The Chinese government has approved the construction of 2, 018 kilometers (1, 254 miles) of roads in an attempt to revive the economic growth.
The government also approved five port and warehouse projects, nine sewage-treatment plants, and two waterway upgrades, but it didn’t say how much it would be invested in these projects. Once the statements were made public, the Shanghai Composite Index increased with 4.5%, on the expectation that these investments will help boost the economic growth that has reached its lowest level in the past three years.
“They are clearly stepping up the infrastructure- investment push to help boost confidence and revive growth,” said Zhang Zhiwei, Hong Kong-based chief China economist at Nomura Holdings Inc. Premier Wen Jiabao’s policy stance is shifting “to a more proactive and significant easing.”
The government is expected to increase infrastructure-spending growth to over 20% annually in the following months, up from 15%, to stimulate the economic growth. The new road project includes highways in Xinjiang and Zhejiang provinces, and it was approved in June. Economists believe that this was the best decision the government could have made, as this project will improve urban infrastructure and add home supply.