China to Invest 1,700 Trillion Won in New Infrastructure Over Next 5 Years... Korean Companies Must Actively Enter Market

[Asia Economy Reporter Ki-min Lee] It is projected that China will invest approximately 10 trillion yuan (about 1,700 trillion KRW) in new infrastructure over the next five years, prompting calls for Korean companies to actively enter the market.

The Federation of Korean Industries (FKI) announced this on the 17th during the ‘Post-COVID, China Economy and Industry Outlook Seminar,’ held simultaneously online and offline at the FKI Conference Center.

Kwon Tae-shin, Vice Chairman of the FKI, said in his opening remarks at the seminar, “In response to the economic crisis caused by the COVID-19 pandemic, governments worldwide are implementing large-scale economic stimulus measures. China plans to invest 4.86 trillion yuan (about 8300 trillion KRW) over five years through the ‘Liangxin Yizhong (兩新一重)’ initiative.” He added, “This presents a significant opportunity for Korean companies, so attention and preparation are necessary.” ‘Liangxin (兩新)’ refers to new infrastructure facilities and urbanization, while ‘Yizhong (一重)’ refers to major projects such as transportation and logistics.

Kim Kyung-hwan, an analyst at Hana Financial Investment, stated in his presentation on ‘China’s New Infrastructure Investment Opportunities’ that new infrastructure investment aligns with China’s goals for qualitative growth, domestic demand stimulation, and supply-side reforms, serving both short-term economic stimulus and long-term strategic directions. Kim estimated this year’s new infrastructure investment projects at about 1.7 trillion yuan (approximately 289 trillion KRW), with direct investment over the next five years reaching 10 trillion yuan. The term ‘new infrastructure’ was introduced at the end of 2018 during China’s Central Economic Work Conference and includes industries such as ▲5G ▲data centers (IDC) ▲artificial intelligence (AI) ▲rail transit ▲ultra-high voltage equipment ▲electric vehicles ▲charging facilities ▲industrial internet.

Yang Pyung-seop, Senior Research Fellow at the Korea Institute for International Economic Policy (KIEP), explained in his presentation on ‘China’s Economic Operation Direction and Outlook for 2020’ that although China did not publicly set an economic growth target at last month’s National People’s Congress (NPC), it appears to have internally set a goal of achieving over 3.0% economic growth.

A 3.0% GDP growth rate is necessary for China to achieve this year’s economic operation goals, including ▲comprehensive realization of a moderately prosperous society (Xiaokang, 小康社?), which means a comfortable life without worries about food, clothing, and shelter ▲creation of 9 million new jobs ▲maintaining unemployment below 6% ▲poverty alleviation, as well as maintaining a fiscal deficit ratio above 3.6%.

Senior Research Fellow Yang also noted that China is actively promoting investments in basic and new infrastructure in response to the post-COVID era. He emphasized that China plans to invest a record 800 billion yuan (about 137 trillion KRW) in railway construction this year.

Former Consul General Lee Kang-guk, who moderated the discussion, described China’s new infrastructure investment as a measure well-suited to the untact (contactless) economy, aimed not only at economic stimulus but also at enhancing overall industrial capacity and leading the Fourth Industrial Revolution. However, he pointed out that most Belt and Road Initiative projects are monopolized by Chinese companies, and Korean companies have yet to play a significant role in the Xiong’an (雄安) New Area urban construction project, a future city development plan. Lee added that a large infrastructure market is opening up in China, urging Korean companies to actively pioneer it and for the government to show interest and provide support.

Professor Oh Seung-ryeol of Hankuk University of Foreign Studies said that as Chinese local governments’ economic autonomy expands, opportunities for mid-sized Korean companies to participate and utilize various foreign investment incentives will increase. He emphasized that modernization policies improving infrastructure in densely populated local areas could provide development opportunities in IT and infrastructure expansion equipment, intermediate goods, design and management know-how, and service industries related to complex urban space development. Korean companies need to closely monitor the direction of China’s urbanization strategy going forward.

Professor Ahn Yoo-hwa of Sungkyunkwan University’s Graduate School of China Studies predicted that post-COVID wealth disparities between countries will be determined by digital infrastructure gaps. She explained that over 90% of the world’s digital platforms are monopolized by the United States and China.

Professor Ahn also stressed that corporate competitiveness in the post-COVID era depends on the realization of infrastructure that enables untact supply and demand markets. She added that with the completion of big data and digital financial infrastructure in China, global companies such as Tesla, PayPal, and Germany’s BASF and BMW are competing to establish smart bases.

Meanwhile, as COVID-19 resurged mainly in the Seoul metropolitan area, the FKI limited seminar attendance to about 30 people to comply with ‘social distancing in daily life’ and provided video streaming via YouTube.

This content was produced with the assistance of AI translation services.