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Economy

China eyes "new infrastructure" to drive investment, economic growth amid epidemic

March 26, 2020


Abstract : "New infrastructure" has become a popular investment field in China to boost economic growth amid the COVID-19 outbreak.

BEIJING, March 26 (Xinhua) -- "New infrastructure" has become a popular investment field in China to boost economic growth amid the COVID-19 outbreak.

First put forward at the Central Economic Work Conference in December 2018, "new infrastructure" mainly refers to the infrastructure related to the high-tech industry, involving 5G, ultra-high voltage, intercity high-speed railway and intercity rail transit, charging piles, big data centers, artificial intelligence (AI) and industrial Internet.

Experts believe that the investment boom in "new infrastructure" during the epidemic may concentrate on 5G and rail transit, with a total investment of more than 700 billion yuan.

Development of "new infrastructure" becomes a priority in China

It's learned that the construction of "new infrastructure" has been frequently mentioned in meetings recently held by China's central authorities. The National Development and Reform Commission (NDRC) mentioned this topic even for four times from March 17-23, all highlighting the construction of 5G network, data centers and other "new infrastructure".

Efforts will be made to strengthen the construction of the "new infrastructure" in fields like 5G, data centers and industrial Internet by using various funds including the central budget investment, said Gao Gao, Deputy Secretary General of the NDRC, China's top economic planner, at a press conference held on March 23.

Emphasis will be put on high-quality development of "new infrastructure", said Zheng Jian, deputy director of the Department of Basic Industries at the NDRC, on March 21.

According to him, China will focus on innovative and integrated development of "new infrastructure" by enhancing support for research, development and innovation of related technologies as well as resource integration and sharing.

In the future, China will push for construction of more projects involving smart transportation, smart power grids and smart cities in a coordinated way to support the development of smart economy and smart society, and meanwhile drive the improvement of traditional infrastructure, said Zheng.

"It's not surprising that China beefs up infrastructure construction, whether it's for the purpose of boosting the economy during the epidemic or meeting the demand existing before the outbreak of the epidemic," said Zhao Xijun, deputy dean of the School of Finance at Renmin University of China.

Infrastructure construction has always been an important part in China's economic development, and the investment stimulated by infrastructure construction is also an important driving force for China's economic growth, Zhao added.

5G infrastructure outshines others in the investment boom

According to Li Jin, chief researcher at the China Enterprise Research Institute, the new investment fields will mainly include 5G infrastructure, ultra-high voltage, intercity high-speed railway and intercity rail transit, new energy vehicle charging piles, big data centers, AI, industrial Internet and so on.

According to GF Securities, a securities company in China, the investment in 5G base stations is estimated to be about 240 billion yuan to 300 billion yuan, while that in intercity expressway and urban rail transit may reach 540 billion yuan to 640 billion yuan.

It's learned that as of March 10, 25 provinces and cities in China had mentioned "new infrastructure" construction in their government work reports, among which 21 regions said they would advance 5G-related construction, and eight regions clarified the number of 5G base stations planned to be built within the year which stands at approximately 276,000 in total.

Given the 5G base station investment plans in the first three quarters of 2020 of China Unicom, China Telecom and China Mobile, the three telecom giants in China, the number of 5G base stations to be built in 2020 might reach about 600,000, with the average cost of each base station standing at about 400,000 to 500,000 yuan and the total investment registering about 240 billion yuan to 300 billion yuan, said Guo Lei, chief macroeconomics analyst of GF Securities.

According to China Academy of Information and Communications Technology (CAICT), a scientific research institute directly under the Ministry of Industry and Information Technology (MIIT) of China, China's investment in 5G network construction is expected to notch 1.2 trillion yuan in 2025.

Besides, in the next five years, the investment of industrial enterprises in network transformation is expected to reach 500 billion yuan, and the construction of 5G network will drive related industrial investment of over 3.5 trillion yuan, said CAICT.

China ramps up special bonds to drive investment

Special bonds may become the main source to expedite the investment in infrastructure amid the epidemic, a signal clearly released by related authorities recently.

Efforts should be made to use some central stock funds in a centralized way, strengthen transfer payments, and expand the issuance of local government special bonds to ensure investment in projects, said Ou Wenhan, assistant minister of the Ministry of Finance (MOF), on February 24.

Luo Guosan, director of the Department of Basic Industries at NDRC, said in an interview on February 27 that efforts should be made to speed up the release of central budget investment, seek loan support from financial institutions, and attract more social investment to participate in the construction of major projects.

In order to push forward the construction of major projects, NDRC will take corresponding policies and measures to speed up the allocation of central budgetary investment and organize local governments to prepare special bond projects, said Ou Hong, director of the Department of Fixed Asset Investment at NDRC, on March 4.

While the scale is expanding, the issuance of special bonds is also accelerating. Data showed that by the end of February, 1,223 billion yuan of local government bonds had been issued nationwide, with 66 percent of them issued in advance. (Edited by Gu Shanshan with Xinhua Silk Road, gushanshan.1987@163.com)

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Keyword: economic growth new infrastructure

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