China's infrastructure investment accelerated in July amid a package of support policies to bolster a stable recovery amid downward pressure and mounting external uncertainties. In July, China's infrastructure investment growth rebounded to about 15% year-on-year, thanks to sustainable funding and policy incentives as well as a low base effect, UBS Economists led by Wang Tao said in a note sent to the Global Times. In the first half of the year, investment in the infrastructure sector rose 7.1% year-on-year, according to the National Bureau of Statistics (NBS). The amount of special-purpose bonds that local governments issued sharply declined to CNY61 billion in July, but the comparatively large amount of issuance worth CNY2.1 trillion in the second quarter continued to provide strong support for infrastructure investment in July and the third quarter, according to Wang.
Last month, the construction of 3,876 large projects across the country started, with total investment reaching nearly CNY2.4 trillion. Progress was also made for some key infrastructure projects. The construction of a project linking China's two mega water infrastructures – the Three Gorges project and the South-to-North Water Diversion Project – started on July 7. The project is scheduled to be finished in nine years, and will transfer water to the country's dry North. China is also counting on new types of infrastructure as part of its long-term goal to optimize the overall economic structure and foster new growth drivers.
In terms of digital information infrastructure, the country added nearly 300,000 5G base stations in the second quarter, bringing the total number in use to over 1.85 million. The third quarter is a peak season for construction projects. “Along with the release of effective policies and raw material price drops, the growth rate of the country's infrastructure investment is expected to further accelerate to 10% or higher in the second half of the year,” Tian Yun, a Beijing-based economist, told the Global Times. He forecast that infrastructure investment will contribute around 1 percentage point to GDP growth in the second half, playing a larger role in promoting the stable recovery of the economy. Policy banks will increase credit lines by another CNY800 billion to provide financial support for infrastructure building.
