BEIJING, Aug. 10 (Xinhua) -- According to the State Council’s executive meeting on July 23, measures will be taken to promote effective investment focusing on addressing inadequacies, gathering momentum and improving people’s livelihood. After that, many Chinese local authorities held meetings successively in this regard, with several provinces having released plans on key project investment.
Analysts believed that the move signals that investment in infrastructure construction, especially in such major infrastructure and livelihood projects as transportation infrastructure and urban public facilities, is likely to be accelerated in the second half of the year. Accordingly, the issuance of the 1.35 trillion yuan worth of special bonds by the local governments may also get accelerated.
--- Infrastructure investment growth likely to rebound
Local governments have already released signals of focusing on major project investment.
On July 24, the People’s Government of Guangdong Province held the meeting to accelerate investment in key projects. The local government highlighted that it will give priority to boosting investment, maintaining growth and giving a full play to the role of major infrastructure and industrial projects.
Previously, Hubei Provincial Development and Reform Commission planned a batch of major projects related to the improvement of people’s livelihood. Besides, many cities, including Yongzhou of Hunan Province, Yuncheng of Shanxi Province and Zhumadian of Henan Province also convened meetings to promote major construction projects.
Zhejiang Provincial Development and Reform Commission disclosed on its website bidding results of major construction projects in the first half of the year. According to the data, with the progress of such major infrastructure projects as Hangzhou-Wenzhou Railway, Hangzhou-Quzhou Railway and Hangzhou Metro Phase III, the transaction volume of major construction projects is estimated to maintain a rapid growth in the second half of the year.
Since the beginning of this year, the growth of investment in infrastructure construction has posted decline. According to the data released by the National Bureau of Statistics, the growth of investment in infrastructure construction stood at 7.3 percent in the first six months, registering a year-on-year decline of 13.8 percentage points.
However, Huatai Securities believed that the key to expanding domestic demand is to stabilize investment in infrastructure construction. It is estimated that the investment in infrastructure is likely to recover in the second half of the year, with the growth in the whole year ranging between 13 percent and 15 percent.
--- Plans already released to address inadequacies, improve livelihood
Recently, many Chinese local authorities have released investment plans on major projects.
Guangdong Provincial Development and Reform Commission issued a circular on investment plan on major projects, which includes 18 projects in 9 categories, like transportation networks, disaster prevention and reduction through water conservancy, water security capability, urban underground pipe networks, environmental pollution treatment, and new talent supply system. The total investment is estimated to exceed 1.9 trillion yuan.
Jiangsu Province released a similar investment plan at the end of June to ensure over 360 billion yuan worth of annual investment. Jiangsu Development & Reform Commission emphasized that the preliminary work of major projects like railways and oil pipelines should be accelerated.
Moreover, Chengdu of Sichuan Province plans to implement 171 major infrastructure and livelihood projects in the coming three years, with the total investments exceeding 1.5 trillion yuan.
--- Issuance of local special bonds to be accelerated
According to the State Council’s executing meeting held on July 23, local governments should speed up the issuance of 1.35 trillion yuan worth of special bonds in a bid to accelerate infrastructure investment.
Based on the data from the Ministry of Finance, in the first half of this year, local governments issued 1.4109 trillion yuan worth of bonds, including 1.0436 trillion yuan of general bonds and 367.3 billion yuan of special bonds respectively.
Li Chao, chief macro researcher of Huatai Securities, noted that special bonds are mainly divided into land reserve bonds, highway bonds and shantytown transformation bonds, which are the main directions of infrastructure construction.
“As the demand for infrastructure investment will be very large in the future, local governments should arrange projects reasonably when issuing special bonds. They should not only guarantee reliable source of repayment, but also give a full play to the role of these bonds as catalyst,” said Jiang Zhen, a researcher with the National Academy of Economics Strategy of China Academy of Social Sciences. (Edited by Zhang Yuan, zhangyuan11@xinhua.org)
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