BEIJING — China’s
Xi Jinping has called for
an “all-out” campaign to build infrastructure, according to state media,
marking the latest attempt by leaders to boost growth in the COVID-battered
economy.
اضافة اعلان
Despite struggling to defeat the country’s worst
outbreak in two years, the leadership is digging in its heels with a strict
zero-COVID policy that involves lockdowns in the biggest cities and mass
testing.
But the measures have snarled supply chains and
hammered business morale, sending shockwaves through the global economy and
markets.
“Infrastructure is an important support for economic
and social development,” Xi said at a high-level meeting on Tuesday, according
to the official Xinhua news agency.
And the Central Committee for Financial and Economic
Affairs added that China’s “infrastructure is still incompatible with the
demand for national development and security”.
The meeting identified several sectors such as
transport and energy where an infrastructure boost was needed, including the
construction of ports and airports.
Recent lockdowns have clogged supply chains and
transport networks — including in the economic dynamos of
Shanghai and Shenzhen
as well as the northeastern grain basket of Jilin.
Xi’s comments are the latest in a series of
statements and steps aimed at boosting confidence in the economy and reassuring
markets.
Shares in infrastructure firms rose Wednesday on the
back of Xi’s comments, including construction company Sany Heavy Industry and
China State Construction International.
Shanghai stocks rallied more than two percent —
although traders remain concerned about the latest virus resurgence.
A major spending push, however, could also reignite
debt worries.
After the 2008 financial crisis,
Beijing launched a
stimulus package worth hundreds of billions of dollars — including massive
infrastructure investment — but that piled on the debt for local governments
and state enterprises.
With risks to consumption and manufacturing exports,
“initiatives to ramp up infrastructure spending are a direct policy tool to
lift government spending”, said Rajiv Biswas, Asia-Pacific chief economist at
S&P Global Market Intelligence.
But infrastructure is “not a quick fix”, cautioned
Nomura chief China economist Ting Lu.
“Lockdowns make the task of ramping up
infrastructure investment more difficult due to ... travel bans and shortage of
construction workers in ... (affected) areas,” he told AFP.
It would also “be unrealistic to expect much faster
infrastructure investment growth, and its pace... would only fill a small part
of the gap left by slowing export growth, the large property sector
contraction, and the rising costs of China’s zero-COVID strategy,” Nomura said
in a recent report.
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