China Infrastructure Approvals Already 70% of Last Year’s Total
(Bloomberg) -- China’s government has given the green-light to investment in projects that’s worth nearly 70% of what was allowed for the whole of last year, another sign that Beijing is accelerating infrastructure spending to bolster an economy hit hard by Covid.
The National Development and Reform Commission approved 32 projects worth a combined 520 billion yuan ($81.6 billion) so far this year in sectors including transportation, energy, and high-tech, Ou Hong, head of the top economic-planning agency’s investment department, said at a briefing Friday. That compared with a total of 775.4 billion yuan of investment in 90 projects the NDRC approved for the whole of last year.
“Actively expanding effective investment not only helps boost demand and cushion downward pressure on the economy, but also promotes structural optimization for high-quality development,” Ou said. While the Covid outbreak puts investment growth at risk, favorable conditions remain, such as the large-scale issuance of special local bonds, he said.
The government has repeatedly vowed to front-load infrastructure investment to drive economic growth this year to help compensate for a housing market slump, weak consumption and an export growth that’s expected to slow. China’s worst Covid outbreak since early 2020 has made things worse, threatening the achievement of Beijing’s growth target of around 5.5%.
Local governments have been selling special bonds, mainly used for infrastructure, at a record pace this year to meet an annual quota of 3.65 trillion yuan. Hundreds of billions of yuan in proceeds have been transferred to entities to undertake relevant projects.
The country is also pushing forward progress in the 102 major projects in its 14th five-year plan in a “forceful and orderly” manner, Ou said. The projects include some third-generation nuclear reactors in Fujian that are in operation now, a section of the Sichuan-Tibet railway under construction, and a container wharf being assessed for the Yangshan Port in east China, he added.
Private investors will be encouraged to participate in the building of the key projects, he said, vowing to improve direct financing abilities of privately-invested programs, such as by supporting them to sell infrastructure real estate investment trust products.
The evolving and complex geopolitical situation and the domestic Covid wave have posed challenges to supply chain stability and weighed on infrastructure investment, Huo Fupeng, an official with the NDRC’s industrial development department, said at the same event. The NDRC pays high attention to this and will “actively” coordinate with other government agencies to solve the problems, he said.
Other highlights from the briefing:
- Investment in transportation jumped 9.8% in the first quarter from a year ago to 636 billion yuan, according to Zheng Jian, an official with the NDRC’s infrastructure development department
- Big data center investment is expected to jump by more than 20% every year in 2021-2025, driving over 3 trillion yuan in investment from all sources, said Sun Wei, an official with the NDRC’s high-tech department.
- The NDRC earmarked 3.38 billion yuan earlier this year to invest in 61 healthcare projects to enhance Covid prevention and treatment at borders and improve contingency plans based on the changing needs of the fight against the virus, said Sun Zhicheng, a social affairs development official at the NDRC
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With assistance from Bloomberg