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China Fast-Tracks $1 Trillion in Projects to Spur Growth

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Helsworth
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China Fast-Tracks $1 Trillion in Projects to Spur Growth

Source: http://www.bloomberg.com/news/2015-01-05...rowth.html

China is accelerating 300 infrastructure projects valued at 7 trillion yuan ($1.1 trillion) this year as policy makers seek to shore up growth that’s in danger of slipping below 7 percent.

Premier Li Keqiang’s government approved the projects as part of a broader 400-venture, 10 trillion yuan plan to run from late 2014 through 2016, said people familiar with the matter who asked not to be identified as the decision wasn’t public. The National Development and Reform Commission, which will oversee the projects, didn’t respond to a faxed request for comment.

The move illustrates concern among officials that China’s planned shift to a domestic-consumption driven economy has yet to produce enough growth momentum. The yuan rose, halting a two-day decline, and Australia’s dollar -- a proxy for China due to its shipments of iron ore and other commodities used in construction -- climbed after the news.

“It’s part of China’s efforts to stabilize growth, and the news will help to boost market confidence,” said Julia Wang, a Hong Kong-based economist with HSBC Holdings Plc. “Infrastructure investment will continue to be a major driver for China’s economic growth.”

The Shanghai Composite Index (SHCOMP) pared a loss of as much as 1.4 percent to close little changed. The MSCI Asia Pacific Index lost 1.7 percent.


Photographer: Tomohiro Ohsumi/Bloomberg
Traffic moves under elevated roads at night in Shanghai, China. The Economic Observer... Read More
The approvals contrast with past moves to boost growth via infrastructure in which the government gave the green-light to projects individually. They are part of efforts to respond to weak output, according to the people.

Project Funding

The projects will be funded by the central and local governments, state-owned firms, loans and the private sector, said the people. The investment will be in seven industries including oil and gas pipelines, health, clean energy, transportation and mining, according to the people. They said the NDRC is also studying projects in other industries in case the government needs to provide more support for growth.

The NDRC’s spokesman, Li Pumin, said last month China would encourage investment in those areas.

The Economic Observer newspaper reported Dec. 26 on its website that an official from the NDRC’s Zhejiang provincial bureau said the government had approved more than 420 infrastructure projects needing investment of more than 10 trillion yuan, without specifying a timeframe.

Rail Investment

Rail investments may exceed 1.1 trillion yuan this year as investments in the previous four years lagged behind the five-year plan for 2011-2015, Han Siyi, an analyst at Shenyin & Wanguo Securities, said at a conference in Shanghai today.

China has sought ways to stimulate growth without resorting to full-blown stimulus as it seeks to keep a lid on total debt that is now more than 200 percent of gross domestic product. The central bank added liquidity into the banking system last year and announced an interest-rate cut on Nov. 21.

“It’s not 2008 again,” Zhao Xijun, a finance professor with Renmin University of China in Beijing, said in reference to a 4 trillion yuan stimulus China unleashed at that time. “When China launched the big stimulus package in 2008 to deal with the global financial crisis, China wanted nothing but faster growth; now China is focusing more on quality, efficiency and sustainability.”

Infrastructure Spending

China’s total fixed-asset investment in the first 11 months of the year was 45.1 trillion yuan. Infrastructure spending totaled 9.8 trillion yuan in transportation; environment and water management; and the supply of heat, gas and water, according to National Bureau of Statistics data compiled by Bloomberg.

Deutsche Bank AG analysts yesterday cut their expansion projections for this quarter to 6.8 percent, reinforcing their call for the central bank to step up monetary stimulus.

“We expect growth to surprise to the downside in Q1 and policies to surprise on the loose side in 2015,” Deutsche Bank economists led by Hong Kong-based Zhang Zhiwei wrote. China will be hit by a “double whammy” of slowing property investment and a sharp decline in land sales by local governments, the analysts wrote.


