Improving the quality of county construction and enhancing the comprehensive service capability for the county plays a very important role in promoting new urbanization and rural revitalization with people as the core. On May 8, 2022, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council issued the "Opinions on Promoting Urbanization Construction with County Towns as an Important Carrier", providing new directions and ideas for expanding domestic demand and boosting investment. At this time, the promotion of county construction stems from the mining of investment carriers under the policy consensus of stable growth of infrastructure. 

The "Opinions" clarified that the construction of county towns involves five aspects: cultivating characteristic and advantageous industries, optimizing municipal facilities, strengthening the supply of public services, improving the quality of the living environment, and promoting the connection and complementation of county and rural functions. According to the Bureau of Statistics, in 2020, the completed investment in municipal public facilities in counties in China is 388.4 billion yuan, accounting for about 0.7% of the total investment in fixed assets in the whole society. Now to solve where the money comes from, tools such as special government bonds and PSL are worthy of attention. The agency interprets it as follows:

1. Why are you promoting the construction of the county seat at this time?

In the long run, the growth of infrastructure investment has been sluggish in recent years and has become a shortcoming on the economic demand side. Behind this, problems such as difficulty in project mining, insufficient supporting funds and local incentive mechanisms need to be solved. In the short term, the economy has faced "triple pressures" since the second half of 2021. In early 2022, two new challenges, such as the conflict between Russia and Ukraine and the recurrence of the epidemic, need to continue to increase counter-cyclical adjustment. In this context, from the 2021 Central Economic Work Conference's proposal of "moderately advanced infrastructure investment" to the special discussion of "comprehensively strengthening the infrastructure system" at the Finance and Economics Committee meeting at the end of April, the policy consensus on stable growth of infrastructure has been condensed. "County Town Construction" and "Urban Renewal" are all established projects in the "14th Five-Year Plan", and early pilot projects have been launched in 2020, and the promotion at this time is appropriate.

2. What does the county construction do specifically?

The "Opinions" clarified five aspects of county construction, cultivating characteristic and advantageous industries, optimizing municipal facilities, strengthening the supply of public services, improving the quality of the living environment, and promoting the connection and complementarity of county and rural functions. From the perspective of projects, 1) industries include industrial supporting facilities, trade and logistics networks, consumer infrastructure, etc.; 2) municipal facilities include transportation facilities, flood control and drainage and disaster prevention and mitigation facilities, renovation of aging pipe networks, renovation of old communities, and digital renovation etc.; 3) Public service infrastructure includes medical and health care, schools, nursing and childcare places, cultural and sports facilities, etc.; 4) Environmental quality infrastructure includes historical landscape protection, ecological green space system, green building, garbage and sewage treatment system; 5) County The connection between townships is mainly the extension of infrastructure to the countryside, such as the extension of the pipeline network, the medical and health community, the urban-rural education complex, and the county and township elderly care service network.

3. How big is the infrastructure space in the county?

Comparing county towns and cities, 1) In terms of population, by the end of 2021, China's urban permanent population will be 910 million, of which county towns (including county-level cities) will be around 250 million, accounting for about 27% of the total urban population; 2) Economic In terms of quantity, the county seat accounts for about 40% of the national GDP; 3) In terms of consumption, the per capita consumption expenditure of the county seat is about 2/3 of that of the city, accounting for about 20% of the total urban consumption expenditure; about 1/2 of the total municipal investment in cities and towns, accounting for about 15% of the total municipal investment in cities and towns. According to the Bureau of Statistics, in 2020, the investment in municipal public facilities in counties in China will be 388.4 billion yuan, accounting for about 0.7% of the total investment in fixed assets of the whole society. Among them, roads and bridges (36%), landscaping (15%) and drainage ( 15%) investment accounted for a relatively high proportion, totaling nearly 70%.

4. Where does the money for county construction come from?

The "Opinions" require that for public welfare projects, increase the investment of local financial funds. Eligible projects can be supported by investment in the central budget and local special bonds; for public welfare and business projects, banks, especially development policy financial institutions, are encouraged to increase Medium- and long-term loans are provided to support enterprises in issuing special corporate bonds for new-type urbanization in county towns. It also supports PPP, infrastructure REITs, the participation of central enterprises, the integration and utilization of existing platform companies, and the revitalization of state-owned stock assets. At the same time, the "Opinions" still emphasize the need to prevent local government debt risks. Considering the current situation, first, it is necessary to continue to increase fiscal transfer payments, and the key is to expand financial resources. Second, the central bank needs to provide policy tools to encourage financial institutions to sink county projects. The Politburo meeting in April proposed to quickly plan for incremental policy tools, especially the national debt, PSL and other tools worthy of attention.

Expert interpretation of the main points of the meeting:

1. The new urbanization plan issued in 2014 will expire in 2020, and a new version of the urbanization plan will be issued at the end of 2021. Under this background, the relevant policies of the urbanization system have been adjusted, and the subsequent urbanization will be divided into two. At different levels, the urbanization of central cities is developing steadily, and the urbanization of county towns has a balanced effect, and the urbanization of county towns has a lower cost, more stability, and more resilience. Under the foreshadowing of the previous policies such as making up for shortcomings in the county and 120 county demonstrations, the urbanization of the county has played a comprehensive and strengthened role.

2. This document has five highlights. First, the thinking and starting point are people-centered, from satisfying people's housing and employment in the county seat to expanding domestic demand and then adapting to rural revitalization. The second is to emphasize classified development, dividing county towns into four categories, and also mentioning the transformation and development of counties with population loss. The third is to cultivate industries to achieve stable employment and improve supporting facilities. Fourth, the color of construction is more obvious, including four aspects of facility construction. Fifth, the implementation of policies revolves around people, money, and land, most of which are existing policy expressions.

3. The follow-up will rely on the 120 demonstration counties in the early stage to supplement some individual county towns. At the same time, the construction of provincial demonstration counties will be promoted simultaneously, as the key development of demonstration areas. The proportion of counties with population loss is not large, about 10%-15%. If it is difficult to reverse the trend of population loss, it is possible to build schools and university branches in the short term.

4. Combined with the stable growth environment in 2022, the increase in the follow-up infrastructure construction in this document is mainly in the aspect of municipal facilities, of which the potential of transportation facilities is not particularly large, flood control and drainage, disaster prevention and mitigation, aging pipe network renovation, pension, cultural and sports , the environment has a relatively large investment potential, and it will play a significant role in stimulating investment during the 14th Five-Year Plan period, and it is a good supplement to the existing major projects. Keywords: infrastructure, infrastructure construction, domestic engineering news, planning and investment

5. This document does not mention the issue of real estate, but through the construction of facilities in several aspects, the attractiveness of the county can be improved to a certain extent, and it has a good promotion effect on the destocking of real estate, but the promotion effect for different counties is Differentiation depends on factors such as the degree of urbanization and inventory level. Editor / Xu Shengpeng