Guojin Securities Zhou Yue: Only Shanghai has a fiscal surplus in the first half?

Guojin Securities Zhou Yue: Only Shanghai has a fiscal surplus in the first half?

Source: Basic Indicators of Yuedu Bond Market[Special Topic]From mid to mid-year, 31 provinces and cities have successively announced the first half of the fiscal year ‘s “transcripts” of fiscal revenue and expenditure.In the first half of the year, only Shanghai had a fiscal balance, and the remaining 30 provinces and cities had gaps in revenue and expenditure.

So, how to understand the problem of gaps that are common in various provinces and cities?

What was the fiscal situation in the first half of the year?

There is no need to make a fuss about the local revenue gap.

The “financial imbalance” was calculated by simply using the rolling difference between fiscal receipts and checks, which was too one-sided and ignored the existence of two processes of primary and secondary distribution under the internal tax system.

Considering the fiscal balance, the focus is on the structure of the general budgetary revenue of the provinces and cities after the secondary distribution, that is, focusing on the index of fiscal self-sufficiency.

The financial situation of the provinces and cities in the first half of the year is re-examined: we supplemented the general fiscal revenue growth rate, general fiscal expenditure growth rate, and fiscal self-sufficiency index, and compared the financial situation in the first half and the first half of last year.

In the first half of the year, due to economic growth, tax cuts and fees were increased, and the fiscal revenue growth of all provinces and cities has been fully expanded. At the same time, relative expenditures under steady growth pressures have led to a large number of provinces and cities ‘expenditure growth.rise.

Summary: From the perspective of fiscal accounts, we will still be optimistic about the ability of local fiscal self-balancing, given the central government’s subsidies to local governments, the use of carry-over funds, and the arrangements for transfer of funds.

However, the trend of financial differentiation among provinces and cities needs attention.

In the first half of the year, the budget for the income was relatively fast, and the provinces and cities with excessively high growth rates of expenditures had limited space for fiscal expenditures during the year. Corresponding fixed asset investment, economic growth was under pressure, and debt risks might increase.

Risk warning: Monetary policy continues to tighten; interest rate fluctuations exceed expectations.

  First, only Shanghai has a fiscal surplus in the first half of the year?

  From the middle of the year, 31 provinces and cities successively announced the “transcripts” of fiscal revenue and expenditure in the first half of the year. Based on “general public fiscal revenue” instead of “general public fiscal expenditures,” simple rolling results showed that only Shanghai had a fiscal balance in the first half of the year.The remaining 30 provinces and cities all have problems of non-payment.

So, how to understand the gaps in revenue and expenditure that are common in various provinces and cities?

What was the fiscal situation in the first half of the year?
  1. There is no need to make a fuss about the gap in local revenue and expenditure. As early as 2017, the self-media article titled “The Truth of China’s Finance: 25 Provinces in Debt, Only 6 Provinces Have Surpluses” was screened in multiple financial media.The gap (or surplus) of fiscal revenue and expenditure in each region was calculated by comparing the difference between the national tax revenue of 31 provinces (autonomous regions, municipalities) and general public budget expenditures. The results show that fiscal revenues and expenditures of 25 provinces and municipalities existed in the first half of 2017.The shortfall is only Guangdong, Jiangsu, Zhejiang, Fujian, Beijing, Shanghai and Shenzhen (planned cities) have fiscal surpluses.

  Roughly similar, if based on the simple calculation of the public financial revenue and expenditure data of the provinces in the first half of the year, only 31 of the 31 provinces and cities have a slight surplus of 192 in Shanghai.

2 ppm, the remaining 30 provinces and cities have problems with receipts that do not resist cheques. Henan, Sichuan, Hunan, and other provinces with the greatest pressure have gaps of more than 300 billion yuan.

  However, the “fiscal imbalance” obtained by the above-mentioned two calculation methods is too one-sided, which is ultimately a misunderstanding of the budget fiscal system.

In the central and local tax sharing system, there are two processes of primary distribution and secondary distribution.

  If you only look at “one distribution”, the local local budget revenue in 2018 is only 97,904.

500 million yuan, corresponding expenditure is 188,198.

26 trillion, even considering 8,300 trillion local deficit arrangements, 12,319.

The carry-over balance of US $ 7.7 billion and the use of transferred funds still have a gap of nearly 7 trillion yen.

This gap needs to be replaced by the return of central budgets to local budgets and transfer payments, that is, secondary distribution.

