Opinion Leader | Zhang Aoping
Ten key points of this article:
1. The economy will get off to a good start in 2024, but it is still in the real environment of insufficient effective demand, overcapacity in some industries, and "strong volume and weak price". "strong volume and weak price" is not conducive to the restoration of the market's micro body perception and expectations;
2. In 2024, China will remain an important growth engine of the global economy. The predicted global economic growth rate in 2024 will be 3.1%, far below the historical average of 3.8% (2000-20019);
3. Export improvement is the key to the recovery of private enterprises' investment and residents' consumption. In the first quarter of 2024, private enterprises accounted for "half of the total import and export value" (54.3%), and the number of enterprises accounted for 90%;
4. Export rebound is the key to realizing a virtuous circle of "export private enterprise investment urban employment (private enterprises contribute 80% of urban employment) resident income resident consumption private enterprise investment";
5. In dollar terms, the export amount in the first quarter increased by 1.5% year-on-year, 6.1 percentage points faster than the growth of the whole year last year, ending the negative growth for three consecutive quarters last year.
6. The focus of the policy of expanding domestic demand in 2024: large-scale equipment renewal to promote private enterprise investment, and consumer goods trade in to promote residents' consumption;
7. The "reverse force mechanism" for updating and renewing is clear: 294 key national standards have been formulated and revised in the Action Plan for Upgrading Traction Equipment with Standards and Replacing Old Consumer Goods with New, and 74 of them are mandatory national standards (mandatory standards must be implemented);
8. Since April, some developed provinces and cities have formulated specific working rules for local renewal. For example, 7 provinces and cities, including Zhejiang, Shandong, Chongqing and Guangdong, have introduced overall plans or measures;
9. Investment in high-tech industries representing new quality productivity, especially high-tech manufacturing investment, is the "bright spot" in economic development;
10. "The development of new quality productivity is not to ignore or abandon traditional industries". In terms of upgrading traditional industries, the focus of work is a new round of large-scale equipment updating action, with energy conservation and carbon reduction, ultra-low emissions, safe production, digital transformation, and intelligent upgrading as important directions.
On April 16, the National Bureau of Statistics released data. According to preliminary accounting, the GDP in the first quarter was 29629.9 billion yuan, an increase of 5.3% year on year at constant prices (base: the GDP in the first quarter of last year increased by 4.5% year on year), and an increase of 1.6% month on month compared with the fourth quarter of last year.
By industry, the added value of the primary industry was 1153.8 billion yuan, up 3.3% year on year; The added value of the secondary industry was 10984.6 billion yuan, up 6.0%; The added value of the tertiary industry was 17491.5 billion yuan, up 5.0%.
From the perspective of the demand side troika, consumption: in the first quarter, the total retail sales of social consumer goods reached 12032.7 billion yuan, up 4.7% year on year (base: consumption increased 5.8% year on year in the first quarter of last year);
Investment: In the first quarter, the national investment in fixed assets (excluding farmers) was 10004.2 billion yuan, up 4.5% year on year, 1.5 percentage points faster than that of the whole year of last year (base: investment in the first quarter of last year increased 5.1% year on year); In terms of sectors, infrastructure investment increased by 6.5%, manufacturing investment increased by 9.9%, and real estate development investment decreased by 9.5%;
Import and export: In the first quarter, the total import and export of goods was 10169.3 billion yuan, with a year-on-year growth of 5.0% (base: 4.8% year-on-year growth in import and export in the first quarter of last year). Among them, the export was 5737.8 billion yuan, up 4.9%; Imports reached 4431.5 billion yuan, up 5.0%. Import and export balance, with a trade surplus of 1306.3 billion yuan.
On the whole, the economy will start well in 2024, but it is still in the real environment of insufficient effective demand, overcapacity in some industries, and "strong quantity but weak price".
From the perspective of price indicators, in the first quarter of 2024, the consumer price CPI of the downstream represents 0% year on year, and the producer price PPI of the upstream represents - 2.7%% year on year. It should be noted that the "strong quantity and weak price" of the economy is not conducive to the repair of the market's micro body feeling and expectations.
