Trillion national debt to boost the infrastructure commercial vehicle industry to meet new opportunities for development


Li Yanan


Driven by favorable policies, the commercial vehicle market is expected to usher in new opportunities.


Recently, the sixth session of the Standing Committee of the 14th National People's Congress voted to pass the resolution of the Standing Committee of the National People's Congress on approving The State Council's plan to increase the issuance of government bonds and the adjustment of the central budget in 2023, specifying that the central government will issue an additional 1 trillion yuan of government bonds in 2023 in the fourth quarter of this year. It is reported that the additional national bonds issued this time are all arranged to local governments through transfer payments, focusing on supporting post-disaster recovery and reconstruction and making up for the shortcomings of disaster prevention and relief. Of this, 500 billion yuan will be allocated this year and 500 billion yuan will be carried forward to next year.


Once the heavy policy was released, it triggered a high degree of concern in the commercial vehicle industry. In the view of the industry, with the "new" of trillion national debt, domestic infrastructure investment projects will accelerate, thereby driving the recovery of demand for construction vehicles. However, it should be noted that it takes time for the policy effect to be transmitted to the market level, and the sales of engineering vehicles are expected to gradually increase next year.


Infrastructure will probably pick up speed


China has issued three special government bonds, in 1998, 2007 and 2020. In general, the issuance of special national bonds generally has a specific historical background, and this additional issuance of special national bonds also has its "special" features, and the direction is very clear, with the goal of post-disaster recovery and reconstruction and making up for the shortcomings in disaster prevention.


According to the Ministry of Finance, the funds will focus on eight major areas: Post-disaster recovery and reconstruction, key flood control projects, projects to improve natural disaster emergency capacity, other key flood control projects, construction and renovation of irrigation areas and key soil erosion control projects, actions to improve urban drainage and waterlogging prevention capabilities, key projects to build a comprehensive natural disaster prevention and control system, and construction of high-standard farmland in Northeast China and the disaster-stricken areas of the Beijing-Tianjin-Hebei region.


In order to promote the accurate and effective use of funds, the additional issuance of national debt funds are all managed according to the project, requiring that "funds and elements follow the project." According to the plan, in the next step, the National Development and Reform Commission and the Ministry of Finance will work with relevant parties to actively do a good job in the implementation of the project of increasing the issuance of national debt, pay close attention to the establishment of a working mechanism, guide local governments to increase the promotion of projects, ensure that newly started projects start construction as soon as possible, and the projects under construction will form a large physical workload this year and next.


The person in charge of a heavy truck enterprise believes that the trillion national debt is the real funds issued by the state to local governments, and the repayment of principal and interest are responsible for the bottom of the central government, which can effectively reduce the financial burden of local governments, alleviate the pressure on the balance of local financial revenues and expenditures, so that they have more funds to support infrastructure construction, which will have a positive impact on the infrastructure field. At the same time, the investment of funds to accurately focus on eight aspects such as post-disaster recovery and reconstruction, it can be seen that infrastructure will once again become the focus of stable growth policy. Driven by this, China's heavy truck industry, especially engineering heavy trucks, is expected to further recover.


In addition, it is worth noting that the central government raised the special debt limit issued in advance in 2023 again to 60%, reaching 2.7 trillion yuan (general debt 0.43 million yuan, special debt 2.28 trillion yuan), plus the national debt a total of 3.7 trillion yuan, such a huge incremental fund supply will strongly support major domestic infrastructure projects and the development needs of various fields. With the new projects and funds gradually in place, it is expected that next year will be the main year for the formation of physical workload, and the growth rate of infrastructure investment will be increased next year.


It is expected to stimulate the market demand for construction vehicles


Under the catalysis of the "steady growth" goal and the favorable policy of trillion national debt, China's infrastructure investment will continue to grow, and its related engineering vehicles and special vehicle industries are expected to benefit from this rising cycle.


