China Secures 337 Trillion Won Funding for Infrastructure in Q1 This Year

Focused Investment in Transportation, Industrial Complexes, and Energy... Igniting Gyeonggi's Growth

[Asia Economy Reporter Kim Hyunjung] China has secured 1.788 trillion yuan (approximately 337 trillion won) in funding for infrastructure investment in the first quarter of this year to stimulate the economy.

According to the status of local government bond issuance in January posted on the website of the Chinese Ministry of Finance on the 15th, Chinese local governments were pre-allocated a new issuance quota of 1.788 trillion yuan (approximately 337 trillion won) for local bonds this year from the central government. Local governments issued a total of 583.7 billion yuan (approximately 110 trillion won) in new bonds in January.

Earlier, the Chinese Academy of Social Sciences predicted an economic growth rate of about 5.3% for this year in December last year. On the other hand, the International Monetary Fund (IMF) recently lowered its forecast for China's economic growth rate this year from 5.6% to 4.8% in its World Economic Outlook report. China is expected to present key economic operation targets such as this year's economic growth rate, fiscal deficit ratio, and inflation at the National People's Congress (NPC) meeting opening on the 5th of next month.

The central government, the State Council, allocates the scale of new bond issuance to each local government by its authority before the annual plenary session of the NPC in March, when the budget is officially approved, to prevent any gap in public investment. The Chinese Ministry of Finance explained that the funds secured through bond issuance were mainly invested in industrial park infrastructure, transportation infrastructure, affordable housing projects, agriculture, forestry and water conservancy infrastructure, ecological and environmental protection infrastructure, energy infrastructure, and cold chain logistics infrastructure.

The total scale of new local government bond issuance in the first quarter also increased by about 60 trillion won compared to previous announcements. The Chinese State Council announced in December last year that it would pre-allocate a quota of 1.46 trillion yuan (approximately 275 trillion won) for special purpose bonds for 2022 to each local government. However, when announcing the January statistics this time, the Ministry of Finance revealed that, separately from the existing special purpose bond allocation, 328 billion yuan (62 trillion won) of general bonds were also pre-allocated to local governments. Special purpose bonds are generally used for large infrastructure projects such as railways and roads with guaranteed returns, while general bonds are used for public projects such as infrastructure construction with insufficient profitability or social security.

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