Local governments have launched a combined 6 trillion yuan (US$974 billion) in spending to stimulate their economies as China’s gross domestic product growth continues to slow.
About 1.47 trillion yuan will go to highway investment and 800 billion yuan to railway development, Economic Information Daily reported Thursday.
The remainder will be used to stabilize exports and fund tax breaks, shantytown redevelopment and other key infrastructure projects.
The mini stimulus comes as China grapples with slowing growth, weak exports and industrial overcapacity.
Local governments face a challenge in raising money for the projects amid tighter bank lending, stricter oversight of local government debt and a crackdown on shadow banking, the report said, citing experts.
Zhang Xiaode, a professor in the Chinese Academy of Governance, said the local government mini stimulus is targeted and controllable compared with the central government’s 4 trillion yuan economic package in 2008.
The spending program led to massive production of steel, cement and aluminum, resulting in excess capacity.
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