February 3, 2023

China’s Xi urges infrastructure spending as Covid lockdowns hit

3 min read

Hong Kong
CNN Business

China is about to launch a new campaign to fix infrastructure costs. An economy Due to its proximity to the breaking point Quad lockdown.

President Xi Jinping told a meeting of senior economic officials on Tuesday that “every effort should be made” to boost construction to boost domestic demand and boost growth.

He said the country’s infrastructure was still “inconsistent” with national development and security needs, according to the state administration. Sinhwa News Agency. Xi called for more transportation, energy and water conservation projects, as well as new facilities for supercomputing, cloud computing and artificial intelligence.

They It was not immediately clear how much China intends to spend on developing the new infrastructure. According to the latest government figures, infrastructure investment has already increased by 8.5% in the first quarter of 2022 compared to a year ago.

Eleven’s comments – which are rarely mentioned. Detailed economic plans, Leaving it to its Prime Minister Li Keqiang – indicates that Beijing is becoming increasingly troubled. About the country’s deteriorating growth outlook, and returning to the policy it has eased in recent years to reduce pressure on local government finances and boost growth through consumption.

But cowardly lockdowns have brought the world’s second-largest economy “closer to the breaking point,” Société Générale analysts wrote earlier this week. However, strict sanctions in Shanghai and other major Chinese cities are only the latest blow. China was already feeling the effects of a lack of real estate and crackdowns on private enterprise. Unemployment hit a 21-month high in March.

Many investment banks have lowered their forecasts for Chinese growth over the past month. And the International Monetary Fund (IMF) said last week, citing the risks of Beijing’s tough zero-sum policy, that it expects growth of 4.4 percent this year, lower than the previous forecast of 4.8 percent. That’s well below China’s official forecast of 5.5 percent.

“The [Tuesday’s] The meeting shows that Chinese policymakers are becoming increasingly aware of the strong growth caused by the Code of Conduct and the continued decline in real estate, and [are] As such, they are becoming more determined to accelerate policy easing, “Goldman Sachs analysts wrote on Wednesday.

Citi analysts, meanwhile, expect China’s infrastructure investment to grow by 8% in 2022, faster than the 0.4% growth seen in 2021.

“The push for infrastructure is real,” he wrote in a note on Wednesday. “The turning point for real policy measures will have come, and the stimulus will probably be more pronounced by the end of Q2.”

This is not the only step taken by Chinese policymakers this week to calm the nerves and promote growth. On Monday, the People’s Bank of China reduced the amount of foreign exchange bank reserves from 9% to 8%. The move would effectively boost the supply of dollars to the market, and analysts widely believe the decision is aimed at curbing it. Yuan depreciates sharply.

The Chinese currency has weakened sharply in recent days, falling to its lowest level since November 2020, as Rising cases of cowardly 19 in Beijing This raised fears that the Chinese capital could join Shanghai and other major cities in the lockdown.

According to data from Refinitiv Eikon, Chinese stocks also fell sharply in the bear market earlier this week, with the Shanghai Composite Index down 21 percent so far this year, making it the second-worst performer in the world after Russia. Became a demonstrating market.

The market turned around at a time when China is determined to maintain its tight-knit sanctions despite heavy economic costs. Shanghai’s financial and manufacturing hub has been in lockdown for almost a month, shutting down businesses and disrupting the global supply chain.

Beijing on Monday launched a massive crackdown on its 21 million people. A “fast and furious” spreadA city government spokesman said.

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