China accelerates infrastructure investment plan as Evergrande woes add to economic slowdown fears

China’s cabinet on Wednesday outlined priority areas for investment, including telecommunication networks, satellite navigation and smart logistics

Both international rating agency Fitch and the Bank of America this week cut their forecasts for China’s economic growth

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China’s infrastructure investment, often funded by governments and state-owned banks, grew by only 2.9 per cent in the first eight months of 2021, far below fixed asset investment growth of 8.9 per cent, according to data from the National Bureau of Statistics. Photo: EPA-EFE

Published: 6:15pm, 23 Sep 2021Updated: 7:31pm, 4 Oct 2021

Infrastructure investment in telecommunication networks, satellite navigation, the industrial internet, smart logistics as well as transport will increase over the next five years, China’s cabinet has announced, with Beijing vowing to stabilise the world’s second largest economy amid the latest setback involving indebted developer China Evergrande Group.

With concerns growing about China’s growth prospects due to the mounting problems involving Evergrande and crackdowns on both Big Tech and the after-school tutoring sector, the country’s cabinet on Wednesday outlined priority areas for investment, which also include increased spending on reservoir repairs and public facilities.

“We must strengthen pre-emptive [policy] adjustments and cross-cyclical adjustments, and stabilise market expectations with fiscal, financial and employment policy coordination,” the State Council said in an online statement following the meeting chaired by Premier Li Keqiang.

“We’ll plan further measures to boost consumption, leverage social capital in investment and maintain the growth of trade to ensure the economy grows within a reasonable range.”

A host of recent indicators have pointed to a sharper-than-expected downturn in domestic demand

Brian Coulton

International credit ratings agency Fitch on Thursday followed the Bank of America in cutting China’s growth estimates due to concerns over weak demand after data last week showed retail sales growth in August slowed to 2.5 per cent from 8.5 per cent a month earlier.