China seen using new tool to finance hi-tech advances amid slower economic growth
Goldman Sachs says deploying an 800 billion yuan financial instrument into strategic investments could provide an economic boost
China could accelerate the deployment of an 800 billion yuan (US$117.94 billion) new financial instrument to support hi-tech development and help mitigate the forecast slowdown in quarterly economic growth, investment bank Goldman Sachs says.
Officials would use the quasi-fiscal New Policy-Based Financial Instrument, which was rolled out to fund strategic investments through policy banks outside traditional commercial bank lending channels, Goldman Sachs said.
“China’s slowing second-quarter growth has … raised market attention on a potentially faster implementation of the New Policy-Based Financial Instrument that was already planned for this year,” the New York-based bank said in a report on Sunday.
“The ongoing US-China technology race calls for larger and more durable funding support for hi-tech industries over the medium to long term,” said the report, written by China economist Wang Lisheng.
“Funding for China’s hi-tech manufacturing sector, including AI supply chains, remains largely government-led, as policymakers seek to narrow the gap in hyperscaler capex between the US and China,” Wang added.
With official data scheduled to be released on Wednesday, some economists expect that China’s economic growth slowed in the second quarter after a 5 per cent increase in the first. Weak domestic demand and geopolitical uncertainties have weighed on the world’s second-largest economy.