Aerial photo taken on Feb. 1, 2021 shows the construction site of the Hangzhou-Shaoxing-Taizhou Intercity Railway in east China’s Zhejiang Province. photo: Xinhua
As 2022 kicks off, China is investing more in infrastructure and construction projects faster than it did at the start of 2021, as the country tries to accelerate GDP growth in the face of challenges such as the resurgence of the coronavirus and pressure from the US government.
These vigorous efforts should push economic growth to exceed more than 5% this year, economists said, but they warned of potential risks, including labor shortages and rising production costs.
Less than two weeks into 2022, China announced or launched major infrastructure projects with a total investment of more than 3 trillion yuan ($471 billion), 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.
Between January and Tuesday, about 10 provincial-level regions held groundbreaking ceremonies for infrastructure projects, including Shanghai, Sichuan Province (southwest), Jiangsu Province (east) and Hebei Province ( North).
Among them, Hebei led the way in investment scale, as it announced 695 key projects for 2022 with a total investment of 1.12 trillion yuan. Zhejiang came second, with 358 major projects and a total investment of 638.6 billion yuan.
Judging by the public data, transportation projects are in focus. For example, the city of Xiamen started building a new airport on January 5. The project, with a planned investment of 53 billion yuan, has been touted by national media as one of the highlights of some 130 projects in the city.
“After the establishment of the China-Laos railway, surrounding transportation projects in Yunnan province will be rolled out, while the Regional Comprehensive Economic Partnership (RCEP) will trigger infrastructure projects that can facilitate trade,” said Tian Yun, former vice director of the Beijing Economic Operations Association, told the Global Times on Tuesday.
Another strong point concerns infrastructure projects related to high-tech industries. For example, Shanghai has signed agreements for projects involving drones and biomedical research and development.
Anhui province has witnessed the start of BYD’s new energy auto parts manufacturing project, while Hebei province will see the construction of nearly 200 projects related to emerging industries ranging from electronic component modules to digital glass .
The central government is accelerating infrastructure construction to spur economic growth, at a time when hopes are dim that other engines of growth – trade and consumption – will play an important role amid the resurgence of COVID19 , said economists.
“Weak consumption and lower economic growth expectations mean that China needs to stimulate economic growth through infrastructure projects, so that economic growth in the first half of the year will be relatively rapid,” said Zheng Lei, economist. Chief at Glory Sun Financial Group, Global. Times.
Zheng said the progress of major infrastructure projects last year fell short of expectations, and some projects were postponed to this year.
However, analysts said China’s infrastructure construction is not a case of large-scale stimulus as it was several years ago, as the scale of investment is still at a subdued level.
“This year’s investment in infrastructure is a minor adjustment from last year’s policies, when the government refrained from large-scale infrastructure investment to avoid adding inflationary pressure,” he said. Tian.
But he warned of potential risks, such as a drop in the number of construction workers.
“As there are fewer migrant workers available, will construction companies have to ‘steal’ workers from private manufacturing companies? Also, can these projects meet China’s environmental protection requirements, which tend to drive up costs?”
Hu Qimu, chief researcher at the Sinosteel Economic Research Institute, told the Global Times that China may adjust its infrastructure investments depending on coronavirus situations.
“If the coronavirus subsides at the end of 2022, it is possible that infrastructure projects will be slowed down and consumption will still be the mainstay of economic growth,” he said.