Xin Lang Cai Jing·2025-12-25 00:26Core Viewpoint - The central economic work conference in December 2025 emphasizes the need to "promote investment stabilization" in 2026, leading to an optimistic outlook on fiscal policy for the upcoming year, particularly in infrastructure investment, which is expected to grow by 4.5% in 2026 [1][3][18]. Fiscal Policy Outlook - The fiscal measures for 2026 are anticipated to be more proactive, with a focus on stabilizing investment and stimulating private sector investment [3][4]. - The trend of "central government increasing leverage while local governments reduce leverage" is expected to continue, with the central government taking a more significant role in driving investment due to limited local government borrowing capacity [4][18]. Infrastructure Investment - Infrastructure investment is projected to be a crucial growth stabilizer in 2026, with a forecasted growth rate of 4.5% [18]. - The central government is expected to play a vital role in supporting infrastructure investment, particularly in the western regions, where there is significant potential for growth [18][32]. Construction Sector Insights - The construction state-owned enterprises (SOEs) are expected to benefit from debt reduction initiatives, leading to improved asset quality and valuation recovery [2][22]. - The share of receivables in total assets for major construction SOEs has been rising, indicating a need for financial improvement and valuation recovery as local government funding stabilizes [22][26]. Regional Investment Opportunities - The western provinces, particularly Sichuan, are highlighted as having high potential for infrastructure investment due to favorable central government funding and strategic positioning [32][39]. - The central transfer payment to western provinces is projected to be 4 trillion yuan, accounting for 42.2% of total central transfer payments, indicating strong financial support for infrastructure projects [32][36]. Manufacturing Sector Outlook - Manufacturing investment is expected to stabilize with a growth rate of around 5% in 2026, driven by a recovery in semiconductor capital expenditures [14][46]. - The cleanroom engineering sector is anticipated to benefit significantly from the upturn in semiconductor investments [46]. International Market Growth - The overseas market is projected to become a second growth curve for construction companies, with expectations of continued growth in new contracts and revenue from international projects [2][18].