Big infrastructure investment is hot, where is the direction this year?

Guía traders.org @guia_traders

Infrastructure investments have always been one of the most important drivers of China's economy. Governments are aware that when facing a slow economy, infrastructure development can continue to grow, increasing spending and reducing government debt. Projects that involve sustainability, digitalization, transport, public sanitation and affordable housing are considered nowadays as a priority. Infrastructure spending has had a rise over the past three decades in China. Starting from miles of railway tracks to huge skyscrapers, providing jobs and improving the quality of life of the population.

Beijing is one of the most remarkable examples of China. Investors lean heavily on local governments to invest in infrastructure. Even though the economy slowed throughout the pandemic, at the end of the fourth quarter of 2021, Beijing is once again turning to infrastructure spending to stimulate the economy at the beginning of this year. China's latest infrastructure fiscal policies promote spending. In 2021, fixed assets investment grew by 4.9% compared to 2.9% growth from 2020. However, there was a slower growth compared to 2019 (5.1%).

Infrastructure investment in China will remain key for the economic growth of China. At the Central Economic Work Conference, China's government said that it will “appropriately front-load infrastructure investment” for 2022. There will be a new monetary policy for the next few years. Sustainable fiscal incentives and support maintain a great level of liquidity without flooding the market. Trends for infrastructure investment food the next years are: innovative infrastructure: Technology that increases productivity, speed, accuracy and internet of things. Also, integrated infrastructure such as transformation of traditional industries and construction of city - high - speed rail systems and charging stations for electric vehicles will be important. Furthermore, improving digitalization of agriculture and building welfare-oriented infrastructure will be one of the most important construction trends.

(China infrastructure growth, National Bureau of Statistics)

China has the objective that by 2025 transport infrastructure will include: Expanding the railway operating mileage by 19,000 km of which 12,000 km will be high speed rails. Also, build at least 25 airports and expand public roads by 302,000 kilometers of which 29,000 kilometers will be expressways. Definitely, China will continue to grow its different infrastructure investment options throughout the years.

Author: Georgina Alvarez Bruno

References:

Briefing, C. (2022). China Infrastructure Investment in 2022 - Spurring Economic Growth. Retrieved 22 February 2022, from https://www.china-briefing.com/news/china-infratsructure-investment-in-2022-spurring-economic-growth/#:~:text=Overview%20of%20China's%20infrastructure%20investment,decad