Recently, the sudden bankruptcy of New Third Board-listed company Laishenglong shocked the public. Laishenglong, a company mainly engaged in manufacturing drones, had sales revenue of 200 million yuan and net profit of over 10 million yuan last year, but suddenly abandoned operations a few days ago. This has given construction machinery enterprises a sense of shared fate, and many small and medium-sized enterprises with poor risk resistance have fallen into panic.
　　The editor believes that construction machinery enterprises need not panic. Let's first look at the trend of national policies and infrastructure.
　　For a long time, the development of construction machinery enterprises has been largely attributed to the influence of national policies and infrastructure trends. Recently, because the mechanical operation rate has not performed as expected, local government deficits have significantly led to weak consumption of infrastructure, and industry insiders are more cautious about the subsequent development of the industry. However, like a thunderclap, the government's policy of vigorously developing infrastructure and the continuous rise in calls for tax cuts have given small and medium-sized construction machinery enterprises another opportunity for development.
　　National Policies Directly Target Infrastructure Investment
　　From the recent State Council executive meetings that emphasized "fiscal policy should be more proactive," to the Ministry of Transport's statement at a recent press conference that "in the second half of the year, we will continue to deepen the supply-side structural reform of transportation," to the National Development and Reform Commission's consistent emphasis on strengthening "effective investment" and "not engaging in massive stimulus," and to the Premier's personal inspection of the Lhasa-Nyingchi section of the Sichuan-Tibet Railway, all signals point to a new round of massive infrastructure construction being launched, and the spring of infrastructure has come again.
　　However, regarding massive infrastructure, everyone has some concerns, fearing that these huge funds will flow into unnecessary areas, such as real estate, bringing side effects. However, this time is very different from the 4 trillion yuan ten years ago. Feng Jianlin, chief macroeconomist of Fushengde, told reporters that the requirement to prevent local government debt risks has not been relaxed. Even if fiscal and monetary policies change slightly in the second half of the year, it must be clear that this is not a massive stimulus.
　　Feng Jianlin said that one example is that on July 13, the General Office of the State Council issued the "Opinions on Further Strengthening the Planning and Construction Management of Urban Rail Transit," specifically pointing out that for cities listed in the local government debt risk warning range, approval (authorization) of new projects should be suspended. Urban rail construction is a major focus of local projects.
　　A fall into a pit, a gain in your wit. The country is definitely more aware of the pros and cons of massive infrastructure than we are, and it has also issued effective management opinions, so everyone need not worry so much.
　　Where will the money come from? The country has arranged it!
　　"Troops and horses have not moved, but provisions and forage go first." There have always been incidents where policies cannot be implemented due to lack of funds. In the first half of this year, the main reason for the stagnation of some infrastructure projects was the tight infrastructure investment funds of local governments. So, with so many projects to be launched in the second half of the year, where will the funds come from?
　　In this regard, the country has made clear requirements:
　　We must accelerate the issuance and use of this year's 1.35 trillion yuan of local government special bonds, and promote early results in infrastructure projects under construction.
　　In the first half of this year, only a fraction of the special bonds was used, only 0.36 trillion yuan. This means that in the second half of the year, there is still 1 trillion yuan of special bonds waiting to enter the infrastructure sector.
　　After the policy was introduced, various ministries and local governments have taken action.
　　Recently, the National Development and Reform Commission went to Beijing, Shanghai, Zhejiang, Henan, Hubei, Jiangxi and other places to conduct intensive research on infrastructure investment and financing.
　　An expert involved in the research revealed: The main purpose of the NDRC's research is to stabilize investment, provide support for the introduction of relevant policies in the next step, and then establish a long-term mechanism for infrastructure investment and financing.
　　Local governments have also taken action. Many places have recently announced investment plans for major projects to fill shortcomings in the second half of this year, with investment scales reaching trillions of yuan.
　　For example, Qinghai has arranged a total of 190 key projects in 2018, with a total investment of 853.5 billion yuan. Under the central government's requirement to fill shortcomings in infrastructure, various infrastructure investment plans will be implemented faster, and infrastructure investment in the second half of the year is expected to exceed expectations.
　　In finance, banks are accelerating credit supply to infrastructure. A friend working in a bank said that a while ago, the head office asked us to report the credit demand and reserve projects for the second half of the year. These days, I do feel that the approval speed of local major infrastructure projects has been faster. Some "approved but not lent" projects in the first half of the year have also gradually received funds.
　　Tax cuts! Please keep up with the development of the times!
　　In recent years, the voice for tax cuts has been loud. It is reported that China's personal income tax revenue in the first seven months of this year exceeded the whole year of 2015. However, personal income tax actually accounts for 8% of the entire public budget revenue. Significantly simplifying and reducing income tax rates will have limited impact on fiscal revenue, but will greatly enhance confidence. The new personal income tax collection method received a large amount of feedback during the opinion collection stage, and it is basically believed that the 5,000 yuan threshold and the 45% maximum tax rate have great room for adjustment.
　　The call for reducing corporate taxes and fees is even louder. Even after the 1% industry value-added tax was reduced in May this year, the tax burden on China's private enterprises is still heavy. Recently, a problem that small and medium-sized enterprises are very worried about is that starting next year, social security will be uniformly collected by the tax authorities. This breaks many previous hidden rules. It is an open secret that many enterprises do not pay or pay less social security. Even the meager profits of many companies come from deductions in the five insurances and one housing fund. Handing it over to the tax authorities for unified collection means that this part of gray operations will be completely transparent. What will be the result? The bankruptcy of many small and medium-sized enterprises is already showing signs, which means many people will lose their jobs.
　　Large-scale tax cuts are indeed quite urgent.
　　Infrastructure investment extends the prosperity cycle of construction machinery
　　According to historical experience, the保有量 of construction machinery is highly correlated with downstream infrastructure and real estate investment, and directly related to the number of project starts. Many practitioners also believe that the recovery of infrastructure investment will further stimulate the sales of construction machinery and extend the prosperity cycle of construction machinery.
　　Analysts in the construction machinery field believe that "infrastructure investment will extend the prosperity of the construction machinery cycle further. From the model, it will increase the slope, but it will decline at a certain point. As for when the peak will appear, it is difficult to estimate, and it may appear within the next two to three years. But in the second half of this year, including 2019, the performance of related enterprises can be maintained very well."
　　Infrastructure, equipment renewal, and enterprise operation have created the "right time, right place, and right people" for the construction machinery industry. It is believed that on the basis of China's economy maintaining stable operation, the construction machinery industry will maintain a healthy development trend in the next three years, and the panic of construction machinery enterprises can be put aside.