Massive road construction plan unveiled

China will invest around 4.7 trillion yuan ($762 billion) in building its national road network between 2013 and 2030, the country's transportation ministry said Thursday, in a move to ease the country's traffic pressure and aid its slowing economy.

The State Council, the country's cabinet, has approved a plan to expand the national road network to 401,000 kilometers by 2030 from 173,000 kilometers at the end of 2012, Dai Dongchang, chief planner at the Ministry of Transport (MOT), said at a press conference Thursday.

Ordinary national non-toll roads will be extended to 265,000 kilometers while national toll-based highways will increase to 118,000 kilometers by 2030, Dai said.

Ordinary national non-toll roads will require an investment of 2.2 trillion yuan and another 2.5 trillion yuan will be invested to build national toll-based highways, he said.

"The total investment in roads will push up annual fixed-assets investment growth by 2.7 percentage points and GDP growth by 0.2 percentage points annually," Yang Xiaowei, an analyst with Lianxun Securities, told the Global Times Thursday.

"Given the long time span involved, the contribution of the planned investment to economic growth will be moderate," Yang noted.

China's economic growth fell to 7.7 percent in the first quarter, down from 7.9 percent in the fourth quarter of 2012, falling short of expectations of a strong rebound. China is aiming for GDP growth of around 7.5 percent year-on-year in 2013.

"The traffic pressure on China's roads is greater than in any other country in the world. The freight volume on China's roads is 3.7 times that of the US," MOT's Dai said.

According to Dai, the construction of national non-toll roads will be financed by the government while the investment channels for national toll-based highways will be more diversified.

"Private investment in building highways will be encouraged and the central and local governments will subsidize these projects accordingly," Dai said.

"With accelerated urbanization and expansion of the country's road network, sectors such as cement, steel and construction will benefit the most," said Yang of Lianxun Securities.

"The distribution of China's roads is uneven, and the traffic conditions in the country's central and western regions are poor," said Zhang Baotong, vice director of the academic committee of the Shaanxi Academy of Social Sciences.

"More investment in the central and western regions in railways and highways could absorb excessive industrial capacity, drive growth and create jobs," Zhang said.

China's stock markets reacted coldly to the plan, with major construction companies seeing a decline in their shares.