China Plans Surge in Infrastructure Projects to Bolster Growth
China’s National Development and Reform Commission says the country needs more highways, subways and sewage plants, as approvals for new projects accelerate in response to slowing growth.
China’s National Development and Reform Commission (NDRC) has called for a major expansion of highways, subways and sewage treatment plants, as the country seeks to counter slowing economic growth with accelerated infrastructure investment.
Xu Lin, head of planning at the NDRC, said at a Peking University forum that China’s demand for infrastructure remains high. He described the government’s push for new projects as a normal counter-cyclical response to the economic slowdown, with project approvals forming part of the country’s macroeconomic management.
The NDRC recently published approvals for a new wave of infrastructure projects, including 2,018 kilometres of highways and subways. According to estimates from Nomura Holdings, the total value of these projects could reach 1 trillion yuan, or $158 billion. The list also includes new sewage treatment plants, railways, warehouses and ports.
Government response to slowing growth
China’s GDP growth slowed to 7.6% in the second quarter of 2012, compared with the same period the previous year. This was the slowest pace since the global financial crisis in 2009. Rather than launching a large-scale stimulus package, Premier Wen Jiabao’s government opted to support the economy by accelerating project approvals and introducing tax cuts.
The NDRC’s infrastructure push is designed to support sectors such as construction, engineering and materials, while also addressing long-term urban and environmental needs. Xu Lin said the government would continue to approve more projects beyond those already announced, signalling further investment ahead.
Scope of new infrastructure projects
The published approvals cover a broad range of sectors. Highways and subways are intended to address urban congestion and improve regional connectivity. New sewage treatment plants target water pollution and public health, while additional railways, warehouses and ports are expected to support logistics and trade.
- 2,018 km of new highways and subways approved
- Sewage treatment plants to expand capacity in growing cities
- Railways, warehouses and ports to support logistics and trade
The NDRC’s approach marks a shift from the broad stimulus of 2008–09, focusing instead on targeted infrastructure that supports both immediate economic activity and longer-term development. This strategy is expected to benefit construction firms, suppliers of building materials and engineering consultancies, as well as local governments tasked with project delivery.
Outlook for further approvals
Xu Lin indicated that the recently announced projects are only a part of a wider pipeline. The NDRC is expected to continue approving infrastructure projects in the coming months, as China balances short-term economic support with the need for modern transport and environmental facilities.
