China’s top 5 infrastructure projects set to cost US$131 billion, but overall investment set to drop
Deteriorating local government finances and concerns about mounting public debts are likely to result in China gradually curbing local government infrastructure projects this year, analysts said, although the top five approved last year are still set to cost close to 850 billion yuan (US$131.7 billion).
China’s total fixed-asset investment rose to 51.9 trillion yuan (US$8 trillion) in 2020, an increase of 2.9 per cent compared to the previous year, but at the same time, its overall debt level also rose to 270.1 per cent of gross domestic product (GDP) from 246.5 per cent in 2019.
“Stabilising investment is the key to stabilising economic growth, and the growth of local government debt is critical to infrastructure investment,” said the National Institution for Finance & Development (NFID), a government-linked think tank, who released the data about China’s debt level.
“Infrastructure investment for the whole year of 2020 increased by 3.41 percentage points more than the growth rate of nominal GDP, but its stimulus effect was limited compared to the scale of debt expansion. The increase in debt growth and the slowdown in economic growth have jointly raised the level of leverage.”
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