Spending on these sectors are poised to grow relatively fast in 2022 under Chinas 14th Five Year Plan. As such, infrastructure spending has been cited as a key countercyclical tool to support growth. 13 major cities and provinces, including Beijing, Shanghai and Fujian province, released investment plans and "major infrastructure" projects for 2020. China's mega water projects, such as the Three Gorges Dam and the South-to-North Water Diversion project (SNWD), are famous. However, new project activity in the first quarter of . Figure 2: Funding sources for Chinas infrastructure investments. The circular sets tangible 2025 targets for the construction of environmental infrastructure. By 2025, data centers will be mandated by the NDRC to maintain power utilization efficiency (PUE) rates under 1.5, thereby be unable to use more than one third of energy for activitiessuch as coolingthat fall outside of the purview of the direct operation of IT equipment. Since then, updates about the construction of EDWC projects have consistently appeared in state media and official rhetoric, revealing that the plan will likely continue to be emphasized by Beijing in the future. China approved Yuan 1.65 trillion (USD 231 billion) of investment in the railway, urban rail traffic, and airport projects in 2018 75% or Yuan 1.24 trillion of it in the fourth quarter. with John Kerry Increasing supportive fiscal, tax, and financial policies, including central budget allocation for eligible projects and inclusion of environment infrastructure in the eligible projects for financing through SPBs, encouraging financial institutes to use various financial tools to finance projects, and encouraging qualified projects to carry out pilot projects in real estate investment trusts (REITs). and grow their operations. Twelve companies signed contracts related to EDWC on the day of its launch, while over thirty have been designated as ecological partners in the construction of EDWC projects in Ningxia alone. The Infrastructure Bill Is Not the Build Back Better Act. However, local governments and developers likely cannot expect a drastic liberation of fiscal and monetary policy in 2022. Between 2007 and 2020, China's two main overseas development banks invested $23 billion in infrastructure projects on the continent, according to a Feb. 9 analysis by the Center for Global . We discussed the rise of LGFVs and local governments reliance on land transfers in more detail in our article on the, Although the proportion of bonds issued for the purpose of refinancing hidden debt has dropped significantly from the previous year (about 16.5 percent (RMB 115.2 billion (US$18.1 billion)) of the bonds issued in January 2022 were for refinancing, versus almost 100 percent in January 2021). All of the funds raised through the issuance of SPBs were used in key areas determined by the Party Central Committee and the State Council, according to a newsletter (link in Chinese) posted on the central government website. Previous Article Understanding Chinas New Rules on Import and Export Food Safety, Next Article How to Sign an Electronic Labor Contract in China: Your Step-by-Step Guide . He was a senior editor at The Nation for 17+ years and has a family in Bangkok. Promoting the upgrade of gigabit fiber-optic networks. January 31, 2022, A Guide to Global COVID-19 Vaccine Efforts, Backgrounder In this article, we look at Chinas latest fiscal policies to promote infrastructure spending and the industries that will likely receive a large proportion of the funding in 2022. Officials in Shanghai, China 's biggest commercial centre, launched eight infrastructure projects on Tuesday with total investment of 1.8 trillion yuan ($257 billion), state media said. Apr 27 2022 3:13 AM EDT Updated Wed . Property investment dragged the overall fixed asset investment growth in 2021 as the country faced a growing housing crisis that depressed house sales and land transfers. In this article. Separately, the bulk of the infrastructure spend thus far has mostly focused on energy capacity expansion (electricity production investments in power plants and power grid construction), railway extensions, as well as water conservancy projects, and expressway construction. One such area is the construction of affordable rental housing. To stave off climate-induced instability in Central America, national governments and regional and international organizations all have a role to play to develop both immediate crisis response and long-term instability mitigation, argues Paul J. Angelo. When it comes online in 2025, it will make Qatar the largest LNG exporter globally, with a LNG production capacity of 110 million tons per year (tpy). At the Central Economic Work Conference held in December 