From the perspective of the leading economic indicator PMI, in March, the economy ended five consecutive months of month on month contraction and returned to the expansion range:
In the fourth quarter of 2023, the economy shrank on a month on month basis. From October to December, PMI was lower than the boom bust line, and the month on month decline was 49.5%, 49.4%, and 49.0%; In the first quarter of 2024, the economy bottomed out and recovered. From January to March, the PMI was 49.2%, 49.1% and 50.8%.
Globally, China will remain an important growth engine of the global economy in 2024. According to the World Economic Outlook issued by the International Monetary Fund (IMF) in January 2024, the forecast value of global economic growth in 2024 is 3.1%, far below the historical average of 3.8% (2000-20019). Among them, the growth rate of developed economies is expected to slow down from 1.6% in 2023 to 1.5% in 2024; The growth rate of emerging markets and developing economies in 2024 will maintain 4.1% of that in 2023.
1、 The key to economic recovery in 2024: warmer external demand drives export improvement
Export improvement is the key to the recovery of private enterprise investment and residents' consumption. The author has repeatedly pointed out that China's economy is not a troika, but "one carriage pulls two wheels", if only looking at private enterprise investment and residents' consumption in the private sector. One carriage is export, and the two wheels are private enterprise investment and resident consumption, which represents market activity.
The reason is that since China's accession to the WTO, a large number of private enterprises are export-oriented enterprises, or the end products of the industrial chain are mainly oriented to external demand, which often benefit from the order spillover effect of supply expansion.
From the data, in the first quarter of 2024, private enterprises accounted for "half" of the total import and export value. In the first quarter, the import and export of private enterprises reached 5.53 trillion yuan, up 10.7%, accounting for 54.3% of the total import and export value. During the same period, the import and export of foreign-invested enterprises reached 2.97 trillion yuan, accounting for 29.3%; The import and export of state-owned enterprises reached 1.64 trillion yuan, accounting for 16.1%.
In terms of the number of business entities, for every 10 foreign trade enterprises with import and export records, 9 are private enterprises. From the perspective of growth, the export and import growth of private enterprises were 4.8 and 7.8 percentage points faster than the overall growth.
Therefore, the rebound of exports is the key to the realization of a virtuous circle of "exports - private enterprise investment - urban employment (private enterprises contribute 80% of urban employment) - residents' income - residents' consumption - private enterprise investment".
When the export of foreign demand rebounds, the two wheels of private enterprise investment (especially manufacturing private enterprise investment) and household consumption will be promoted in the above cycle, and the perceived economic activity of the market will be enhanced, and vice versa.
This is one of the main reasons why market players have a better economic perception of 2021, the second year of the epidemic, than 2023. In 2021, exports will increase by about 30% year on year, while in 2023, exports will decline by 4.6% year on year (US dollars).
In dollar terms, the export amount in the first quarter increased by 1.5% year-on-year, 6.1 percentage points faster than the growth of the whole year last year, ending the negative growth for three consecutive quarters last year.
The author believes that from the perspective of economic endogenous adjustment mechanism, the overseas destocking cycle has come to an end, and exports in 2024 will be better than in 2023.
2、 The policy focus of expanding domestic demand in 2024: a new round of large-scale equipment renewal and consumer goods trade in
If we say that the repair of private enterprise investment and resident consumption driven by exports is the "invisible hand" of the market. In that case, large-scale equipment renewal and trade in of consumer goods are the key to stabilizing the economy with the "tangible hand" of policy.
First of all, since the Central Economic Work Conference at the end of last year, the decision-making level has intensively deployed a new round of large-scale equipment renewal and specific work arrangements for consumer goods trade in, highlighting its importance.
In December 2023, the Central Economic Work Conference stressed that "we should take the improvement of technology, energy consumption, emissions and other standards as the traction to promote large-scale equipment renewal and consumer goods trade in";
In February 2024, the fourth meeting of the Central Finance and Economic Commission stressed that "large-scale equipment renewal and consumer goods trade in will strongly promote investment and consumption, both for the present and the long-term";
On March 1, 2024, the executive meeting of the State Council pointed out that "promoting a new round of large-scale equipment renewal and consumer goods trade in is a major decision made by the Central Committee of the Communist Party of China with an eye to the overall situation of high-quality development of our country", and reviewed and adopted the Action Plan for Promoting Large scale Equipment Renewal and Consumer Goods Trade in (hereinafter referred to as the Action Plan);
On March 5, 2024, the government work report pointed out that "encourage and promote the exchange of old consumer goods for new ones, and boost the mass consumption of intelligent connected new energy vehicles, electronic products and other products" and "promote the upgrading and technological transformation of various production equipment and service equipment".
