1/6
An examination of provincial growth plans for 2022 suggests that we are going to see a renewed surge in infrastructure spending, according to Caixin. This comes after a year in which local governments were able to cut back.
caixinglobal.com/2022-02-16/in-…
An examination of provincial growth plans for 2022 suggests that we are going to see a renewed surge in infrastructure spending, according to Caixin. This comes after a year in which local governments were able to cut back.
caixinglobal.com/2022-02-16/in-…
2/6
"Of the around 20 provincial-level regions that have announced growth targets for fixed-asset investment," Caixin says, "which includes government-driven infrastructure spending, almost all set targets higher than their GDP growth targets."
"Of the around 20 provincial-level regions that have announced growth targets for fixed-asset investment," Caixin says, "which includes government-driven infrastructure spending, almost all set targets higher than their GDP growth targets."
3/6
This isn't a surprise. Last year was the only year in which a surge in consumption, mainly a reversal of the sharp contraction the previous year, was likely to lead GDP growth, and this was reinforced by soaring exports and strong private-sector investment.
This isn't a surprise. Last year was the only year in which a surge in consumption, mainly a reversal of the sharp contraction the previous year, was likely to lead GDP growth, and this was reinforced by soaring exports and strong private-sector investment.
4/6
As a result, Beijing as able to force local governments to cut back on infrastructure spending in 2021, even as it also clamped down on the property sector. This is something it had been eager to do for years, but couldn't as long as it set high GDP growth targets.
As a result, Beijing as able to force local governments to cut back on infrastructure spending in 2021, even as it also clamped down on the property sector. This is something it had been eager to do for years, but couldn't as long as it set high GDP growth targets.
5/6
But that was clearly a COVID-related one-off. This year, especially given the sluggish recovery of the property sector, there was no way local governments could achieve their growth targets without even faster growth in fixed asset investment.
But that was clearly a COVID-related one-off. This year, especially given the sluggish recovery of the property sector, there was no way local governments could achieve their growth targets without even faster growth in fixed asset investment.
6/6
That's why local governments expect FAI growth to lead GDP growth again. This also means that China must again see rapid growth in its debt burden. It's no coincidence that yesterday NIFD said it expected China's debt-to-GDP ratio in 2022 to rise by 4-5 percentage points.
That's why local governments expect FAI growth to lead GDP growth again. This also means that China must again see rapid growth in its debt burden. It's no coincidence that yesterday NIFD said it expected China's debt-to-GDP ratio in 2022 to rise by 4-5 percentage points.
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