China triples investment project approvals to stimulate economy

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China ramps up investment to boost economy.
China ramps up investment to boost economy.
  • China's economic planning agency has green-lit 48 fixed-asset investment projects.
  • Infrastructure investment rose 6.7% in the first five months of the year compared to a year earlier.
  • The country has beefed up coal production since it was hit by a power shortage last year.

So far this year, China has approved investment projects worth three times what was approved by this time last year, as Beijing ramps up efforts to boost an economy weighed down by Covid outbreaks and weak demand.

The economic planning agency has green-lit 48 fixed-asset investment projects with a combined value of 654.2 billion yuan ($97.6 billion) in the first five months of the year, according to Meng Wei, spokeswoman of the National Development and Reform Commission.

That's a 215% surge from the same period last year, according to Bloomberg calculations based on official data. Ten projects worth 121 billion yuan were approved just last month. 

The scale of China’s investment in infrastructure this year is one of the key factors deciding how fast the economy will grow, with President Xi Jinping promising an "all out" effort to boost infrastructure investment and local governments accelerating sales of bonds to fund the drive.

The economy had a mixed recovery last month, with production unexpectedly rebounding while consumer spending and the property market continued to shrink. 

The projects the NDRC has approved are mainly in the transportation and water conservation sectors, Meng said Thursday at a briefing in Beijing. She added the agency has accelerated the distribution of central government funds and strengthened supervision of programs which use money from the sale of special local bonds.

"We will push for policies to show effects sooner to ensure the economy has reasonable growth in the second quarter and a better basis and conditions to develop in the second half of the year," Meng said.

Infrastructure investment rose 6.7% in the first five months of the year compared to a year earlier, picking up slightly from a 6.5% gain in January-April, government figures show. But that expansion is much weaker once adjusted for the 8.5% jump in producer price inflation over the same period.

Meng said PPI growth is expected to moderate in the coming months as key supplies such as coal and grain can meet demand. The government is also confident it can keep consumer prices stable with ample food supplies and the easing of logistical bottlenecks, she said. The government has ensured electricity supplies for the summer, with coal stockpiles at power plants higher than historical norms and hydropower output greater than expected this year, Meng said.

China has beefed up coal production since it was hit by a power shortage last year, and this has also helped keep domestic inflation under control even with international oil and gas prices soaring due to the war in Ukraine.

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