20180601-兴业研究-Private_Investment_Rose_Amid_Structural_Deleveraging_9页_761kb

Private Investment Rose Amid Structural Deleveraging Summary

Core Content

The document discusses the impact of China's structural deleveraging policy on private investment, particularly in the context of declining investments by local governments and state-owned enterprises (SOEs). It highlights how this policy shift may create opportunities for private sector growth and outlines the trends in investment across different sectors.

Main Views

• Structural Deleveraging Policy: The Chinese government has prioritized structural deleveraging, focusing on reducing debt levels among local governments and SOEs. This policy was introduced during the Communist Party Politburo meeting on April 2, 2018.
• Trend Divergence: There is a noticeable divergence in the asset-liability ratio trends between SOEs and private enterprises in 2018, indicating a shift in investment behavior.
• Impact on Investment Growth: The structural deleveraging has slowed down SOEs' fixed asset investment (FAI), while private enterprises' investment has shown an upward trend, particularly in the manufacturing sector.
• Private Investment as a Key Driver: Private investment has become a significant driver of the rebound in manufacturing FAI, contributing 1.1 percentage points to the overall growth during January to April 2018.
• PPP Projects and Private Investment: The State Council's guidelines from September 15, 2017, aimed at boosting private investment in public-private partnership (PPP) projects in infrastructure and public utilities sectors have led to rapid growth in private investment in these areas.
• No Clear Correlation in Local Government Investment: Despite the focus on deleveraging, there is no obvious correlation between local governments' debt ratios and their infrastructure investment growth rates, suggesting that the impact of deleveraging on local government investment is not yet clear.

Key Information

• SOEs' Leverage Ratio: The leverage ratio of SOEs is as high as 59.5%, slightly lower than that of collectively owned enterprises.
• Sectoral Investment Trends:
  • Property investment edged down slightly.
  • Infrastructure investment slid.
  • Manufacturing FAI rebounded.
• Government-Owned Assets in Manufacturing Sectors: The share of government-owned assets in sectors like clothing, entertainment, and textiles is relatively small, which may explain the rebound in private investment.
• Correlation Analysis: There is a broadly negative correlation between the investment growth rate in a manufacturing sector and the percentage of government-owned assets in that sector.
• Time Periods:
  • The macro-economic leverage ratio growth has been slowing since March 2016.
  • From January to April 2018, private investment in manufacturing increased by 6%.
• Policy Impact: The deleveraging policy has created an environment where private investment can thrive, especially in manufacturing and infrastructure sectors through PPP initiatives.

Figures and Data Sources

• Figure 1: China's non-financial sector debt as a percentage of GDP (Source: Wind, CIB Research)
• Figure 2: Asset-liability ratio by the nature of ownership (Source: Wind, CIB Research)
• Figure 3: Divergence in SOEs' and private enterprises' asset-liability ratio trends in 2018 (Source: Wind, CIB Research)
• Figure 4: Deleveraging has weighed on SOEs' investment (Source: Wind, CIB Research)
• Figure 5: Divergence in FAI growth rates (Source: Wind, CIB Research)
• Figure 6: % of government-owned assets in total assets of each sector (end-2015) (Source: Wind, CIB Research)
• Figure 7: Investment growth rates and % of government-owned assets in total assets in manufacturing sectors (Source: Wind, CIB Research)
• Figure 8: Private investment becomes a key driver behind manufacturing FAI rebound (Source: Wind, CIB Research)
• Figure 9: Contribution of private investment to the growth rate of overall manufacturing FAI by sector (Source: Wind, CIB Research)
• Figure 10: Rapid growth of private investment in infrastructure and public utilities sectors (Source: Wind, CIB Research)
• Figure 11: Local governments' debt ratios in 2017 (Source: Wind, CIB Research)
• Figure 12: No clear correlation between a local government's debt ratio and its infrastructure investment growth rate (Source: Wind, CIB Research)

Legal Disclosures

• Disclaimer: The report is based on reliable information but does not guarantee accuracy or completeness. It is for informational purposes only and does not constitute an offer to buy or sell securities.
• Liability: Neither CIB Research nor the original writer accepts liability for any losses arising from the use of the report.
• Opinion Change: Opinions, speculations, and forecasts in the report are subject to change without further notification.
• Interests Disclosure: CIB Research may have positions in or provide investment banking services for companies mentioned, which could affect the objectivity of the report.
• Copyright: The report is copyrighted by CIB Research, and unauthorized use is prohibited.

Conclusion

The structural deleveraging policy in China, focusing on local governments and SOEs, has created a favorable environment for private investment. This is evident in the rebound of manufacturing fixed asset investment and the growth of private investment in infrastructure and public utilities sectors through PPP projects. However, the impact on local government investment remains unclear, with no significant correlation between debt ratios and infrastructure investment growth. Investors are advised to conduct their own analysis and consult professional advisers before making investment decisions.