  Since 1994, developing countries have implemented a tax-sharing fiscal system, and central fiscal revenue has been stable at about 50%.

In order to resolve regional imbalances, the central government still has transfer payments to local governments. In 2018, central transfers to local governments accounted for 81 of central budget expenditures.

5%.

In this way, the central government can balance resources between economically developed and less developed regions.

Generally, even provinces and cities that are recognized as economically and financially developed will receive a certain amount of subsidy income from the central government every year.

Taking Shanghai as an example, the 2017 final accounts report showed that it received 781 from the central subsidy.

600 million yuan.

  Fiscal revenues across China have been uneven since ancient times.

Whether the separation of the “political center” Changan and the “economic center” of Luoyang in the Tang Dynasty or the taxation of the Jiangnan region in the Ming and Qing dynasties accounted for 60% of the country, it is clear that “transfer payments” are inevitable.

Regardless of the natural environment, population density, transportation facilities, and concentration of logistics transaction sites, provinces and cities such as Beijing, Shanghai, Guangzhou, and Guangzhou have rich economic and profit resources, and it is understandable to contribute to the country by turning over funds.

  Therefore, when considering the fiscal balance of provinces and cities, the focus is not on measuring the gap of fiscal revenue and expenditure in the primary distribution, but on the structure of the general budgetary revenue of the provinces and cities after the secondary distribution.

根据一般公共预算收支决算平衡表可得:  一般公共预算收入+中央补助收入+其他收入=一般公共预算支出+其他支出[2]  我们建议使用财政自给率指标反映各省市财政收支情况,即Fiscal self-sufficiency rate = general public budget revenue (level budget + non-tax revenue) / general public budget expenditure.From the horizontal comparison of the data in 2018, Shanghai, Beijing, Guangdong, Zhejiang, and Jiangsu rank among the top five of the 31 provinces and cities in terms of self-sufficiency in finance, accounting for more than 74%. Provinces and cities with poor fiscal balance include Tibet and Qinghai., Gansu, Heilongjiang, etc., all accounted for less than 30%.

Most provinces and cities have a self-sufficiency rate of no more than 50%, which is a substitute for central compensation.

  2. The review of the financial status of provinces and cities in the first half of the year took into account that it is not objective to simply calculate the general fiscal revenue and expenditure gap for horizontal comparison. We believe that the comparison can fully reflect the fiscal changes of provinces and cities, that is, compare the first half of each year and the first half of last year.

Specific indicators include: general fiscal revenue growth rate, general fiscal expenditure growth rate, and fiscal self-sufficiency rate.

Growth rate of general fiscal revenue: Economic expansion plus tax and fee reductions are finally viewed from the growth rate of general public budget revenue growth in the first half of the year. Among 31 provinces, Beijing, Chongqing, Guizhou, Xinjiang, Hainan, Gansu, Qinghai, TibetEight other places showed negative growth, and another nine provinces recorded the lowest growth rates in the same period in 2012, including Beijing, Fujian, Hubei, Guangdong, Hainan, Chongqing, Sichuan, Guizhou, and Ningxia.

The top three growth rates are Shanxi, Hebei and Zhejiang.

Around the first half of last year, growth in 25 provinces and cities decreased. Only Hunan, Tianjin, Jilin, Inner Mongolia, Hebei, and Guangxi increased. The economic development momentum in Hebei in the first half of the year was good, driving general public budget revenue to increase by 12

7%, second only to Shanxi’s 12.

9%, the growth rate of the other 5 provinces and cities is mainly due to the smallest base in the same period last year, such as -12 in Inner Mongolia from the first half of last year.

8% (affected by the “squeeze” event) increased to 5.

7%.

  The growth rate of fiscal revenue in various places has been mainly affected by the downward pressure on the economy, and it has also been related to the reduction in taxes brought about by large-scale tax and fee reductions.

Since the early days, various tax reduction policies have come to fruition: a new special tax reduction method that was fully implemented in January, a significant reduction in interest rates and tax rates since April, and a gradual promotion of half-tax collection for small and micro enterprises.
  Taking Beijing as an example, the general public budget revenue in the first half of the year was 3,170.

900 million, down 2 every year.

5%; of which personal income is 286.

500 million, down 33 every year.

The tax reduction effect of the individual tax policy is the main cause of dragging down the growth rate of fiscal revenue.

  Taking Chongqing as an example, in addition to the personal income decline of more than 33%, the city’s non-tax income was affected by the fee reduction policy and the income of urban infrastructure supporting fees was transferred to the budget revenue of the fund, which fell by 19%.

