China is seeking private investment in thousands of projects worth a total of 3.2 trillion yuan ($445 billion) in Beijing’s latest efforts to revive the faltering economy.
(Bloomberg) — China is seeking private investment in thousands of projects worth a total of 3.2 trillion yuan ($445 billion) in Beijing’s latest efforts to revive the faltering economy.
The National Development and Reform Commission has compiled a list of more than 2,900 projects from local governments that private investors can participate in, Luo Guosan, head of the NDRC’s investment department, told reporters on Monday. The NDRC also promised to improve funding support for the projects.
Among the key sectors it’s targeting for private investment are transportation, water conservation, clean energy, new infrastructures, advanced manufacturing and modern agricultural facilities. The NDRC, the nation’s main economic planning agency, will soon launch a platform where investors can access information about the recommend projects, Luo said.
The NDRC’s bid follows a rare joint statement last week by the Communist Party and the government pledging to improve the environment for private businesses. The government will strive to maintain the share of private investment in overall fixed-asset investment at a “reasonable” level, the NDRC said in a statement Monday.
Private investment in China has contracted this year as businesses, already battered by years of pandemic controls and regulatory crackdowns in key sectors like property and technology, now grapple with a slowing recovery. Top leaders and government officials have met with several high-level business executives this year — including with global funds on Friday — in a bid to turn around sentiment. Yet investors remain skeptical about the pledges.
The NDRC said it’s plan is intended to “further deepen, flesh out and specify the measures to continuously strengthen the willingness and ability of private firms to invest.” It repeated the government’s language on “unwavering” support for the sector.
Luo said at the briefing that the NDRC has set up a trial program for investment-loan cooperation with seven banks including China Development Bank and Industrial and Commercial Bank of China. The agency is preparing a list of private investment projects to guide banks to increase loan support, he added.
Qualified private investment projects will be supported to issue infrastructure real estate investment trust products to expand the financing channels of private companies, lower their debt-to-asset ratio and improve their ability to reinvest, according to the agency’s statement.
The NDRC has discussed 71 infrastructure REITs projects this year with the securities regulator, the Shanghai and Shenzhen exchanges and industry experts, including 19 from the private sector, involving shopping malls, solar and wind power, and big data centers, Han Zhifeng, another official of the agency, said at the same press conference on Monday.
Private firms will also be encouraged to buy state-owned enterprises’ assets and use infrastructure REITs as a way to exit the investment, Han added.
The private sector produces more than 60% of China’s gross domestic product and accounts for more than 80% of urban jobs. However, the sector’s investment made up just 53% of overall fixed assets investment as of the end of June, down from a peak of 65% in May 2015, according to Bloomberg calculations of official data.
(Updates with details from NDRC briefing.)
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