China pumps US$163.2 billion into infrastructure to prop up economy
CHINA has approved 16 infrastructure development projects worth a total of CNY1
CHINA has approved 16 infrastructure development projects worth a total of CNY1.1 trillion ($163.2 billion), including the US$44.24 billion Shanghai Urban Rail Transit, since the start of December, in a bid to give its flagging economy a shot in the arm, the South China Morning Post reported as the trade row with the US drags on.
This is a dramatic increase from the $15.69 billion approved for seven major infrastructure projects by the National Development and Reform Commission (NDRC) over the previous 12 months.
The most expensive project on the approval list is an expansion of the Shanghai Urban Rail Transit that aims to better connect the financial hub's two airports and two major railway stations, according to the statement from the NDRC.
'China will speed up investment projects and local government bond issuance but will not resort to 'flood-like' stimulus,' said NDRC vice-chairman Lian Weiliang earlier this month, reiterating Beijing's stance against easy borrowing.
Investment growth, excluding power and utility assets, slowed to 3.3 per cent in the first nine months of 2018, from 19.8 per cent for the corresponding period in 2017, according to Moody's, as a result of Beijing's effort to reduce debt and tighten control over local government spend.
The central People's Bank of China (PBOC) has cut bank reserve ratios five times since last year. This means banks are required to hold less cash in reserve. It is a policy measure designed to free up more liquidity for lending.
Last year, China's banks extended a record CNY16.17 trillion in new loans, well above the previous record of CNY13.53 trillion in 2017, an indication that the bank has been moderately aggressive in using monetary policy to stimulate the economy.
Last week, the PBOC also announced a bill swap mechanism, that will allow holders to swap commercial bank perpetual debt ?that is, debt without a maturity date ?for central bank bills to be used for borrowing collateral.