First of all, a new round of large-scale equipment renewal and consumer goods trade in offers both short-term and long-term market opportunities.
According to the current top-level plan document Action Plan, many tasks require target customization in 2027, which means that equipment renewal and consumer goods trade in will become a major focus of work in the next three years.
"By 2027, the scale of equipment investment in industry, agriculture, construction, transportation, education, culture and tourism, medical care and other fields will increase by more than 25% compared with 2023; The energy efficiency of major energy consuming equipment in key industries has basically reached the level of energy conservation, and the proportion of production capacity whose environmental protection performance has reached the level of A has increased significantly. The popularization rate of digital R&D design tools and the numerical control rate of key processes in industrial enterprises above designated size have exceeded 90% and 75% respectively; The recycling volume of end-of-life vehicles is about double that of 2023, the trading volume of second-hand vehicles is 45% higher than that of 2023, the recycling volume of waste household appliances is 30% higher than that of 2023, and the proportion of renewable materials in resource supply is further improved ".
Secondly, it covers a wide range. In the Action Plan, it is clearly defined in terms of equipment renewal, promoting equipment renewal and transformation in key industries, accelerating equipment renewal in the field of construction and municipal infrastructure, supporting the renewal of transportation equipment and old agricultural machinery, and improving the level of educational, cultural, tourism and medical equipment.
From the perspective of "promoting the upgrading and transformation of equipment in key industries", it will "focus on steel, nonferrous metals, petrochemical, chemical, building materials, power, machinery, aviation, shipbuilding, light textile, electronics and other key industries". The direction of the update is green, safe, digital and intelligent (with energy saving and carbon reduction, ultra-low emissions, safe production, digital transformation and intelligent upgrading as important directions).
In the Action Plan, the three major product directions of automobile, household appliances and home decoration are defined in the aspect of consumer goods renewal; stay
In terms of the implementation of recycling actions, four major work priorities were identified: improving the recycling network of waste products and equipment, supporting the circulation and trading of second-hand goods, orderly promoting remanufacturing and echelon utilization, and promoting high-level recycling of resources.
Since April, some developed provinces and cities have formulated local specific working rules. For example, 7 provinces and cities, including Zhejiang, Shandong, Chongqing and Guangdong, have introduced overall plans or measures; Shanghai, Beijing and Jiangsu provinces and cities have introduced financial support programs.
In addition, Hunan, Shanxi, Guangxi and other provinces and cities have indicated that they are or will need to touch and arrange the renewal needs in the future; Hunan, Shandong, Shanxi, Guangxi, Jiangxi and other provinces and cities need to further develop lists or implementation documents in various fields.
Finally, the policy is strong. The Action Plan defines the "reverse force mechanism" for the implementation of standard improvement actions. It includes four aspects: accelerating the improvement of energy consumption, emissions and technical standards; Strengthen the promotion of product technical standards; Strengthen the standard supply of resource recycling; Strengthen the convergence of domestic and international standards in key areas.
Readers need to pay more attention. On April 10, the State Administration of Market Supervision issued the Action Plan for Upgrading Traction Equipment by Standards and Swapping Consumer Goods for New, which clarifies the key areas of standards upgrading this year and next in the form of a list.
Among them, 294 key national standards have been formulated and revised, 74 of which are mandatory national standards (mandatory standards must be implemented).
Key directions: "Accelerate the revision of energy consumption quota standards for thermal power, refining, coal chemical, steel, coke, polysilicon and other industries, focus on improving the energy efficiency standards for key energy consuming equipment such as charging piles, boilers, motors, transformers, pumps, chillers, refrigerators, and quickly develop energy consumption quota standards for lithium battery positive and negative materials, photovoltaic crystal products, and communication base stations" "Upgrading the emission standards of air pollutants for coking, lead zinc, coal mining and other industries", "Promoting the conversion of recommended standards for gas appliances such as gas hoses and shut-off valves into mandatory standards", etc.
The Action Plan clarifies both the "backward forcing mechanism" and the way of policy resource support. For example, in the "Strengthening financial policy support", it is proposed that "qualified equipment renewal and recycling projects should be included in the scope of capital support such as investment in the central budget", "qualified cars should be exchanged for new ones through the energy conservation and emission reduction subsidies arranged by the central finance", "the central finance should set up special funds to support the recycling of waste electrical and electronic products", etc.
