China’s wealthiest provinces accelerate fixed-asset investment to drive growth
WITH the end of the Chinese New Year break, China’s wealthiest provinces this week announced annual investment in major projects totalling over two trillion yuan (S$374 billion), heeding Beijing’s call to expedite fixed-asset investment and take the lead in driving growth.
Guangzhou, capital of southern Guangdong province, will commence 319 major projects in the first quarter of this year, according to the official Guangzhou Daily on Wednesday (Feb 21).
The mega-city of 18.7 million people also planned to start 844 key projects with an annual planned investment of 380.5 billion yuan, such as the expansion of its Baiyun international airport and an increase in GAC Honda’s new energy vehicle production capacity.
Since last year, the world’s second-biggest economy has struggled to sustain a strong post-Covid recovery, weighed down by a years-long property slump, mounting local government debt, and sluggish domestic consumption.
At a key economic conference held in Beijing in December, China’s top leaders told major provincial officials to take the lead in driving growth and make greater contributions to the national economy.
At the same time, heavily indebted local governments were instructed to delay or halt some state-funded infrastructure projects to contain debt risks.
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Local officials in some rich provinces have since unveiled their priorities for 2024 with pledges to speed up infrastructure investment and plans to expand high value-added sectors.
Eastern Zhejiang province will invest more than one trillion yuan this year in over 1,000 major projects including nuclear power and new energy, official media reported on Tuesday.
Zhejiang in late January planned its fixed asset investment to grow around 6 per cent this year, in line with last year’s growth rate, but later said it would ensure both growth and the share of private investment this year would exceed 2023 levels.
Guangdong province is planning 1,508 projects with annual investment of more than one trillion yuan in next-generation information technology, high-end equipment manufacturing and new industrial materials.
Guangdong in the government work report late January set a 4 per cent target for fixed asset investment growth this year, up from 2.5 per cent recorded in 2023.
Since Feb 10, the first day of the eight-day Chinese New Year holiday, eastern Jiangsu province continued to work on 76 major industrial projects, including in areas such as chips, new energy vehicles and autonomous driving, official media reported on Tuesday.
China’s economy grew 5.2 per cent in 2023, slightly more than the official target, but the recovery was far shakier than many analysts and investors had expected.
Markets are looking towards the annual parliamentary meeting, which will start on Mar 5, for new policy directives. China’s economic growth target for the year will also be announced at the time.
The National People’s Congress, or parliament, “will be a test of whether or not the recent efforts to support the economy and stabilise markets represent a policy pivot,” said economists at Citi group, expecting the government to keep economic growth target at around 5 per cent. REUTERS
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