China has seen various local governments unveil their economic growth targets in recent weeks. Among those that made their plans public, 11 provinces have aimed for a slower expansion pace this year while six have set a more aggressive goal.
It appears that fixed-asset investment will again be a major growth engine.
Projects worth hundreds of billions of yuan or even a trillion yuan have not been uncommon in government-led initiatives in the country. Breaking down the spending, railways, roads and airports have accounted for the majority of the projects.
As property investment has been cooling off, such infrastructure projects — especially rail ventures — would be the pillar of local authorities’ growth plans. This year, as many as 35 new railway projects will start construction.
Elsewhere, manufacturing upgrade, new-energy vehicles and charging facilities will also be key focus areas, I believe.
It’s estimated that China’s fixed-asset investment growth will expand by 8 percent this year, and infrastructure spending will be at it core, with spending amounting to about 16 trillion yuan.
However, local governments would face mounting financing pressure for these big infrastructure projects.
Various provincial governments have said that they will try to diversify their financing channels, be innovative and attract more private capital. As a result, public-private partnership (PPP) is set to become a hot theme this year.
Last year, as many as 163 private companies invested in PPP projects, contributing 39 percent of the funds, according to official data from China’s finance ministry.
This article appeared in the Hong Kong Economic Journal on Feb. 20
Translation by Julie Zhu
[Chinese version 中文版]
– Contact us at [email protected]