Infrastructure gets go-ahead to buoy growth

Transportation and water conservation among areas set for further development outlined in guideline to boost growth

China will accelerate the construction of planned key infrastructure projects, including railways, highways, water conservation, energy and ecological protection, according to a recent guideline.

The document, disclosed this month by the General Office of the State Council, China’s Cabinet, focuses on nine fields that still have shortcomings and will be boosted to support stable economic growth and improve public welfare, including infrastructure.

Specifically, intercity railways, the Beijing-Tianjin-Hebei integration, the Yangtze River Delta and the Guangdong-Hong Kong-Macao Greater Bay Area are priorities. The Beijing Daxing International Airport, another massive civil aviation project in the capital, will also be accelerated.

Noticeably, other fields closely related to people’s livelihoods will also be promoted, such as education, medical care, culture, sports, elderly nursing and babysitting, to further promote universal public services.

The document also unveils 10 supportive measures, including faster pre-construction preparation, necessary financial support for uncompleted projects, active introduction of private capital into profitable projects in transport, petroleum, natural gas and telecommunication, and diffusing the risks of local governments’ hidden debt.

In the first three quarters, China’s fixed asset investment hit 48.34 trillion yuan ($6.95 billion). However, infrastructure investment saw a slower increase, particularly when the country faces new uncertainties in the international scenario and a new round of downward pressure on economic growth.

For example, fixed asset investment in railways nationwide hit 461.2 billion yuan in the first eight months, accounting for only 57.56 percent of this year’s target.

From January to September, the volume of potential infrastructure investment went down by 34.1 percent, compared with the same period last year, according to the report on national fixed asset investment released two months ago by the National Development and Reform Commission. The investment volume in railways decreased by 44.1 percent compared to the same period in 2017.

Liu Shihu, deputy inspector of the Department of Fixed Asset Investment at the National Development and Reform Commission, said at a news conference in September that infrastructure investment went up by 4.2 percent from January to August, down by 15.6 percentage points compared to the same period last year.

A slowdown in such investment led to a decrease of the nation’s overall investment, Liu said, who also pledged to stabilize effective investment and expand investment in infrastructure, especially areas that need to be strengthened.

Entering the fourth quarter, infrastructure projects are being approved at a much faster pace nationwide. The NDRC approved several railway and water transport projects, including a railway connecting Shanghai, Suzhou in Jiangsu province and Huzhou in Zhejiang province, which is designed with investment of 36.7 billion yuan. The high-speed railway from downtown Chongqing to the city’s outlying Qianjiang district, at cost of 53.5 billion yuan, was among them.

Meanwhile, several provinces such as Shandong released their long-term transportation plans, showing great potential for expressway and railway construction.

Wei Jigang, director of industrial economics of the State Council’s Development Research Center, said infrastructure is a pillar for promoting economic development and modernization. Therefore, more investments in such areas can help achieve stable economic growth, he said.

Wang Zhigang, a macroeconomics researcher at the Chinese Academy of Fiscal Sciences, echoed Wei. He said these infrastructure investments were set to overcome shortcomings in subareas, instead of blind expansion in all fields, while targeted support will be provided rather than massive fiscal stimulus.

To help improve people’s livelihoods and boost development, such inputs in infrastructure are necessary, Wang said. It needs the endeavor of the government and market entities, whose enthusiasm should be invigorated when the government creates a better investment environment and an effective cooperation mechanism to achieve a strong public-private partnership, he said.

However, financial and debt risks should be curbed by conducting compliance reviews for financing of some projects, which can prevent risks arising from unregulated financing, Wang added.