Central Government Starts Economic Stimulus... 10 Provinces Announce Investment Plans Worth 3 Trillion Yuan

Confirmed Local Government Infrastructure Investment Plans in Shanghai, Sichuan, Jiangsu, Zhejiang, Hebei, etc.
Concerns Over Labor Shortages and Inflation Pressure Due to Large-Scale Infrastructure Investment

[Asia Economy Beijing=Special Correspondent Jo Young-shin] As the Chinese government announced large-scale infrastructure investments as part of economic stimulus measures, 10 provinces, municipalities, and autonomous regions have revealed investment plans totaling 3 trillion yuan (560 trillion KRW).

However, within China, concerns have been raised that unexpected situations such as the resurgence of COVID-19 could disrupt the infrastructure investment plans. There are also worries that large-scale economic stimulus could lead to inflation.

Photo by Xinhua News Agency Capture

According to Chinese media including Global Times on the 12th, some local governments such as Shanghai, Sichuan Province, Jiangsu Province, Zhejiang Province, and Hebei Province have disclosed their infrastructure investment plans for this year.

Among the local governments announcing infrastructure investment plans, Hebei Province has the largest scale. Hebei Province stated that it plans to invest 1.12 trillion yuan (210 trillion KRW) this year and carry out a total of 695 projects.

Zhejiang Province, home to China’s largest port, Ningbo Port, also announced that it will proceed with 358 projects this year, investing a total of 638.6 billion yuan.

Some cities have already started construction. Xiamen City in Fujian Province began a new airport project on the 5th, with an investment of 53 billion yuan. Chinese media emphasized that once completed, the new airport will be able to handle 45 million passengers and 750,000 tons of cargo annually, highlighting that the investment is aimed with Hong Kong and Taiwan in mind.

Investments in advanced industries are also underway. Shanghai City disclosed plans to invest in cutting-edge industries such as drones and biomedicine, while Anhui Province announced projects related to core components for new energy vehicles such as electric cars. The new energy vehicle projects in Anhui Province are known to be centered around the Chinese electric vehicle manufacturer BYD.

Jing Lei, Chief Economist at Hong Kong Baoxin Finance, said, "Fixed asset investment in China was minimal last year. Given the expected economic slowdown due to consumption contraction this year, China’s large-scale infrastructure investment could drive economic growth."

Within China, there is also considerable caution regarding large-scale infrastructure investments by local governments. Since huge amounts of money are being injected as part of economic stimulus, there are concerns that this could unexpectedly trigger inflation. Additionally, as local governments embark on large-scale infrastructure investments, unexpected issues such as labor shortages may arise. If COVID-19 spreads, infrastructure construction plans could be disrupted.

Tian Yun, Vice Chairman of the Beijing Economic Operation Association, expressed concern, saying, "As large-scale infrastructure investments begin, labor shortages are occurring, which could lead to rising labor costs and reduce economic efficiency." He also added that environmental problems could arise due to large-scale infrastructure investments.

Hu Chi-mu, Senior Researcher at Synosteel Economic Research Institute, stated, "If COVID-19 stabilizes, large-scale infrastructure investment projects could become a pillar of economic growth," expressing a positive stance on the Chinese government’s economic stimulus measures, while noting that infrastructure investment plans may be adjusted depending on the COVID-19 situation.

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