China to stimulate infrastructure investment to boost economic growth

Friday, 13 December 2019 16:02:54 (GMT+3)   |   Shanghai
       

From November 2018 up to the present, China’s National Development and Reform Commission (NDRC) has approved around RMB 1.8 trillion ($0.26 trillion) of investment in infrastructure projects, with such investments hitting the highest level of the past three years.

Against the increasing downward pressure on the economy, China plans to stimulate infrastructure investment to boost economic growth in the coming year. On November 27, China’s Ministry of Finance issued a quota of special local government bonds for 2020 worth RMB 1.0 trillion ($0.14 trillion) in advance of next year, equal to 47 percent of the amount issued for 2019. Meanwhile, China has launched a six-month campaign to speed up the implementation of congested investments, aiming to boost infrastructure investment growth in 2020.

In November, which is traditionally regarded as part of the offseason for the steel markets in China, inventories of finished steel in southern and eastern China decreased at a similar rate compared to the peak season. Moreover, in November, heavy truck sales in China amounted to around 94,000 units, up 3.0 percent month on month and increasing by 5.3 percent year on year, maintaining the year-on-year increasing trend seen since July this year.

Official data shows that local governments in China approved investments in infrastructure projects amounted to a value of over RMB 590.0 billion ($84.3 billion) in the October-November period this year.

Director of Pacific Securities, Huang Fusheng, has stated that the main thrust of infrastructure investment will be in three sectors. First of all, investment in infrastructure renovation in old residential districts in China is expected to amount to RMB 1.28 trillion. Secondly, construction of the 5G network in China will take eight to 10 years, with an average annual investment of RMB 1.0 trillion ($0.14 trillion). Thirdly, high-speed railway construction will be an important driving force to boost economic growth, with major construction projects already under way, including the Sichuan-Tibet railway and a railway to Xiong’an New Area, a megacity a two-hour drive south of Beijing.


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