Breaking | China’s best performing mega-city to boost infrastructure spending, despite fears over investment-fuelled growth
Chongqing plans to continue increasing spending on infrastructure, despite fears regarding the sustainability of such investment-fuelled growth.
Zhang Guoqing, the deputy Communist Party chief of Chongqing, told reporters from Hong Kong and Macau that investment in infrastructure would continue.
Chongqing, a mega-city on the upper reaches of the Yangtze River the size of Austria, reported a faster pace of economic growth than most provinces and major cities in the first quarter of the year. According to official figures, its GDP rose by 10.7 per cent compared with the same period last year, with investment in infrastructure, which rose 30 per cent to 73.05 billion yuan (HK$87.3 billion), a big contributor.
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Zhang said the boost in spending was not simply to stimulate the economy, but was to meet “actual demands”, especially in rural and mountainous areas.
Chongqing has set a GDP growth target of about 10 per cent for the year. Zhang said growth in the second quarter was expected to remain above 10 per cent.
Zhang also reiterated government plans to “effectively destock the property market”, saying that the priority was to keep property prices stable.
“[Chongqing] does not want and would never allow any big rise or fall [in property prices],” Zhang said.
The strong economic performance by Chongqing in the first three months of the year comes after the city of nearly 30 million people reported GDP growth of 11 per cent last year. That was the highest figure of the 31 provinces, regions and major cities on the mainland.
Overall growth on the mainland slowed to 6.9 per cent last year, the lowest in a quarter of a century. The central government has set a growth target of 6.5 to 7 per cent for 2016.
Beijing endorsed the economic policies of Chongqing’s leadership – led by party secretary Sun Zhengcai and mayor Huang Qifan – when President Xi Jinping visited the city at the beginning of this year.
China’s GDP grows 6.7pc in first quarter in good start to 2016
This was seen as a political boost for both Sun and Huang ahead of the next party leadership reshuffle, which takes place in less than two years.
China has reported better-than-expected first quarter economic figures. GDP grew 6.7 per cent from a year earlier and appears on track to meet the full-year target.
However, concerns have been growing that the world’s second largest economy, under intensifying downward pressure, may be reverting to the government investment-led model of growth that Beijing has promised to abandon.