2021, an annual conference that sets the tone for economic policy for the following year, the government said it would appropriately front-load infrastructure investment for 2022. Recent months have seen a pick-up in infrastructure investment in Shanghai, the municipal government said, with contracts signed for 597 big projects from mid-June to mid-September, and investment of 941 billion yuan, while 296 of those have begun construction. Join an event and well donate a tree to reforestation projects, Overview of Chinas infrastructure investment. Bloomberg Daybreak Europe, anchored live from London, tracks breaking news in Europe and around the world. John Kerry discusses the U.S. international climate effort ahead of COP27,the upcoming 2022 United Nations Climate Change Conferencein Sharm el-Sheikh, Egypt. Building a national integrated big data center system and several national hub nodes and big data center clusters, including E-level and 10E-level supercomputing centers. BEIJING -China will set up a state infrastructure investment fund worth 500 billion yuan ($74.69 billion) to spur infrastructure spending and revive a flagging economy, two people with knowledge of the matter told Reuters on Tuesday. In the first of a three-webinar series, the Le Collectif pour le Renouveau Africain (CORA) brought together a group of leading African analysts and scholars to discuss local agency in Africa-China negotiations. China has relied on infrastructure to boost growth on the past, and analysts said the approach can be effective near-term, but adds to long-term problems. Webinar. Chinas government has given the green-light to investment in projects thats worth nearly 70% of what was allowed for the whole of last year, another sign that Beijing is accelerating infrastructure spending to bolster an economy hit hard by Covid. Notwithstanding this, infrastructure spending is still looked to as a key countercyclical measure to support growth. Around China's three largest urban areas Beijing, Shanghai, and Guangzhou the area of new construction sites increased by 110% in . Achieving this will require a huge amount of investment and offers a host of new opportunities for growth. Insummary, infrastructure spending continues to be a key growth lever for Chinas policymakers. Center for Preventive Action, Social Justice Webinar: Religion and the 2022 Midterm Elections, Webinar Mining grew by 10.9 percent, up from 14.1 percent decline in 2020, while investment in electricity, heat, gas, and water production and supply increased by just 1.1 percent, a significant slowdown from the 17.6 percent growth in 2020. Ensuring enough liquidity for local governments to effectively spur spending and economic growth is still not a certainty. This work is licensed under Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) License. Moreover, there are timelines on when earmarked quotas have to be utilised, so this may encourage and help front load spending on these infrastructure-related projects. As the largest carbon emitter, China has committed to reaching the carbon peak by 2030 and carbon neutrality by 2060 in the 75th United Nations High-level Meeting. Build 600,000 5G base stations across the country by the end of 2020, and 5 million to 5.5 million by 2025 to ensure nationwide 5G coverage. Chinese Infrastructure Projects in Indonesia Face Fresh Delays Overnight on Wall Street is morning in Europe. The coastal port of Haiphong, Vietnam, used to be famous for aromatic noodle dishes and organized crime. Dezan Shira & Associates has offices in Vietnam, Indonesia, Singapore, United States, Germany, Italy, India, and Russia, in addition to our trade research facilities along the Belt & Road Initiative. Infrastructure with public benefits, which support science and technology, science and education, and industrial technology innovation, including R&D institutions, research infrastructure, and innovation-focused industrial parks. In this sense, achieving truly equitable development between Chinas regions remains a challenge, particularly in the absence of convincing market incentives. They released the first-ever white paper pertaining to Eastern Data, Western Computing (EDWC, or in Chinese)a national-scale project in which China hopes to alleviate regional discrepancies, such as geographic and environmental barriers, to the development of computing and data infrastructure throughout the country. China's infrastructure investments have had a strong start in Q1 2022 and have remained resilient in the face of lockdowns in selected locations. Our subscription service offers regular regulatory updates, China Briefing is written and produced by Dezan Shira & Associates. According to data from financial services firm Zhongtai Securities, local