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07.01.2015 12:17
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Richard Wilson
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Post: #2
RE: China Fast-Tracks $1 Trillion in Projects to Spur Growth

Sounds like $timulu$ to me! Groove

07.01.2015 14:53
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Helsworth
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Post: #3
RE: China Fast-Tracks $1 Trillion in Projects to Spur Growth

Good thing they've not taken after Japan and the west to (foolishly) pursue QE in the hopes of 'spurring' growth.


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07.01.2015 17:48
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Ajay Alcos
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Post: #4
RE: China Fast-Tracks $1 Trillion in Projects to Spur Growth

Sigh.. The bubble is only getting bigger.

07.09.2015 00:04
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Alexei B.Miller
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Post: #5
RE: China Fast-Tracks $1 Trillion in Projects to Spur Growth

Infrastructure is a very good investment, for one it will control unemployment, two it wil further development the interior, and three it will increase connectivity within eurasia to increase the ease of movement of goods and services between borders. Also the so called bubble is not being expanded, the government has been slowly acting to diversify investment options for people to shift away from real estate. I believe the Chinese will be able to survive fairly unscathe.

My Russia on the other hand needs to scale down military spending and continue to lower the nuclear threshold until the crisis blows over. Government reserves should go to protecting domestic spending (including security) until crises blows over. The government should also be saving its dollars for firms seeking to invest in R&D projects designed to bring Russia's extraction technologies to western aptitudes. Putin should continue the operation in Ukraine to impose further cost on Porkoshenko until the government collapses of implement decentralization in the east. Gazprom should also reduce expanding into Europe and begin snapping up more Central Asian assets as this where the major silk road routes will venture.


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07.09.2015 00:17
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Edvard Kardelj
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Post: #6
RE: China Fast-Tracks $1 Trillion in Projects to Spur Growth

What strikes me as interesting isn't so much what the Chinese economy is doing, as it is what Chinese investors are doing.

East Africa isn't an attractive place for investment. Wars, corruption, horrific diseases, non-existent infrastructure, you name it-this place has long been the stomping ground of NGOs rather than corporations. And yet this is where Chinese investors are putting their money- in places as unlikely as Chad and South Sudan.

if this seems risky as hell, you're right. However, it does suggest that the Reserve Army of Labor in China itself may be drying up. Labor Time is becoming expensive there, as workers begin to agitate for increased wages and benefits.

Development agencies have been an abysmal failure in Africa. Despite the billions poured into the continent in foreign aid, the same problems that have wracked the continent since the Scramble for Africa began continue to plague it.

But the Chinese investor class believes capitalism can make this place profitable. This is the next place to look for cheap Labor Time. People here will work for slave wages that Chinese citizens would reject. For tho reason, the Chinese investor class believes the long term profits that can come from buying the basic infrastructure needed to support such an economy are a worthy investment.

If this seems like yet another attempt at colonialism, you're not paying attention. Colonialism was about wealth extraction, but it operated under the guise of 'humanitarianism'. What Chinese investors are doing here doesn't even pretend to be humanitarian. They're building roads schools and hospitals, but not because they think this will 'save African souls'. They're just here for the money. The African soul can save itself.

The transformative effects of capitalism will render most of this continent the same way it rendered Europe, then America, and then Asia. We will know when it has run it's course when Labor Time becomes expensive there, too.

07.09.2015 00:55
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Helsworth
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Post: #7
RE: China Fast-Tracks $1 Trillion in Projects to Spur Growth

If they can keep sectarian & segregationist conflicts at bay, and if the Chinese government will adjust fiscal policy in order to counteract private debt deflation at home, they'll do fine in Africa.


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07.09.2015 08:09
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Alexei B.Miller
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Post: #8
RE: China Fast-Tracks $1 Trillion in Projects to Spur Growth

China is simply in Africa for mineral extraction, in the art of statecraft whatever China thinks is "good" for Africa is even better for itself. I'm also thinking that China will seek some military basing on Africa to further aggravate the Indians who won't be able to counter chinese influence in Africa. Look at the South China Sea, Look at Sri Lanka, Pakistan, now East Africa...the String of Pearls is being completed.


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07.09.2015 21:07
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