Infrastructure projects, accelerated budget spending

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Aerial photo taken on Jan. 11, 2022 shows the construction site of the high-speed railway linking Nanning and Yulin in south China’s Guangxi Zhuang Autonomous Region. (Photo: Xinhua)

With the launch of major infrastructure projects in early 2022 in several Chinese provinces, capital investment is on a fast track, which should boost economic growth as the world’s second-largest economy aims to stabilize GDP rates against to growing challenges, experts said.

On Wednesday, central China’s Hubei Province, eastern Fujian Province, northern Shaanxi Province and other provinces held ground-breaking ceremonies for key construction projects, including the majority are infrastructure projects.

On Feb. 8, the cities of Chongqing and Chengdu in southwest China jointly released plans to finance 160 projects worth 2 trillion yuan ($314.1 billion), the modern infrastructure projects accounting for the majority worth 1.35 trillion yuan, including clusters of world-class airports, high-speed railways, highways, energy infrastructure and others.

On Feb. 7, construction work for 230 major projects in Fujian Province began, with a total investment of 239.8 billion yuan. This includes 53 infrastructure projects with a total investment of 38.85 billion yuan.

The pace of infrastructure construction has accelerated. Less than two weeks into 2022, China announced or launched major infrastructure projects with a total investment of more than 3 trillion yuan, according to data released by provincial governments. By contrast, only about 1.2 trillion yuan of major infrastructure projects were announced from Jan. 1 to Jan. 19 last year.

Figures from financial data provider Wind showed that in January local bond issuance reached 698.9 billion yuan, a significant jump from the same period last year. New issuance of special purpose bonds amounted to 484.4 billion yuan.

Infrastructure construction is reflected in the stock market. The three trading days to Wednesday since the Spring Festival saw gains in sectors such as construction machinery and cement.

The fundamental and driving role of infrastructure investment in 2022 could be expected, experts said, and it could also promote upstream and downstream industrial chains, helping to support GDP growth.

Chen Li, managing director of the Beijing-based Chuancai Securities Research Institute, told the Global Times on Thursday that a range of macroeconomic policies, including monetary and fiscal policies, will jointly play a major role in stabilizing economic development, as the stabilizing growth is an important task for this year’s economic work.

“At the end of last year, relevant departments have intensively approved many projects, and the People’s Bank of China has scaled up its toolbox, which has laid the foundation for a steady opening. of the economy,” Chen said.

During the Spring Festival holiday, officials from the National Development and Reform Commission (NDRC), the main economic planner, stressed the need to anticipate the impact of policies through early arrangements and actions, that will deliver results at an early stage, given multiple uncertain factors in the first quarter.

The NDRC plans measures to implement the domestic demand expansion strategy and moderately accelerate infrastructure investment.

With the acceleration of special purpose bond issuance and the start of construction of many major projects, the growth rate of fixed asset investment, one of the three engines of China’s economic growth, will increase. ‘speed up this year,’ said Ning Jizhe, head of the National Bureau of Statistics (NBS), in January.

China has the confidence and ability to ensure sustainable and healthy economic development in the future despite growing challenges in 2022, the official said.

Capital investment rose 4.9% year-on-year in 2021, and infrastructure investment rose 0.4%, according to BNS data. Investment in real estate development increased by 4.4%.

Infrastructure investment is expected to play a major role in stabilizing economic growth this year, and its annual growth rate is expected to reach over 5%, backed by government policy support, according to a Bank research note. communications.

“We see that infrastructure investment should rebound. This will largely offset the slowdown in investment in the real estate sector. We see weak consumption in the first quarter [of 2022] but recovering afterwards,” said Wang Tao, chief economist for China and head of Asian economics at UBS in January.

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