BEIJING: Chinese provinces are set to increase spending ($1.8 trillion) on major construction projects as part of the infrastructure plan by nearly a fifth this year, as the country’s government looks to infrastructure investment to bolster a pandemic-stricken economy.
The move comes as consumers remain cautious and bruised from years of restrictions related to the COVID-19 pandemic.
According to a Bloomberg analysis of government statements and state-media reports, around two-thirds of China’s regions have announced plans to spend more than 12.2 trillion yuan ($1.8 trillion) on major projects like transport infrastructure, energy generation, and industrial parks. This represents a 17% increase compared to last year.
While the recovery in consumer spending is still expected to be the main driver of economic growth this year, the scars left by the pandemic suggest that job and income rebound could be gradual.
In this context, provincial spending plans that emphasize investment in manufacturing and infrastructure are seen by some economists as providing a significant boost to the economy.
This move underlines Beijing’s reliance on a well-tested strategy of using the investment to drive employment and, ultimately, household incomes, rather than subsidizing households directly.
It also highlights the government’s continued commitment to infrastructure investment as a means of spurring economic growth, particularly in the face of ongoing pandemic-related challenges.
