China revs up infrastructure investment to spur growth

BEIJING -- Investment, a traditional key driver of China's economic growth, is unleashing new energy as the central authorities have made fresh arrangements to modernize the country's infrastructure for sustained growth.

The arrangements were made at a meeting of the Central Committee for Financial and Economic Affairs earlier this week, involving a variety of construction needs from urban and rural facilities, digital networks, and industrial upgrades to national security.

Regarding infrastructure as a pillar for economic and social development, the meeting stressed the significant role of infrastructure construction in ensuring national security, smoothing domestic circulation, facilitating the circulation of domestic and overseas markets, expanding domestic demand and promoting high-quality development.

Long Haibo, a researcher with the Development Research Center of the State Council, said the meeting sent a signal that the central government attaches great importance to strengthening infrastructure construction.

The move will further expand domestic demand, improve the resilience of industrial and supply chains, and meet people's expectations for a high-quality life, Long said.

Facing the triple pressure of shrinking demand, supply shock, and weakening expectation, China has scaled up support for major projects amid efforts to expand effective investment, generate more economic activities and boost growth.

INFRASTRUCTURE ON FAST TRACK

For excavator operators in China, the past few months were rather busy, with the industrial index indicating solid expansion of infrastructure construction and accelerated investment growth.

The excavator index tracked by leading construction gear maker Sany Heavy Industry Co., Ltd. shows the average workload of construction machinery steadily accelerated across the country in March.

The industry data, which suggests a rebound in construction activities, was in line with the country's fixed-asset investment that jumped 9.3 percent from a year earlier to 10.49 trillion yuan (about 1.6 trillion U.S. dollars) in the first quarter, according to the National Bureau of Statistics.

Despite the challenges from COVID-19 resurgence on investment growth, the country has the toolbox to keep investment stable, said the National Development and Reform Commission (NDRC) at a recent press conference.

The country plans to issue a total of 3.65 trillion yuan of special-purpose bonds for local governments in 2022, while 1.2 trillion yuan of such bonds issued in the fourth quarter last year are also expected to shore up investment.

As China looks to quicken the issuance of local government bonds to support infrastructure construction, analysts expect that more pro-investment policies will be rolled out in the coming months to facilitate funding, land use and energy supply.

NEW INFRASTRUCTURE FOR DIGITAL FUTURE

While traditional infrastructures such as roads and airports connect goods and people, new digital infrastructures connect data, enabling the introduction of new types of products and services as well as new manufacturing systems and business models.

From cloud computing and artificial intelligence platforms to data centers and the industrial internet, China has channeled more investment to advance the development of new infrastructure.

During the first three months of the year, some 81,000 5G base stations were built across the country, bringing the total to over 1.5 million, official data showed.

According to estimates by Industrial Securities, the increase in new infrastructure investment in China this year is expected to reach 180 billion yuan.

Among the investment projects is an integrated national big-data system project. This mega project launched in February involves establishing eight national computing hubs in the country, plus 10 national data center clusters.

Since the beginning of this year, 25 projects of 10 national data center clusters have started construction, driving investment of more than 190 billion yuan, the NDRC said.

The investment in big data centers is expected to grow at an annual rate of over 20 percent during the 14th Five-Year Plan period (2021-2025), driving the total investment to over 3 trillion yuan, according to the NDRC.