2%, resulting in a decrease in the city’s fiscal revenue by 7.

8% (2 in the same period last year.

7%).

General fiscal expenditure growth rate: The counter-cyclical force situation is obvious. On the contrary, the expenditure end of each province is not affected by the reduction of fiscal revenue in the first half of the year, and the expenditure situation is obvious under the pressure of steady growth.

The growth rates of fiscal expenditures of all 31 provinces and cities are all positive growth, of which 20 provinces and cities have reached the number of countries, and Guizhou, the number one, even reached 21.

4%.

Around 2018, the growth rate of fiscal expenditures of the 20 provinces and municipalities in the first half of the year increased, reflecting from the side that the local governments are more enthusiastic about actively developing financial resources in response to economic growth and employment pressure.

  However, there are also 11 provinces and municipalities whose fiscal expenditure growth rate did not rise but fell during the same period last year, mainly due to income-side pressure.

Taking Shanghai as an example, fiscal revenue growth in the first half was only zero.

1%.

First, economic growth, especially industrial growth indicators, and second, tax and fee reduction efforts continue to increase. It is estimated that additional tax and fee reductions will increase by approximately 183.5 billion, affecting approximately 75.2 billion local public budget revenue in Shanghai.Considering the balance of income and expenditure budget, it is not difficult to understand the breakdown of expenditure growth rate.

Fiscal self-sufficiency rate: Except for Shandong, the overall decline is proportional to the horizontal comparison of fiscal revenue and expenditure gaps. We are more concerned about the degree of fiscal self-sufficiency.

Approximately in the first half of last year, only the fiscal self-sufficiency rate in Shandong Province increased by 1 percentage point, and the self-sufficiency rate in the remaining 30 provinces and cities fell across the board, typically in Beijing, Guizhou, Chongqing and other places, with a decline of more than seven.

At the same time that the growth rate of fiscal revenue has fallen, the forward tilt of fiscal expenditure has led to faster expenditure in the first half of the year, which is the key to the decline in self-sufficiency.

  Taking Henan Province as an example, the general public budget revenue from January to June was 2,147.

500 million US dollars, accounting for 53 of the current budget.

4%, an annual increase of 6.

3%, while the expenditure was 6,137.

600 million, reaching 67 to adjust budget arrangements.

5%, an annual increase of 12.

8%.
In terms of time progress, income lags far behind expenditure growth, resulting in a gradual decline in self-sufficiency rate2.
1 average.

  3. Summary: What do you think about the second half of the year?

  In the first half of the year, due to economic growth, tax cuts and fees were increased, and the fiscal revenue growth of all provinces and cities has been fully expanded. At the same time, relative expenditures under steady growth pressures have led to a large number of provinces and cities ‘expenditure growth.rise.
If we simply use the general budget revenue and expenditure margin, only Shanghai has a fiscal surplus in the first half of the year, and the financial self-sufficiency rate of 30 provinces and cities has declined.

From the perspective of financial accounts, considering the central government’s subsidies to local governments, the use of carry-over funds, and the arrangement of transferred funds, we are still very optimistic about the local and local fiscal self-balancing capacity[4].

  However, the financial differentiation of provinces and cities may become a core issue for the market in the second half of the year.

Judging from the current statements, some provinces will still work hard to achieve the early budget goals, some will vigorously reduce general expenditures, and some have already considered lowering their initial budget goals.

Taking Shanghai, which has a good financial base, as an example, it is clear that the government’s general government expenditure reduction, which has already been implemented, will be reduced by 5% to more than 10%.

Strictly control supplementary budgets, never increase budgets, and generally do not introduce policies to increase current expenditures.

[5]  因此,在不考虑增加地方财政赤字的前提下,上半年收入下滑较快、支出增速过高的省市(典型的如贵州省)年内财政支出空间有限,相应的固定资产投资、Economic growth is under pressure to challenge and needs to focus on the possibility of rising debt risk.

  注:  [1]新闻来源:https://www.One color.

com / news / 5334430.

html.

  [2] 这里的其他收入主要包括地方债务收入、结转结余和调入资金使用,相应的,其他支出包括地方债务还本支出、补充预算稳定调节基金和结转下年支出.

  [3]The statistical caliber of Jilin data is from January to April, the same below.

  [4] 详细分析见报告:《财政能否更积极?Expected infrastructure development?

