context: Chinese netizens nicknamed the country an 'infrastructure maniac' as state-led infrastructure investment was the hallmark of post-2008 economic stimulus. Facing mounting slowdown pressures, infrastructure construction is back again, along with the drive to resume production. Debt-ridden local governments are hoping to attract private money this time around. However, the private economy is also struggling to survive in this adverse economic situation.
Given 24.5 percent y-o-y decline in January-February fixed asset investment, according to National Bureau of Statistics, Ming Ming 明明 CITIC Securities expects infrastructure to be the primary driver of growth stabilisation after the epidemic subsides.
Top policymakers mentioned 'new infrastructure' four times in 20 days, according to 21st Century Business Herald. Fujian, Guangdong, Zhejiang, Jiangsu, Anhui and Hainan have all launched 'new infrastructure' project databases and special policies. Actual investment data in these localities is also improving, though at relatively low levels, adds 21st Century Business Herald. Meanwhile, Wind data company shows new special-purpose bond offerings were C¥1.08 tn as of 31 Mar 2020, 84 percent of the advanced quota.
Ren Zeping 任泽平 Evergrande hails 'new infrastructure' as a perfect connection of short-term demand stimulus and long-term effective supply, key to China's high-quality development. Guan Qingyou 管清友 Rushi Financial Research Institute says a 1 percentage point increase in infrastructure translates to 0.1 percent GDP growth; to achieve 5-6 percent development target, infrastructure growth should reach 10 percent.
Significantly, private enterprises are contributing to 'new infrastructure' construction. In 537 key projects in Zhejiang, 402 have private investment. 73 private enterprises are involved in 130 projects in Jiangsu. Liu Wei 刘伟 PCI Tech CEO says many private companies master core technologies and abundant capital, complementing the state's effort to boost new infrastructure. However, Liu also admits that many private companies face financing difficulties and high costs and are in a weak position; he calls for dismantling the glass ceiling and truly incentivising private participation.