Many localities in China have recently launched major investment projects for the second quarter, with a focus on new quality productive forces, and observers believe the trend will help stabilize overall investment in the period. Analysts said that the new wave of major projects, along with an emphasis by localities on developing new quality productive forces, expanding domestic demand and improving the business environment, is to inject momentum into the economic recovery in the second quarter. Shenzhen started work on 236 projects slated for the second quarter with total investment of CNY176.65 billion. Among those breaking ground were 51 industrial projects and 85 infrastructure projects. Xinjiang called for further development of eight industrial clusters including oil and gas, green mining and new materials, and speeding up the development of strategic and emerging industries. Localities including Hubei, Anhui and Shaanxi province have all held meetings to summarize economic work in the first quarter, and rolled out new projects for the second quarter with total investment exceeding the trillion-yuan mark.
Analysts noted the launch of projects will further fuel economic growth and overall investment – including foreign investment – in the second quarter. Guangzhou-based Economist Pan Helin told the Global Times that local governments give these projects special attention as they will promote regional economic development, align industrial chains and contribute to the build-up of industrial clusters. The overall result will be enhanced competitiveness in the corporate sector. Pan predicted that fixed-asset investment could grow as fast as about 5% during the second quarter, gaining pace from the January-March period, as the industrial sector contributed much of the momentum. In the first quarter, fixed-asset investment (FAI) rose by 4.5% to CNY10 trillion according to the National Bureau of Statistics (NBS).
“In the second quarter, manufacturing and infrastructure will remain the ballast stone to underpin the recovery,” Zhou Maohua, Macro-economist at China Everbright Bank, told the Global Times. Zhou noted that consumption is still in recovery, while investment into the property sector has abated. Along with the faster roll-out of special-purpose bonds by local governments and the implementation of trade-in programs for equipment upgrades and consumer goods, as well as robust automobile production and sales, it is expected that fixed-asset investment may grow at a faster pace in the second quarter, Zhou said, as reported by the Global Times.
