NDRC greenlights new infrastructure construction
China's top economic planner has approved infrastructure projects worth more than 450 billion yuan ($72.6 billion) this week in an effort to boost investment, news portal chinanews.com reported Thursday.
This follows a previous round of approvals of investment projects worth 100 billion yuan at the beginning of this year, the report said.
Experts said these measures will help stabilize the Chinese economy in the second half of 2015.
The National Development and Reform Commission (NDRC), the country's top economic planner, announced on Monday that nearly 243 billion yuan will be invested in six new railways.
The projects include four high-speed lines in East China's Shandong and Jiangsu provinces, as well as in Northeast China's Liaoning Province. There will also be two new urban rail transits in Chengdu, capital of Southwest China's Sichuan Province and Nanning, capital of South China's Guangxi Zhuang Autonomous Region.
On Wednesday, the NDRC announced approvals for three more urban rail transit projects, worth 215 billion yuan in total. The projects will be in Nanjing and Nanchang, capitals of East China's Jiangsu and Jiangxi provinces, respectively, and in Hohhot, capital of North China's Inner Mongolia Autonomous Region.
"These investments are aimed at stabilizing growth and countering the downward pressure on the economy," Xu Hongcai, head of the department of information at the China Center for International Economic Exchanges, told the Global Times Thursday.
"In the second half of this year, the situation will be better. Things may turn positive in the third quarter, as policies rolled out earlier will need some time to take effect. These infrastructure projects are needed for these cities to grow," Xu noted.
China's economic growth slowed to 7 percent in the first quarter, down from 7.3 percent in the last quarter of 2014, data from the National Bureau of Statistics showed in April.
From January to April, China's fixed-assets investment rose 12 percent year-on-year to 11.99 trillion yuan, official data showed. But this was slower than the 13.5 percent year-on-year growth registered in the January-March period.
"Investment in rail is demand-driven, and Chinese people have already seen the benefits from building a large high-speed railway network," Liang Qinghuai, a professor of underground transportation at Beijing Jiaotong University, told the Global Times Thursday.
"Even though these cities are smaller ones, they are also expected to grow in population amid China's urbanization drive," Liang said, adding that investment in the cities' transport infrastructure will benefit their overall development.
Liang also pointed out that Beijing, Shanghai, Guangzhou and Shenzhen have suffered from overcrowding as the development of their urban transit systems has lagged behind overall urban development.
The financing for the new projects will come from a combination of local government funds, the State-owned China Railway Group and bank loans, according to the NDRC.
Liang said these projects will inevitably be a financial burden for local governments, but a necessary burden.
"These public services will have to be subsidized. Globally, over 90 percent of cities subsidize their urban transit systems," Liang said.
Profits from offering properties along the urban transit routes could help make up for some of the initial investment and operation costs, he noted.
"Local governments on their own will not be able to finance these projects. The promotion of new measures such as the Public-Private Partnership (PPP) model is needed. Despite obstacles faced by some of the earlier PPP pilot programs, it is still an important strategy that should be further pursued," Xu said.
In addition to the transportation projects, many provinces including Yunnan in Southwest China, Jilin in Northeast China and Hebei in North China have also rolled out policies for streamlining administrative procedures and boosting consumption, as well as tax reductions.
The government has also used monetary easing measures to spur growth. The People's Bank of China, the central bank, has cut interest rates three times since November, and banks' reserve requirement ratio was also cut twice, in February and April.
