China continues small stimulus steps to boost infrastructure projects in face of economic slowdown
- State Council has relaxed the minimum capital ratio requirement for some infrastructure projects to 20 per cent from 25 per cent to boost growth
- The government has so far rebuffed calls for large-scale easing, but is continuing with a series of small steps to help flagging economy
China has taken another small step to help prop up its flagging economy by relaxing the minimum capital ratio requirement for some local government infrastructure projects.
The requirement for ports and shipping infrastructure projects, which are mainly funded by local governments, will be cut to 20 per cent from 25 per cent, while capital requirements for railways, roads, environmental projects and logistics will be decreased by up to 5 percentage points, according to a statement released by the State Council on Wednesday.
Government-backed infrastructure projects will now be able to raise up to 50 per cent of registered capital for a project through debt and equity, it added. In the past, initial capital had to come from a government fund, state-owned enterprise or, more recently, proceeds from special purpose bonds.
The current adjustment is more of a move to ease market worries, rather than start a strong stimulus
China’s gross domestic product (GDP) expanded at 6.0 per cent in the third quarter, the slowest pace in nearly three decades and matching the floor of the government’s 2019 growth target range.