China is increasing investment in fixed assets for a stable economy affected by COVID

Worker walks on a construction site in Beijing, China, July 20, 2017. Photo taken on July 20, 2017. REUTERS / Jason Lee

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BEIJING, June 16 (Reuters) – China’s state planner said Thursday that it has approved 10 fixed asset investments worth 121 billion yuan ($ 18.1 billion) in May, more than six times as much as in April. as politicians seek to achieve economic growth back on track after the downturn caused by COVID.

Wednesday’s data show that activity in the world’s second-largest economy is beginning to rise again in some sectors after widespread blockades of COVID-19 in April and early May, but prospects remain uncertain, especially for cities like Beijing, which are still still trying to bring the loads to zero.

Most private economists believe that the Chinese economy contracted in April-June after growing by 4.8% in the first three months. The government has promised positive growth in the second quarter. Read more

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“We will ensure reasonable economic growth in the second quarter to provide a solid basis and conditions for the economy in the second half of the year,” said Meng Wei, spokesman for the National Development and Reform Commission (NDRC), at a news conference Thursday.

From January to May, the NDRC approved a total of 48 fixed asset investment projects totaling 654.2 billion yuan, more than 80% of the 775.4 billion yuan of infrastructure, energy, mining, water and manufacturing projects approved for the full 2021 d.

With the proliferation of the high-transmission Omicron variant in China this year, severe restrictions have been imposed in many cities, such as Shanghai and Beijing, including various blockages that are hurting local economies.

The Chinese capital, Beijing, which has been battling its worst outbreak since late April, has seen its economy cool sharply, with even a weaker national economy.

In January-May, the city’s industrial output fell 12.5 percent from a year earlier, according to local statistics bureau on Thursday, worse than China’s overall growth of 3.3 percent during the period.

Following the closure of restaurants and some entertainment services in May, Beijing’s retail sales fell 7.7 percent in the first five months, from a 1.5 percent decline across the country. Revenues from catering in the city decreased by 13.0%.

In May alone, retail sales fell 25.73% year-on-year, while real estate sales fell 23.1%, according to official Reuters estimates.

The NDRC will also give local authorities more leeway in using the funds they raise through special bonds, Mann said.

China will for the first time include high-tech infrastructure projects or “new infrastructure” in the scope of use of funds raised from local government special bonds, she said.

PRIVATE INVESTMENTS

On Wednesday, state media quoted the cabinet meeting as saying China would direct financial institutions to lend more long-term loans and boost support for private investment.

China will boost support for private investment by choosing a batch of major infrastructure projects to attract private investors, the cabinet said.

“Private investment is important when trying to maintain a stable growth rate of total investment,” Mann said.

Since 2012, when official statistics on private investment began, the share of private investment has always remained above 55% of total investment.

As of this year, private investment growth has slowed due to complex and volatile international factors, as well as COVID’s domestic outbreaks, Mann said.

From January to May, private investment increased by 4.1%, or 56.9% of total investment, Meng said, slowing from 5.3% in the first four months.

The NDRC will increase financial support for private investment, she said.

(1 dollar = 6.9664 Chinese Yuan Renminbi)

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Report by Shen Yan, Ryan Woo and Ellen Zhang; Edited by Christopher Cushing and Kim Coghill

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