3、 The key to supply side innovation in 2024: accelerating the development of new quality productivity
In the first quarter of 2024, investment in high-tech industries representing new quality productivity, especially high-tech manufacturing investment, is the "highlight" of economic development. Investment in high-tech industries increased by 11.4% year on year, of which investment in high-tech manufacturing and high-tech service industries increased by 10.8% and 12.7% respectively.
In high-tech manufacturing, investment in aerospace and equipment manufacturing, computer and office equipment manufacturing increased by 42.7% and 11.8% respectively; In high-tech service industry, investment in e-commerce service industry and information service industry increased by 24.6% and 16.9% respectively.
It should be noted that there is still a key misunderstanding in the current market for the development of new quality productivity. It is believed that the development of new quality productivity should completely abandon traditional industries and only develop strategic emerging and future industries.
On January 31, 2024, the Politburo's eleventh collective learning on the development of new quality productive forces made it clear that "three lines of progress" should be achieved at the industrial end, emphasizing that "scientific and technological innovation achievements should be applied to specific industries and industrial chains in a timely manner, traditional industries should be transformed and upgraded, emerging industries should be cultivated and strengthened, future industries should be laid out and built, and modern industrial systems should be improved". In the ranking, "transforming and upgrading traditional industries" ranked first, highlighting its importance.
On the afternoon of March 5, General Secretary Xi Jinping, when attending the deliberation of the Jiangsu delegation at the second session of the 14th National People's Congress where he was, stressed that "the development of new quality productive forces is not to ignore or abandon traditional industries. It is necessary to prevent crowding, bubbling, and not to engage in a model" "All localities should adhere to the principle of starting from reality, setting up first and then breaking down, adjusting measures to local conditions, and giving classified guidance. They should selectively promote the development of new industries, new models, and new drivers according to local resource endowments, industrial bases, and scientific research conditions. They should transform and upgrade traditional industries with new technologies, and actively promote high-end, intelligent, and green industries.".
In the author's opinion, one of the most important tasks in the transformation and upgrading of traditional industries is a new round of large-scale equipment upgrading, with energy saving and carbon reduction, ultra-low emissions, safe production, digital transformation, and intelligent upgrading as the important direction.
With regard to strategic emerging industries and specific business opportunities for future industries, readers can focus on the Implementation Plan of New Industry Standardization Pilot Project (2023-2035) (hereinafter referred to as the Plan) issued by the Ministry of Industry and Information Technology and other four departments in August 2023.
The Plan clearly states that "new industries refer to emerging industries and future industries that have been developed and expanded by applying new technologies, which are characterized by active innovation, technology intensive and broad development prospects, and are related to the overall situation of national economic and social development and optimization and upgrading of industrial structure". In addition, the Plan also clarifies the objectives of emerging industries and future industrial standardization construction.
The eight emerging industries include: new generation information technology, new energy, new materials, high-end equipment, new energy vehicles, green environmental protection, civil aviation, ships and marine engineering equipment.
The nine future industries include: metauniverse, brain computer interface, quantum information, humanoid robot, generative artificial intelligence, biological manufacturing, future display, future network, and new energy storage.
In addition, the author believes that the cultivation of new quality productivity requires the joint promotion of six aspects, namely, "new quality cities, new quality infrastructure, new quality industries, new quality enterprises, new quality talents and new quality finance", and each of them is indispensable.
In the future, external demand will continue to pick up; In terms of domestic demand, a new round of large-scale equipment renewal and consumer goods trade in will form concrete support for private enterprise investment and residents' consumption; In addition, in the second quarter, with the acceleration of the implementation of trillions of extra long term special national debt, special debt and other incremental finance, and the continuous promotion of the "three major projects" of the new development model of real estate, the environment of "strong quantity and weak price" of the imbalance between supply and demand is expected to ease, and the market's micro subjective perception and expectations are expected to be repaired.
Only by thinking about the pattern of tomorrow from the perspective of the future, and making today's decisions based on the pattern of tomorrow, can we not be pessimistic, not confused, and grasp the long-term certainty.
(The author of this article introduces: well-known venture capital experts, financial writers, such as the general manager of capital)
