China is seeking private investment in thousands of projects worth a total of 3.2 trillion yuan ($445 billion) as part of Beijing's latest efforts to bolster business confidence and the faltering economy.
Luo Guosan, head of the NDRC's investment department, told reporters on Monday that the National Development and Reform Commission has compiled a list of over 2,900 local government initiatives in which private investors can participate. The NDRC also pledged to enhance project funding support.
Local governments typically proclaim large construction projects during the course of the year. These projects are funded with a combination of private and public funds and require several months to commence. Investors anticipating stronger policy action, including direct stimulus measures, are unlikely to experience an imminent improvement in business sentiment as a result of the NDRC's actions.
“A push as powerful as this is a positive sign,” said Ding Shuang, chief economist for Greater China & North Asia at Standard Chartered Plc.
“But the recovery of private sector confidence takes time. Even if investment improves as confidence rebounds, project preparations will take time, too. Therefore, I’d expect effects to be felt next year and beyond.”
Transportation, water conservation, clean energy, new infrastructures, advanced manufacturing, and modern agricultural facilities are among the main sectors that the NDRC is targeting for private investment. Luo stated that the NDRC, the nation's primary agency for economic planning, will shortly launch a platform where investors can access information about recommended projects.
The NDRC's announcement comes days after Beijing pledged to improve business conditions, which have been harmed by years of stringent pandemic controls and regulatory crackdowns in key sectors such as technology and real estate.
According to official data, private investment in China has decreased this year and now accounts for just 53% of total fixed asset investment, down from a peak of 65% in May 2015. Monday, the NDRC stated that its goal is to keep the proportion of private investment at a "reasonable level."
Luo stated during the briefing that the NDRC has established a pilot programme for investment-loan cooperation with seven institutions, including the China Development Bank and the Industrial and Commercial Bank of China. He added that the agency is preparing a list of private investment initiatives to help banks increase their loan support.
According to the agency's statement, qualified private investment projects will be supported to issue infrastructure real estate investment trust products to expand the financing channels of private companies, reduce their debt-to-asset ratio, and enhance their capacity to reinvest.
This year, the NDRC has met with the securities regulator, the Shanghai and Shenzhen exchanges, and industry experts to discuss 71 infrastructure REITs projects, including 19 from the private sector involving retail malls, solar and wind power, and large data centres. Han Zhifeng, another agency official, stated at the same Monday press conference.
Han added that private firms will be encouraged to acquire the assets of state-owned enterprises and use infrastructure REITs to exit the investment.
According to the NDRC official, factors such as the economy's sluggish demand have impacted business confidence. In addition, there were "unreasonable" restrictions on private firms' participation in certain initiatives, and their access to funding and land remains restricted, Han said.