China Boosts Ritz... Putting Private Companies Front and Center

As China continues to announce measures to revive the economy, it has declared its intention to promote the issuance of infrastructure REITs bonds by private enterprises. With the ongoing real estate market slump hindering economic recovery, this move is interpreted as an effort to boost the market by putting the private sector at the forefront.

According to local media such as China Pengpai News on the 24th, Han Zepeng, Deputy Director of the Fixed Asset Investment Department at the National Development and Reform Commission (NDRC) of China, stated at a press conference, "We will help private enterprises accelerate the issuance of infrastructure REITs bonds." REITs refer to funds that pool money from multiple investors to invest professionally in real estate and infrastructure, and distribute profits according to the scale of investment.

[Image source=Yonhap News]

Deputy Director Han explained, "Infrastructure REITs are one of the important measures to activate equity assets and a significant innovation that effectively connects the real economy with the capital market," adding, "The number of private projects is still relatively small, and the types of assets remain relatively singular, so further encouragement is needed."

Regarding the low number of listed private enterprise infrastructure REIT projects, he pointed out, "From an objective perspective, the capabilities of private enterprises participating in infrastructure investment are relatively limited," and noted, "Infrastructure REITs are innovative financial instruments, and when first implemented, some private enterprises still had a wait-and-see mindset and required a process of acceptance for new things."

He also emphasized, "The National Development and Reform Commission has consistently valued and actively encouraged private enterprises to activate equity assets." He continued, "We have encouraged private enterprises to make good use of innovative tools such as infrastructure REITs to activate existing equity assets and optimized development models," explaining, "We promoted speeding up capital turnover without increasing debt ratios and encouraged investment in industries with high development potential, such as new energy."

On the same day, the NDRC announced plans to increase the investment proportion of the private sector in fixed asset investment and to promote private investment in key areas. In particular, it presented specific policies to improve the environment, such as shortening the investment approval period.