“(July 28, 2019).

  [5]News source: https: // finance.

Sina

com.

en / china / 2019-07-24 / doc-ihytcerm5782021.

shtml.

  Second, the real economy observation 1. Demand is weak, production is weak, oil prices continue to decline, demand-side real estate transactions have fallen, automobile sales have weakened, and total demand has come under pressure.

The real estate policy adheres to the “no housing and speculation” positioning, and real estate financing has tightened. The sales area of commercial housing in 30 large and medium cities this week has shrunk significantly, which is -5.

4%, a year of -7.

6%, the demand for commercial housing weakened.

Regarding the supervision of commercial housing, the government’s supervisory departments mainly include: “Don’t use substance as a means to stimulate the economy in the short term” during the Politburo meeting in July, the “Circular 23” of the CBRC, and the CBRC to discuss trusts, restricting financial institutions from illegally real estateThe provision of funds by enterprises, etc., will lead to the contraction of commercial housing. Subsequently, due to economic growth expectations, the sales of commercial housing may continue to decline.

With the policy disturbance to car sales subsided, until July 28, the average weekly retail volume of passenger cars was 43.

550,000 vehicles, down 14 from the previous week.

25%, at least 4 weeks in July can be negative.

(Note: The latest data of passenger car sales in August is not available.) The average daily coal consumption at the production end fell month-on-month, shrinking for 18 consecutive weeks and showing a volatile trend.

Blast furnace operating rate is still weak for ten years.

The average daily coal consumption of the six major power generation groups this week was -8.

9%, the annual decline narrowed to -11.

7%, running in the negative range for 18 consecutive weeks. In the process of changing the development model and adjusting the industrial structure, the industrial electricity consumption that accounts for the total electricity consumption will gradually decrease. Considering the clearing of the old economy and the cultivation of a new economyBackground, the average daily coal consumption for power generation is reduced or refracts the economic structural transformation.

Fluctuations in electricity consumption caused by weather and other reasons are just disturbance factors.

The blast furnace started reconstruction this week.
48%, up 3 from the previous month.

29%, one year from negative to positive.
The blast furnace operating rate was the second low of 66 during the transition period in mid-July this year.

After 0%, it recovered for 4 consecutive weeks, indicating that industrial production continued to repair marginally.

At present, domestic economic activity is weak, trade frictions are intensifying, and the global economy is weakening, and the blast furnace operating rate may fluctuate.

  In terms of industrial product prices, the escalation of trade disputes has impacted industrial product prices. The domestic South China industrial product price index has fallen sharply for two consecutive weeks, and has decreased by nearly 3% from the previous week to 2,219. The international CRB spot index has increased from a decline to 448.

72, up 1 week on week.

50%.

; This week the Myspic steel price index closed at 141.

38, down 1 from the previous month.

83%. In July, the PPI entered a negative range. The market demand was subdivided. The production and operation activities of enterprises declined. The procurement activities of steel mills were shrinking. The profit of steel enterprises was extended. This week, the average national cement price closed at 471.

68 yuan / ton, down slightly from the previous month.

35%.

The short-term impact of the cement industry, such as periodic rain, has entered a relatively low season. Cement prices have fallen in some areas, but factors such as the impact of the trade war and the increasing downward pressure on the domestic economy may trigger the strength of policies in new infrastructure and make up for shortcomings.Cement industry.

Crude oil prices continued to fall under the escalation of the trade war and the impact of increased external risks. The settlement price of Brent crude oil futures closed at 58 this week.

$ 53 / barrel, down 5 from the previous month.

43%.

  2. Price: The price of pork continues to rise, the price of eggs rises, and the price of fruits and vegetables declines. In terms of food prices, affected by African swine fever, pork supply is tight, and pork prices continue to rise, rising month-on-month.

59% to 25.

38 yuan / kg, pork prices have risen for 10 consecutive weeks since June, pork prices may be an important factor in driving inflation in the second half of the year; vegetable prices have fallen against the trend, and the agricultural product wholesale price 200 index (fresh vegetables) has dropped to 109 for 3 consecutive weeks。
86; The average wholesale price of 7 key monitoring fruits this week was 6.

82 yuan / kg, down 2 from the previous month.

57%, 7 consecutive weeks of decline; as laying hens are at a standstill, egg production has decreased and egg prices have rebounded. Since July, the average weekly increase in egg prices has been 2.

39%, current price is 9.

50 yuan / kg.

CPI 2 in July.

