China to increase spending on large construction projects by US$1.8 trillion
By Catrin Jones13 April 2023
The Chinese government is set to increase its spending on large construction and infrastructure projects by US$1.8 trillion year-on-year to help regional economies recover from the pandemic.
Bloomberg reports that this amounts to a 17% increase in capital investment, with new projects spanning the transport, energy and industrial park sectors. However, only 21 of China’s 31 regions have made their targets public, making it difficult to assess the complete picture of spending across the country.
Nonetheless, construction activity rose to its highest level in over a decade in March, signalling a return to investment as a means of stimulating economic growth.
The investment will focus on high-tech manufacturing and renewable energy, as China looks to increase its technological self-sufficiency and energy security. The central province of Henan will increase spending on industrial transformation projects by nearly 50% to US$290 billion.
According to rating agency Fitch, China will continue increasing the deployment of renewable power in 2023, with wind and solar power capacity rising 22% in 2022 on strong demand, lower raw material costs and a low base effect for wind power.
Bloomberg warns that the investment strategy will increase China’s public debt burden, which could raise concerns about the country’s financial stability.