governments issued a total of RMB 698.9 billion (US$109.9 billion) of bonds in January 2022, of which RMB 448.4 billion (US$70.5 billion) were new SPBs. That means setting out fiscal and monetary policy before year-end to shore up investment and instigate growth at the beginning of 2022, particularly important as GDP growth slowed to just 4 percent in the fourth quarter of 2021. Target industries for infrastructure spending, A key buzzword that many may have heard coming from the Chinese state in 2020 and 2021 is . The United States and India were the . Policymakers have announced more than 50 economy-supporting measures since late May and stressed that this quarter was a critical time for policy action. Data showed that fixed-asset investment expanded by a better than expected 9.3% in the first quarter from a year earlier, helped by a move to front-load 2022 local government special bonds. International project finance in infrastructure sectors is expected to continue to provide growth momentum. Ensuring enough liquidity for local governments to effectively spur spending and economic growth is still not a certainty. Chinas growth looks to be behind target. More than 300 new water infrastructure projects were announced between 2014 and 2020. We began operations in Beijing in January 2016 and have since grown to 105 approved members worldwide. Religion and Foreign Policy Webinars, COP27 and International Climate Action: A Conversation With John Kerry, Virtual Event This means the country will not be able to continue to rely on traditional growth drivers such as a large and efficient workforce and will need to pivot to new areas for continued economic success. Build Back Better will provide monthly payments to the parents of nearly 90 percent of American children for 2022 - $300 per month per child under six and $250 per month per child ages 6 to 17. However, it is yet uncertain whether the reversal of previous restrictive policies will be enough to drastically change the course of Chinas slowing economy. . (link in Chinese) posted on the central government website. Although the proportion of bonds issued for the purpose of refinancing hidden debt has dropped significantly from the previous year (about 16.5 percent (RMB 115.2 billion (US$18.1 billion)) of the bonds issued in January 2022 were for refinancing, versus almost 100 percent in January 2021), it is still not clear whether bonds issued throughout the rest of 2022 will primarily be new bonds or refinancing bonds. However, the plan is not guaranteed to succeed. We expect passenger traffic to rebound swiftly when the pandemic situation eases, and to remain resilient despite China's economy slowdown. We discussed the rise of LGFVs and local governments reliance on land transfers in more detail in our article on the housing market. Looking beyond 2022, one of the main long-term trends we are likely to see in infrastructure investment is the continued transition to investment in high-tech and advanced infrastructure. The move appears to be a bid to recharge the engine of Chinas biggest city as Shanghais economyslumped 13.7% in the second quarter when Covid-19 outbreaks led to citywide lockdowns in April and May. The diplomatic Somalia-China relations have played a crucial role in Chinese government developing over 80 infrastructure projects in Somalia, including the national stadium, . By entering your email and clicking subscribe, you're agreeing to receive announcements from CFR about our products and services, as well as invitations to CFR events. Hong Kongs Cultural Icons Vanish as Covid Hastens Gentrification, NYC Buildings Commissioner Resigns While UnderGambling Investigation, Crypto Cowboys Testthe Lonestar States Gridas Mining Woes Persist, Novogratzs Galaxy Digital Explores Job Cuts of About 20%. Live from Dubai, connecting Asian markets to the European opens. Cheaper land and electricity costs in underdeveloped regions work to EDWCs advantage. Click to share on Facebook (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on Reddit (Opens in new window), Click to email a link to a friend (Opens in new window), China's Greater Bay Area: Accessing Latest Business Subsidies in 2022, Joint Venture Success in China: Deadlock Prevention and Countermeasures. The transport sector needs to be deeply decarbonized in China to achieve this goal. The practice assists foreign investors into China and has done so since 1992 through offices in Beijing, Tianjin, Dalian, Qingdao, Shanghai, Hangzhou, Ningbo, Suzhou, Guangzhou, Dongguan, Zhongshan, Shenzhen, and Hong Kong. Building high-speed and efficient information infrastructure to enhance data perception, transmission, storage, and computing capabilities. 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