8%, slightly higher, the rise of food items, especially pork, is the main cause of the CPI. Currently, the impact of African swine fever has continued to this day, and there is an upward phase of the existing pig cycle. Pork supply continues to be insufficient in the second half of the year. PorkPrices still have room to rise.

Egg prices may have an impact at some point in the future.

  III. Liquidity Tracking 1, Funding: Transitional monetary policy “Stand-by force” Issuing and issuing three-month bills of US $ 5 billion this week has been converted into a view that the current banking system’s liquidity can be reasonably adequate, and no reverse repurchase has been conducted this weekOperation, open market operation net investment of -5 billion yuan.

It is initially shown that the monetary policy is still strong, and targeted liquidity is “precision drip irrigation”, and it is more determined not to engage in “flood flooding.”

Due to the escalation of the trade war, the RMB exchange rate against the US dollar depreciated slightly this week.

59% closed at 7.

052 (closed last week at 6.

94).

In the short term, the trade situation will be the main factor affecting the RMB exchange rate.

Affected by the trade war and the US economy in the short term, the US dollar index fell 0.

51 to 97.

57 (closed last week at 98.

08).

  2. Money market: SHIBOR overnight and weekly interest rates are generally downward for 3 consecutive weeks under interest rates. Among them, SHIBOR: overnight interest rates have fallen by 3 from the previous week.
8 bp to 2.

60%; SHIBOR: 1 week before the interest rate fell 0.
3 bp to 2.

64%.

Regarding the repurchase rate, R007 showed a downward trend this week and was 2 on Friday.

63%, down 5 from last week.

87 basis points; DR007 re-averaged to 2 on Friday.

63%, down from last week.

82bp.

  3. Interbank certificates of deposit: the repayment amount is huge, the net financing amount is negative, the issue interest rate rises and falls, and the scale of interbank deposit and issuance has expanded this week, but due to the huge total repayment amount, the single net financing amount is negative.

This week’s circulation is 4652.

200 million yuan, an increase of 1212 per week compared with last week.

600 million yuan, the total 杭州桑拿网 repayment amount is 1768.

At 23 trillion, the final net financing amount was recorded at -338.

6.7 billion.

This week’s interbank certificates of deposit issuance interest rates have risen and fallen, of which the one-month interbank certificates of issue issuance rate increased by 10.

63 bp to 2.

77%, the 3-month interbank deposit issue rate fell by 7.

98 bp to 3.

07%, the 6-month interbank deposit certificate issue rate fell by 3.

88 bp to 3.

30%.

  Fourth, the interest rate bond market review 1. Primary market: interest rate bond issuance rebounded, national debt growth increased, and net financing increased. This week, interest rate bond issuance increased, especially national bond issuance scale increased, local bond issuance decreased slightly, and government bondIssuance has picked up.

3031.

3.3 billion yuan (1789 last week.

01ppm), its China debt issuance increased significantly to 1423.

3 billion yuan (102 last week).

30ppm), local bond issuance was slightly reduced to 790.

4.3 billion yuan (1006 last week.

71 ppm), and government bond issuance increased slightly to 769 this week.

1ppm (68 billion yuan last week).

Interest rate bonds mature this week at 1009.

05 trillion US dollars, the maturity pressure changed from last week, the net financing amount rose significantly to 2022.

2.7 billion.

There is no key term government bond bid this week, and the long-term bidding interest rate of CDB bonds has slightly increased.

2. The secondary market: the interest rate curve has steepened This week, the interest rate debt yield curve has been aligned downward, and the yields of government bonds, local bonds and CDB bonds have mostly fallen.

As external trade frictions intensify, with increasing downward pressure on the domestic economy and tightening land policies, pessimistic expectations of the market for the economy, reduced funding risks, and continued inflows of foreign capital, these factors are conducive to interest rate debt.

The interest rate curve of the secondary market generally continues to decline this week. The 1-year, 5-year, and 10-year maturity yields of national bonds are weekly changes of -2.

97bp, -3.

66bp, -6.
98bp; local bonds have one-year, five-year, and ten-year maturity yields that are weekly changes -5.

79bp, -4.
66bp, -3.

98bp; 1-year, 5-year, and 10-year maturity yields of CDB bonds are weekly changes -3.

4bp, -5.

87bp, -6.

17bp.

  V. Risk warning: Monetary policy continues to tighten; interest rate fluctuations exceed expectations.

  Editor’s note: Slightly abridged here.