Shanghai bets on infrastructure, fixed-asset investment to claw back economic losses from two-month citywide lockdown
- Mega projects ranging from metro lines to data centres are set to create a cascade of demand for industrial products, say company bosses
- Shanghai’s GDP shrank 13.7 per cent in the second quarter as residents were confined to their homes and manufacturing was suspended
He said that new metro lines the municipality plans to build will give Voith a much-needed boost next year when the mammoth projects receive the go-ahead to start construction.
Leo Zhang, president of chemical product maker Sika China, said the government’s stimulus policies to underpin the ailing economy could offset the losses his firm suffered in production during the citywide lockdown.
“We hope new orders from construction of public works as well as building of solar and wind power plants can help Sika’s Shanghai factories make up for lost ground,” he said. “We still hope that positive growth [in production] can be achieved.”
The bullish forecasts for the Shanghai operations of large industrial companies come as the city’s authorities voice their determination to claw back huge economic losses.
Shanghai has yet to revise its full-year gross domestic product growth target of 5.5 per cent set in January, although it is on course to miss the goal.
“City officials have not given up their hopes of a sharp rebound in the second half,” said Wang Feng, chairman of Shanghai-based financial services group Ye Lang Capital. “Economic sweeteners like fast-tracking new project approvals will effectively shore up economic data, but only big firms can benefit initially.”
The city’s key manufacturing sectors such as electric cars and semiconductors had helped cushion a sharp decline in industrial output from January to June.
Overall, Shanghai’s industrial production fell 13.7 per cent on the year in the first half, but the new-energy vehicle (NEV) sector – which comprises pure electric, plug-in hybrid and hydrogen fuel-cell cars – recorded a 67 per cent jump, according to local government statistics.
In June, the Shanghai government announced it would offer buyers a subsidy of 10,000 yuan (US$1,478) to replace their used petrol cars with NEVs.
“Infrastructure, automotive, property, all capital-intensive industries, can play a leading role in bolstering economic growth amid government support,” said Gao Shen, an independent analyst in Shanghai. “Our concern is whether small businesses can reap the benefits of the stimulus measures.”
The city received US$12.5 billion of foreign direct investment in the first half of this year, virtually unchanged from 2021.
The Shanghai statistics bureau said in a statement this week that the city’s economic fundamentals remained solid and the Covid-19 pandemic was not enough to reverse long-term growth prospects.