China Sets Out $75 Billion Infrastructure Fund to Revitalize Economy

China is set to line up a state infrastructure investment fund worth 500 billion yuan ($74.69 billion) to boost infrastructure spending and revive a stagnant economy. Chinese economy has started slowly recovering from pandemic lockdowns but headwinds that slow down growth remain.

Some of those headwinds are a still subdued property market, low consumer spending and a fear of new wave of covid infections.

Beijing is expected to set up the fund in the third quarter.

China has unveiled a series of economic support measures in recent weeks to reach its 5.5% growth target for the year, but experts say it will be hard to achieve without abandoning its strict zero-Covid policy.

Beijing’s economic support so far has mostly come from its fiscal stimulus to counter the impact of Covid-19, with the central bank steadily easing liquidity conditions to lower financing costs.

Government officials now bet on an infrastructure push to revive the economy, pledging 800 billion yuan in new credit quota and 300 billion yuan in financial bonds for policy banks to fund big projects.

Meanwhile, Chinese consumers have been tightening their belts amid job losses and falling incomes and exporters face headwinds from a potentially sharp global economic downturn as major central banks tighten policy to fight soaring inflation. The Ukraine war, high raw material costs and supply chain problems also pose risks to the outlook.

Good news for China is its inflation is largely under control, so it provides room for the government to stimulate the economy. Still, global cost-push factors could start impacting domestic prices later in the year.

Beijing’s push for big infrastructure projects is a viable one, but it may not be enough as property spending is still weakening.

Beijing’s new targets in infrastructure will be 5G, artificial intelligence and data, as returns on traditional projects like highways, railways and airports are now much lower.

To meet the full-year target of 5.5%, China must reach 7-8% of economic growth in the second half of 2022, which is 3-4 percentage points higher than the growth rate in the third and fourth quarters of last year.

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Need to access the insight?

Start your 7-day free trial now

Do you need to access special insights on this matter?

Start your 7-day free trial  and become a member today

Subscribe to Top Insights Today

Subscribe to Executive Newsletter Top Insights Today

The Executive Newsletter -Top Insights Today- puts global business events in perspective through special insights

Join the ranks of global executives and subscribe to Top Insights Today

Top Insights Today covers insights on energy, clean-tech, oil&gas, mining, rare earths, defense, aviation, infrastructure, manufacturing, electrical vehicles, big-tech, finance and politics of business

By clicking subscribe you agree to our privacy and cookie policy and terms and conditions of use.

Read more insights

Canada’s Oil Rich Alberta Province Set to Become Renewables Powerhouse

Canada’s oil rich province of Alberta is preparing to undergo a major shift and become one of the country’s top renewable energy producers. The province aims to attract investments given its vast natural resources and business friendly regulatory environment. Canada’s renewables output is expected to grow from 19.6 gigawatts (GW) in 2021 to around 45 GW in 2025, primarily on the back of new onshore wind and solar energy projects. It should not come as a surprise as Canada’s energy mix is hydropower dominant, but Alberta being the pioneer is interesting as the province produces the majority of its electricity from fossil fuels.

Explained: Why OPEC+ is Mulling Over an Output Cut

The OPEC+ group of oil exporting countries have been mulling over an output cut of more than 1 million barrels per day (bpd) in addition to voluntary reductions by individual members, which will make the group’s largest cut since 2020. The group will meet in Vienna on Oct. 5, in person for the first time since March 2020, on the back of falling oil prices and months of market volatility, which prompted Saudi Arabia, the group’s top oil producer, to discuss production cuts. OPEC+, which includes OPEC members and allies including Russia, has been gradually rising output to compensate record cuts it made in 2020. 

Congress Questions Major U.S. Banks’ China Stance

The U.S. House Financial Services Committee held a hearing on Wednesday to question top U.S. bankers’ stance on China. The lawmakers mounted pressure on banks to take a tougher stance on doing business with China amid growing tensions between Washington and Beijing over Taiwan and China’s human rights record. During the hearing, lawmakers asked the banks what position they would take in the event of a Chinese invasion of Taiwan. 

Stay informed

error: This content is protected !!