure can connect consumption and investment, and even create emerging consumption. The multiplier effect is relatively large. Therefore, it has a better effect to carry out new infrastructure investment in a moderate advance, It is also an organic combination of cross cycle and counter cycle regulation.
Wu chaoming believes that the growth rate of infrastructure investment in the second quarter is expected to continue to pick up, benefiting from positive factors such as the increase of capital quantity and quality, the advance of project commencement and the advance of construction progress. On the one hand, the commencement or announcement time of major projects in various provinces this year is generally 1-2 months earlier than last year, and there is a high probability that new projects or projects under construction will accelerate construction in the second quarter; On the other hand, the progress of local major projects this year shows the characteristics of moderate advancement. The supporting role of major projects on infrastructure investment will be significantly enhanced compared with previous years, and the second quarter is the key window period of steady growth. Major projects with implementation conditions and obvious economic and social benefits may be further constructed in advance.
(Intern Zhan Chunyang also contributed to this article)