The last week of September will be an important node for stable investment in the fourth quarter.

 The last week of September will be an important node for stable investment in the fourth quarter.

After the Congress allowed special debt funds to be used as capital for major projects and defined major infrastructure areas, different policies were adopted for major projects landing.

On September 21, the General Office of the Guangdong Provincial Government announced that Ma Xingrui, the governor of Guangdong Province, had chaired a standing meeting of the provincial government to study and set up the provincial headquarters of major construction projects and the reform of the division of financial powers and expenditure responsibilities between provincial and municipal governments in the field of science and technology.

At the same time, Guangdong local debt declaration work has been carried out intensively.

According to wind data, 11 places, such as Hunan and Hubei, rushed to issue a total of 161.096 billion yuan of local debt on September 23-27 in order to catch the last train of new issuance this year.

Send it ahead of schedule with little suspense

In fact, the completion of the issuance of local debt by September is a firm fact.

On September 18, the Ministry of Finance released the national data on the issuance of local debt. According to the data, as of September 1, a total of 966 local government bonds were issued by 37 provinces, municipalities and municipalities in China, with a total bond size of 39626 billion yuan. The issuance of new local government bonds has completed 94% of the new local government bond quota for the whole year. At the same time, more than 21 provinces including Beijing, Guangdong, Shanghai, Zhejiang and Jiangsu have used up the new quotas for the whole year.

There is a time lag between the issuance and use of local debts and the formation of physical workload. By the end of September, the remaining amount of special bonds will be fully issued, which is expected to be an important force for stabilizing investment in the fourth quarter.

From this years progress of issuing local bonds is obviously faster than that of previous years. From the end of September to the end of the year, the issuance tasks of local bonds have basically been completed, which is about a quarter ahead of previous years. This is mainly related to the guidance of central policy and the increase of investment by local governments. It will play an important role in responding positively to the downward pressure of the economy. Yang Zhiyong, a researcher at the Institute of Financial Strategies of the Chinese Academy of Social Sciences, pointed out in an interview with TIME Weekly that the pre-issuance of local debts is a manifestation of the positive fiscal policy. Money spent in January is not the same as that spent in December, which is why the regular session of the State Council emphasized that the new quota for next years special debt should be issued ahead of schedule as required.

At the end of December 2018, the Standing Committee of the National Peoples Congress authorized the State Council to issue in advance the new local government debt limit for the next year within 60% of the new local government limit in 2019-2022. According to this calculation, the new local government debt limit in 2019 is 3.08 trillion yuan, so the local government debt limit in 2020 that can be issued in advance in 2019 will not exceed 1.86 trillion yuan.

From the implementation in 2019, the pre-issuance of local debt has indeed brought a very significant improvement in accelerating the project launch. A person close to the financial system told TIME Weekly that this year in Guangdong Province, for example, many major projects have basically completed the preliminary procedures in the first quarter and are ready to launch, while in previous years, this time is still doing the local debt issuance plan.

Finding out the Big Local Debt Project

According to media reports, with the possibility of early issuance of new local debt in 2020 increasing, the National Development and Reform Commission is also conducting a thorough investigation of major local projects: according to sources, in order to implement the requirements of stable investment of the State Council, the local government reported some new projects of special debt in 2020.

At present, the National Development and Reform Commission (NDRC) is trying to find out whether the reported projects can be used in advance and be effective. It is clear whether these projects meet the requirements of physical workload, whether they can be used as capital and whether they are major projects.

In fact, since June this year for the first time specified that special debt can be used as capital for major projects, although a number of debt-loan portfolio projects have emerged intensively, but special debt as capital projects are not many, its role in investment leverage is not as high as the market expected.

At present, there are different reasons for the blockage of infrastructure projects in different areas. The head of a public utility company in a city in Guangdong told TIME Weekly that, on the one hand, some economically underdeveloped areas may not be able to solve the problem of supporting funds even if they issue debts, while some relatively well-off areas may have idle funds.

This is also the important reason why the National Assembly on September 5th emphasized that funds should follow projects.

The idleness of funds and the collusion of funds do exist. In an interview with the media, Zhang Yu, an expert on PPP of the National Development and Reform Commission, said that in view of the problems of idle funds and collusion of funds in some places, as well as the inadequate use of local debts, the regulatory authorities urged local governments to form physical workload as soon as possible. In fact, they encouraged special debts to be used preferentially in construction projects and new projects. At least in the early stage, the procedures should be complete so as to make the investment effective.

The data we have reported are closely related to infrastructure projects and the issuance of local debt in the coming period. Relevant persons in charge of the above-mentioned financial system told TIME that to improve the efficiency of the use of local debt, on the one hand, it is necessary to compress the administrative process from issuance to final allocation; on the other hand, it is necessary to consider ensuring that good steel is used on the blade to avoid fund precipitation.

Accelerate project landing

At the capital side, the issuance of new local bonds is sprinting with all efforts, while at the project side, there are many major infrastructure projects with intensive start-up period:

On Sept. 16, 29 key transportation projects in Sichuan Province, including 8 Expressway projects, 21 national and provincial trunk lines and red tourism highway projects, were launched with a total investment of 18.8 billion yuan.

On September 12, the first batch of key projects in Lingang New Area of China (Shanghai) Free Trade Pilot Zone were signed and started, with a total investment of more than 11 billion yuan in 23 projects.

Whether projects are mostly concentrated in emerging industries, highlighting the characteristics of strong investment intensity, close industrial chain links, or the accelerated release of investment demand behind the accelerated start of projects, all reflect the coming fourth quarter, when the state ministries and local governments jointly press the fast-forward key of stable investment: on the one hand, to promote. On the other hand, on the basis of groping, it systematically combs the list of major projects, studies financing schemes, and speeds up the project launching cycle.

The key to an active fiscal policy is to spend money. If only the project of issuing debt has not landed in the end, it can not be called an active fiscal policy. Yang Zhiyong pointed out to TIME Weekly.

Yang Zhiyong also said that the key to this round of stable investment lies in mobilizing the enthusiasm of all parties through government investment, especially investment representing the future direction of industry, which not only has short-term stable investment effect, but also has long-term significance.

Source: Responsible Editor of Times Weekly: Chen Hequn_NB12679