In recent years, due to the contraction of domestic demand, weakening expectations and other factors, many engineering construction projects have stalled or delayed, resulting in poor performance of the engineering special vehicle market. Taking concrete mixing trucks as an example, their sales have been hit hard and market demand has been greatly reduced. Industry data show that in the first half of this year, the cumulative sales of concrete mixing trucks were less than 10,000, down nearly 30% year-on-year. In contrast, the heavy-duty dump truck market performance is also less than expected, has been in a low state of operation. From January to September this year, the cumulative sales volume of domestic heavy dump trucks was 38,900, an increase of 5%.


"The sales volume of engineering vehicles is positively correlated with the growth rate of domestic fixed asset investment. Since the beginning of this year, although the state has introduced policies such as lowering the reserve ratio, cutting interest rates, liberalizing the property market purchase limit, promoting the stock market, and other policies, there are also some major projects signed or started across the country, but the overall gap with expectations is large, from the performance of each market segment of the engineering vehicle, the boost is not obvious." Ren Shifa, an expert in the commercial vehicle industry, pointed out that the central government announced an additional issue of 1 trillion yuan of special Treasury bonds, mainly for infrastructure construction such as water conservancy, not only a large amount of capital investment, but also stressed that the construction speed of the project should be fast, even some major projects with more complex preliminary work, in principle, should not be later than the end of June next year. This will play a strong supporting role in the construction truck market, especially the new energy mixer market segment.


In this regard, many construction vehicle manufacturers said that the issuance of trillion national debt to promote infrastructure acceleration will stimulate the market demand for downstream industries such as construction vehicles, which is undoubtedly a big positive for the entire heavy truck industry. However, it will take a process for the policy stimulus to be transmitted to the market level, and it is unclear whether it will be reflected in sales in the final months of the year. Therefore, the growth of construction vehicle sales in 2023 has a certain uncertainty, and the policy effect is expected to appear in the beginning of 2024 at the earliest.


Commercial vehicle enterprises should actively seize the opportunity


As the "ballast stone" of national macroeconomic operation, infrastructure investment has always played an important role in stimulating market vitality. Nowadays, with the continuous improvement of the start-up rate of infrastructure projects, it will help the domestic economy stabilize and rebound, and it will also give rise to the demand for the use of dump trucks, muck trucks and mixing trucks, and the domestic construction truck market is expected to usher in marginal improvement, or it will become a new incremental market for the commercial vehicle industry. For heavy truck manufacturers, how to grasp the policy opportunities and achieve their own breakthroughs is an important issue they are facing.


Some senior people in the industry believe that in addition to giving full play to their own advantages and actively tapping the potential of domestic demand and external markets, the coping strategies of heavy truck companies need to be targeted. It is not difficult to find that the policy mainly focuses on the affected areas and flood control projects, and the national debt funds are invested in the northeast and the Beijing-Tianjin-Hebei region, which are more severely affected. At the same time, different provinces get different amounts of local debt, and the key projects in each region are not the same. Therefore, whether it is in the launch of new products or service marketing, heavy truck enterprises should seize the hot regional market of engineering vehicles, so as to achieve sales increase.


Not only that, in the construction of modern infrastructure systems, from villages to towns, from small projects to large projects, the engineering transportation market needs more subdivided and professional engineering vehicles. In addition, with the gradual advancement of the national "double carbon" goal, energy saving, emission reduction, low-carbon environmental protection has become a new direction for the development of engineering special vehicle industry. Since the beginning of this year, various localities have intensively released favorable policies related to new energy engineering vehicles, and it is expected that the market of new energy engineering vehicles will maintain a stable growth trend in the next few years. Therefore, commercial vehicle enterprises should adhere to market orientation and scenario-driven, consolidate technical strength while absorbing new market demand, seize the commanding heights of development on various technological routes of new energy, carry out targeted development for subdivisions, and constantly introduce models that are more in line with market development needs.


Originally published by China Automotive News on November 14, 2023