Guangxi, Hubei Province Announce Successive Construction Projects
"Positive Impact Expected on Q4 China GDP Figures"
[Asia Economy Beijing=Special Correspondent Jo Young-shin] China is undertaking large-scale construction projects as part of its economic stimulus efforts. In response to domestic and international factors such as rising global raw material prices, manufacturing slowdowns due to power shortages, and a nationwide resurgence of COVID-19, which have triggered warning signs in key growth indicators, the Chinese government appears to have pulled out the construction card.
According to Chinese media including the state-run Global Times and Pengpai on the 15th, Guangxi Zhuang Autonomous Region (Guangxi Province) recently officially announced construction projects worth 185.9 billion yuan (29.1 billion dollars).
The Guangxi provincial government unveiled a blueprint to transform Guangxi into a major transportation hub connecting eastern, western, northern China, and maritime routes by 2025, when the 14th Five-Year Economic Plan ends. To this end, they also revealed detailed plans to build four new railways and establish seven new expressways.
Prior to Guangxi, Hubei Province announced it would carry out a total of 805 projects. The funds allocated for these 805 projects amount to a staggering 452 billion yuan (70.9 billion dollars). The capital city of Shaanxi Province, Xi’an, also recently disclosed the commencement of a large-scale power grid project worth 65 billion yuan (10.2 billion dollars).
Chinese media explained that the large-scale construction projects announced by these major provinces will all begin in the fourth quarter. The Global Times pointed out that fixed asset investment has been continuously declining since the first quarter of this year, despite a 7.3% increase compared to the same period last year, and that infrastructure investments such as construction and real estate in China have not significantly increased, even considering the base effect. It diagnosed that the announcement of these large-scale projects by major provinces is related to economic stimulus.
Hu Qimu, a researcher at the Sinosteel Economic Research Institute, said, "The Chinese government has stated that it will not use artificial monetary policies," but added, "Given the increasing downward pressure on the domestic and international economy, the Chinese government is expected to utilize fiscal policies such as approving the issuance of special purpose bonds."
Dong Dengxin, director of the Finance Research Institute at Wuhan University, explained, "Due to various factors, China’s economic growth in the second half of the year is slowing down," and added, "The construction projects in major Chinese provinces will have a positive impact not only on the fourth-quarter economy but also on China’s annual gross domestic product (GDP)."
The Global Times, citing data from China’s Ministry of Finance, forecasted that the issuance of special purpose bonds by major local provinces began in earnest in August and will be completed by the end of November. It also added that the issuance amount of China’s special purpose bonds reached 2.22 trillion yuan by the third quarter.
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