Accelerated Infrastructure Investment Anticipated

Last year, the government tried pushing out treasury funds earlier in the year and told local governments to accelerate their infrastructure investments. If it buys time in the short-term, it comes at the expense of future growth, and this year's further slowdown reflects this reality. The article below isn't from an official mouthpiece, but along with RRR cut expectations this weekend, reflects growing pessimism.

Sina: 经济调结构面临阻力 基建投资“风口”来临
The second half will significantly speed up investment in infrastructure

  From a historical practice, the second half of the investment, whether local or investment scale investment rate will have improved significantly over the first half, but the second half of this year will be even more so. In the current economic weakness, the probability of big government will strengthen fiscal policy, and infrastructure investment as the main driving force of GDP growth is expected to increase its investment.

 Early this year, there are nine central and western provinces identified annual fixed asset investment plan to complete the amount in the government work report. Among them, Hubei, Hunan and Shaanxi provinces planned size of not less than 2.2 trillion yuan, plans to scale Guizhou, Shanxi, Inner Mongolia, Jilin and other four provinces of not less than 1 trillion yuan. In addition, plans to invest 368 billion yuan this year, Ningxia, Tibet also plans to break through 130 billion yuan. However, according to estimates, the scale of investment in the first half of the nine provinces to complete only about 30% to 40% of the planned size. For example, investment in fixed assets this year, Ningxia plans to complete 368 billion yuan, 126.709 billion yuan in the first half completed. This may mean that in the second half as well as the remaining 60% to 70% of the space can be released, and Click to estimates, only the nine provinces, there are more than 7.5 trillion yuan of investment scale of release.

  Meanwhile, the agency expects there will be a number of recent positive measures will be launched, such as the introduction of special construction bonds trillion, the second batch of PPP projects. In particular, the special construction bonds, the launch is bound to form a strong support infrastructure investment will accelerate infrastructure projects landing. Zhang Jun Morgan Stanley Huaxin Securities macroeconomic research director, said: "The second half, particularly 1 to 2 months at the end of the money factors have assault, so the full year, to account for the bulk of investment in the second half."
Going back to the old playbook of infrastructure investment will result in depleted reserves.
if the only way China can stimulate the economy is through investment, then China's $3 trillion in foreign exchange reserves will be exhausted within 5 years.

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