Wire services Bloomberg is reporting unnamed sources close to the Chinese government have told it China’s National Development and Reform Commission intends to spend big on up to 420 projects by the end of 2016.
The first 300 projects have apparently been approved.
Premier Li Keqiang’s government is concerned that China’s planned shift to a domestic-consumption driven economy has yet to produce enough growth momentum to sustain targeted growth rates above 7%.
The news has been good for the New Zealand and Australian currencies, which have both risen on the news, in anticipation of strong demand for commodities such as coal, iron ore and copper into China to support the infrastructure development.
The projects will be funded by the central and local governments, state-owned firms, loans and the private sector, Bloomberg reported.
The investment will be in seven industries including oil and gas pipelines, health, clean energy, transportation and mining.
The NDRC’s spokesman, Li Pumin, said last month China would encourage investment in those areas.
“They said the NDRC is also studying projects in other industries in case the government needs to provide more support for growth,”Bloomberg wrote.
Rail expenditure alone may exceed 1.1 trillion yuan [$A220 billion] this year as investments in the previous four years lagged behind the five-year plan for 2011-2015.
This year (2015) is the last year for the 12th Five-Year Plan and due to pressure on the central and local governments to complete the plan on time it is common to see investment financed by government accelerated.
The latest economic injection is a fraction of 2008’s stimulus package of 4 trillion yuan [$A8 trillion] to deal with the global financial crisis, and is targeted on quality, efficiency and sustainability over sheer brute force growth ambitions.
Deutsche Bank analysts yesterday cut their expansion projections for this quarter to 6.8%, just below China’s target of 7%.
The Bloomberg report came after the National Bureau of Statistics released data showing the manufacturing purchasing manager's index, a key measure of factory activity in China, slumped to 50.1 in December, underlining the economy is still facing downward pressure.
In other news, NZ has officially joined the China-led Asian Infrastructure Investment Bank founding member state.
The AIIB now has 24 prospective founding members, which are all expected to complete negotiation and paper work before June 2015.
The Chinese initiative will fund infrastructure projects in Asia with start-up capital of $US50 billion [$A62 billion].
AIIB is seen as a rival to Asian Development Bank as the two are gearing up for the same purpose.
Japan, South Korea and Australia have so far not joined the AIIB amid concerns expressed by the US stating that it lacks transparency.