China Plans Stronger Fiscal Policy, More Infrastructure Spending

  • Better market access to boost record-low private investment
  • "Good timing" to boost infrastructure as commodity prices low

China is planning stronger fiscal policy and more infrastructure investment to cement stabilization in the world’s second-largest economy and cushion it from slowing global growth. 

Restrictions on infrastructure spending will be eased and equal access granted to private investors in sectors such as education and medical care, according to a statement released on the State Council’s website Tuesday, citing a meeting chaired by Premier Li Keqiang on Monday. Policy banks will be encouraged to increase credit support to investment projects, and state-owned enterprises are being asked to step up investment in rural grid and telecommunication projects, the statement said.

The plans follow a series of government pledges to boost faltering fixed-asset investment by the private sector, as policy makers seek to meet this year’s growth target of at least 6.5 percent. Also, China’s central bank has signaled less room for any big monetary policy moves this year, saying interest-rate cuts put pressure on the yuan.

Now is a good time to boost infrastructure spending as commodity prices, especially raw materials, are relatively low, and expanding domestic demand helps supply-side reform, the statement said.

China said last month it would open up sectors including oil and gas drilling to private capital to counter record-low investment growth.

— With assistance by Yinan Zhao

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