$25b projects and bonds to sustain growth

Infra boost may offset adverse effect of tighter monetary policy

China approved big-ticket investments for 22 fixed-asset projects in July, up from 11 in June, and launched new bonds in an attempt to maintain stable economic growth, the National Development and Reform Commission said on Aug 18.

The State planner said it will also renew efforts to boost private investment.

Analysts say the moves will help offset the effect of financial regulatory tightening and real estate cool-off and help the country maintain stable growth in the coming months.

The 22 projects are valued at 165.5 billion yuan ($24.8 billion; 21.1 billion euros; ￡19.25 billion) and mainly in the energy, water conservancy, transport, and high-tech sectors.

They are expected to drive high-quality growth and better meet public demand for infrastructure and facilities, said Meng Wei, spokeswoman of the NDRC, at a news conference.

As well as the number of projects, their value also rose from June. The 11 projects approved in that month were valued at 29.6 billion yuan.

The expected investment boom will likely help bolster China's overall fixed-asset investment, which increased by 8.3 percent year-on-year in the first seven months, down from 8.6 percent for the January-June period.

The commission also launched two special bonds recently for supporting rural industrial development and development of industries that help improve people's quality of life, such as health, elderly care, education and training, culture, sports and travel, Meng said.

The trend of issuing bonds to support development of selected industries started in 2015, when the commission launched nine special instruments for supporting strategically important industries, innovation, power grid and environmental industries, among others.

"Such special bonds will help cushion the negative effect of tightened monetary regulation on growth," said a research note of investment bank UBS.

The NDRC said it will also make more efforts to encourage private investment, which is crucial for economic growth and job creation.

The government will simplify investment approval procedures for private investors and encourage private investors to participate in public-private partnership or PPP projects in infrastructure and public utility fields, the spokeswoman said.

Most of China's economic indicators weakened in July, triggering concerns that growth may ease in the coming months.

But any such easing would likely be moderate and China will not face the danger of economic meltdown, said a CITIC Securities report.

UBS on Aug 15 raised its forecast of China's GDP growth for 2017 to 6.8 percent from 6.7 percent.

xinzhiming@chinadaily.com.cn

(China Daily European Weekly 08/25/2017 page29)