China’s Xi urges to push for ‘all-out’ infrastructure to boost growth
Chinese President Xi Jinping has called for an “all-out” campaign to build infrastructure, marking the latest effort by leaders to spur growth in the Covid-battered economy, according to state media.
Despite struggling to defeat the country’s worst outbreak in two years, the leadership is digging in its heels with a strict zero-Covid policy that includes lockdowns and mass testing in the largest cities.
But the measures have dented supply chains and business morale, dealing a blow to the global economy and markets.
“Infrastructure is an important support for economic and social development,” Xi said at a high-level meeting on Tuesday, according to official Xinhua news agency.
The Central Committee on Financial and Economic Affairs said China’s “infrastructure is still inconsistent with the demands of national development and security”.
Several sectors such as transport and energy were identified in the meeting where infrastructure needs to be boosted including construction of ports and airports.
Recent lockdowns have shut down supply chains and transportation networks – including the economic dynamo of Shanghai and Shenzhen as well as the grain basket northeast of Jilin.
Xi’s comments are the latest in a series of statements and moves aimed at boosting confidence in the economy and reassuring markets, but traders remained unimpressed by the latest broad pledge, while a major spending push could also restart debt concerns.
In the aftermath of the 2008 financial crisis, Beijing launched a stimulus package worth hundreds of billions of dollars – including massive infrastructure investment – but it piled on debt for local governments and state enterprises.
With risks to consumption and manufacturing exports, “initiation to accelerate infrastructure spending is a direct policy tool to lift government spending”, said Rajeev Biswas, chief economist for Asia-Pacific at S&P Global Market Intelligence.
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But the infrastructure “doesn’t recover quickly”, warned Nomura’s chief China economist Ting Lu.
“The lockdown has made infrastructure investment more difficult in the (affected) areas… because of travel restrictions and a shortage of construction workers,” he told AFP.
It would also be “unrealistic to expect infrastructure investment to increase too rapidly, and its pace … only left by slowing export growth, contraction of the large property sector and rising costs of China’s zero-Covid strategy.” will fill a small part of the gap, Nomura said in a recent report.
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