Daily Macro Economy News on May,22th

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International Crude Price Trend and Exchange Rate of RMB to USD Trend

Domestic News

1、CNP: On-grid Energy Reached 62.29 billion kWh from this January to April, up 5.32% year-on-year

2、The report shows that ensuring food security requires efforts to both increase production and reduce losses

3、CITIC Securities: waiting for policy to act more aggressively, the short-term market is expected to continue to find the bottom

4、New energy power generation installation increased in Jilin Province rapidly, the first four months reached a record-high outside power supply

International News

1、The U.S. banking crisis affects more than just the banking industry

2、S&P: The debt ceiling deal was reached at the last minute could still limit economic growth

3、Developed countries are once again facing the dilemma of price stability or financial stability

4、The debt ceiling impasse could trigger a recession, but defaults would be worse

More detials:

Domestic News

1、CNP: On-grid Energy Reached 62.29 billion kWh from this January to April, up 5.32% year-on-year

China Nuclear Power (CNP) disclosed on the evening of May 21, as of April 30 of 2023, the company's nuclear power holdings 25 units in operation, installed capacity of 23.75 million kilowatts; holdings under construction of 9 units, installed capacity of 10.129 million kilowatts; holdings approved for construction 2 units, installed capacity of 2.242 million kilowatts. The company's new energy holdings have an installed capacity of 13,446,100 kilowatts in operation, including 4,605,400 kilowatts of wind power and 8,840,700 kilowatts of photovoltaics, in addition to independent energy storage power plants of 211,000 kilowatts; holdings have an installed capacity of 7,627,500 kilowatts under construction, including 1,555,000 kilowatts of wind power and 6,072,500 kilowatts of photovoltaics. As of April 30, 2023, the Company's cumulative commercial power generation capacity was 66.195 billion kilowatt-hours, up 5.04% year-on-year, and its on-grid energy reached 62.29 billion kilowatt-hours, up 5.32% year-on-year.

2、The report shows that ensuring food security requires efforts to both increase production and reduce losses

According to the China Agricultural Industry Development Report 2023 released by the Chinese Academy of Agricultural Sciences on the May 21st, it is a key move to ensure food security in the new era to continuously strengthen the foundation of food security by making efforts from both ends of grain production capacity enhancement and loss reduction of the whole industry chain. The report shows that there is currently waste and loss in the whole industry chain of China's three major staple grains - rice, wheat and corn. It is expected that by 2035, through scientific and technological progress, agricultural technology promotion, national food saving and loss reduction action and other measures, grain harvesting, storage, processing and consumption chain loss rate can be reduced by 1 to 3 percentage points respectively, can achieve a total of grain loss reduction of more than 100 billion pounds.

3、CITIC Securities: waiting for policy to act more aggressively, the short-term market is expected to continue to find the bottom

The industrial value added, social zero, and fixed asset investment are less than expected, the accelerated RMB depreciation fell below 7, the MLF interest rate cut is expected to fall short, and the market is waiting for the policy to act more aggressively. The short-term market is expected to continue to find the bottom, the main line of adjustment is not finished. Recent market rotation at low levels as expected, short-term macro expectations at home and abroad before further clarification, the market is expected to remain a low-risk preference and a high odds defensive strategy, focusing on independent cyclical sectors with policy expectations, including durable consumer goods such as new energy vehicles, home appliances, etc.

4、New energy power generation installation increased in Jilin Province rapidly, the first four months reached a record-high outside power supply

Jilin Electric Power Trading Center said on May 20^th that in the first four months of this year, the power grid in Jilin Province has reached outside power supply contracts in a total of 16.755 billion kilowatt-hours, an increase of 34.73%. Outside power of 7.053 billion kilowatt-hours, an increase of 60.77% and reached a record-high for the same period in history. Four days ago, Jilin Province sent Qinghai Province intra-month power trading for the second time out, reached trading 106 million kWh of electricity, including 84.8 million kWh of wind power and 21.2 million kWh of thermal power. Previously, the two places have been successfully traded a number of times. State Grid Jilin Electric Power introduced, it is expected that by the end of 2023, Jilin Province's installed capacity of new energy will exceed 18 million kilowatts, exceeding the installed capacity of coal power to become the province's first power source.

International News

1、The U.S. banking crisis affects more than just the banking industry

In the Tsinghua PBCSF Global Finance Forum high-end dialogue session, the former vice president of the International Monetary Fund, the former vice governor of the People's Bank of China Zhu Min dialogue with the founder of Bridgewater Associates Ray Dalio, on the U.S. banking crisis, the Federal Reserve policy path choice and impact, the causes of inflation and other hot topics to discuss. On the U.S. banking crisis, Ray Dalio said it is important to recognize that this is a widespread problem that affects more than just the banking industry, a problem that currently affects many banks because many of them have purchased government bonds. But in fact, many entities have purchased government bonds. And this refers not only to U.S. entities that buy U.S. government bonds but also to European entities that buy European bonds because of monetary policy, etc.

2、S&P: The debt ceiling deal was reached at the last minute could still limit economic growth

U. S. economic growth is already slowing down due to rising interest rates, and many forecasters expect a recession this year. Joel Prakken, Chief U.S. economist for S&P Global Market Intelligence, said the uncertainty could lead consumers, investors and businesses to cut back on spending, increasing the likelihood of a recession as members of Congress wrangle. Stocks may start to fall as June 1 approaches, Prakken said, in 2011, when Congress raised the debt ceiling hours before the deadline, stocks fell and took months to recover. After that, the U.S. credit rating was downgraded. Even if the U.S. reaches a deal before it runs out of cash, the uncertainty could still have a legacy effect of limiting economic growth.

3、Developed countries are once again facing the dilemma of price stability or financial stability

Ding Zhijie, director of the Foreign Exchange Research Center of the State Administration of Foreign Exchange, said that developed countries are once again faced with the dilemma of price stability or financial stability. The causes of this inflation are complex, there are factors of Covid-19, factors of overheated demand, factors of the global industrial chain supply chain, but also factors of geopolitical conflicts, the combination of these factors led to a rapid rise in global commodity prices, and now, although there has been a fall, the inflationary stickiness in Europe and the United States is still more obvious. The response policy in Europe and the United States is to choose a similar approach to interest rate hikes in the 1980s, European and American banks have continued to raise interest rates in May, especially the Federal Reserve has raised interest rates ten times in a row since 2022, a total of 500 basis points. The side effects of the interest rate hike policy are becoming more and more evident and may trigger a crisis in the banking sector in Europe and the United States.

4、The debt ceiling impasse could trigger a recession, but defaults would be worse

It is now widely believed that the protracted debt ceiling battle could push the U.S. economy into recession, while defaults on government debt could trigger a serious financial crisis. Joel Placon, Chief U.S. economist at S&P Global Market Intelligence, said the uncertainty is causing consumers, investors and businesses to contract while lawmakers argue which invariably increases the likelihood of a recession. And if a final agreement is not reached by the deadline, the value of Treasuries is expected to fall, with investors selling off and possibly permanently reducing their holdings. Failure to repay payments would also undermine trillions of dollars of global short-term dollar borrowing liquidity, which is critical for banks and companies to raise working capital. The White House also said that unlike the recession caused by the Covid-19 epidemic in 2020, while more than 20 million jobs were lost then, the government injected trillions of dollars in stimulus money to provide support. And in the event of a debt default, the U.S. government would not be able to provide such support.

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