Stress on infra keeps stable growth in spotlight

Updated: 2022- 02- 21

Increasing investment by funding major infrastructure projects is likely to drive growth in China this year as some local governments have prioritized GDP expansion, experts said.

Their comments emerged amid the ongoing local people's congresses and political consultative conferences. To date, some 30 province-level regions have concluded their local two sessions, with regional annual economic growth targets and specific economic plans set for the year.

For most of them, stable growth has emerged as a key priority for this year. Specific measures to expand demand, ensure effective investment and boost consumption are in the pipeline.

The central government said it will front-load supportive measures in the early part of this year to keep the economy running smoothly. During the ongoing local two sessions, a number of provinces and municipalities have urged stepping up construction of "new infrastructure" like 5G facilities and data centers. They have also underlined new urbanization initiatives.

For instance, East China's Anhui province said it will open more than 2,600 infrastructure projects worth 100 million yuan ($15.7 million) each this year. At least 1,200 of them will be completed by the end of the year.

Similarly, Central China's Henan province has a target of 2.8 trillion yuan worth of fixed asset investment this year, while Jiangxi province's comparable goal is 1.1 trillion yuan worth of 3,453 large or medium-sized projects.

Yuan Haixia, a senior researcher at China Chengxin International Credit Rating Co Ltd, said in a note that on the supply front, infrastructure investment is likely to rebound notably, thanks to front-loaded fiscal policies and prompt allocation of funds raised through special local government bonds.

Some places have announced policies to improve the local business environment by mitigating existing difficulties, so as to soften the impact of new downward pressure, thereby further energizing the markets.

Both Jiangsu and Anhui provinces have urged full delivery of tax and fee breaks together with feasible policies that can make local businesses profitable.

"Keeping growth stable has become the key mission of most local governments. And compared with last year, many provinces have revised their growth targets upward for 2022," said Gao Ruidong, chief economist of Everbright Securities.

Gao noted that major efforts are likely to be made in infrastructure investment, affordable housing and sprucing up of old towns and communities, while efforts in boosting green consumption and rural consumption will contribute to expanding domestic demand.