China approves infrastructure investment to boost economy
CHINA HAS given the green light to 60 infrastructure projects, including 2,018km of roads, as it looks to energise its sluggish economy, mired in its worst slowdown in three years.
The investment has also fuelled hopes that the world’s growth engine may get a lift from more activity in China in the last quarter of the year.
The Shanghai Composite Index jumped by as much as 4.5 per cent, led by building stocks, on speculation that infrastructure spending would help boost growth, which has eased to its slowest pace in three years.
China’s economic planning body, the National Development and Reform Commission, announced the approval of a number of projects, including motorways, ports and airport runways, worth an estimated one trillion yuan (€123 billion) or more. This amounts to about 2.1 per cent of China’s total economy.
The government also backed nine sewage-treatment plants, two waterway upgrades and five port and warehouse projects, according to the commission. There were also increases in land supplies in cities including Guangzhou, Hangzhou, Beijing and Shanghai.
Yesterday’s announcements of infrastructure spends are a result of fast-tracking infrastructure projects already in the pipeline. China is taking care on how it invests in stimulus plans. A four trillion yuan (€492 billion) investment programme in 2008 and 2009 headed off a recession but left the economy with a lot of debt.
The government is keen to shore up economic growth before the leadership transition in October. Tomorrow sees the publication of a raft of data out of China that could confirm fears the downswing in the world’s second-biggest economy has stretched into a seventh straight quarter, leaving global markets with no respite. Inflation, factory output, fixed-asset investment and retail sales data for August are due.