China's state planner unveils measures to boost private investment in infrastructure

China’s National Development and Reform Commission (NDRC) has introduced a series of measures aimed at encouraging private sector participation in infrastructure projects. The move comes on the heels of last week’s release of guidelines focused on strengthening and expanding the private sector in the country.

The NDRC’s latest announcement, disclosed on Monday, highlights the agency’s determination to attract more private capital into major project construction. Sectors such as transport, water, clean energy, advanced manufacturing, and agriculture will be opened to private investors, as per the statement. Further specifics about the investment opportunities in these sectors will be provided at a later stage.

With the Chinese economy showing signs of losing momentum after an initial bounce back from the COVID-19 pandemic, investors have been eagerly anticipating stimulus measures from the government. However, previous piecemeal announcements by authorities fell short of market expectations.

To address this issue, China’s “traffic light” system was unveiled last week, aimed at providing clarity to private investors about sectors open for investment opportunities. The system will guide private investors towards areas where their contributions are welcome.

The NDRC emphasized the importance of recognizing the significance of improving private investment and expressed its commitment to maintaining a reasonable level of private fixed-asset investment relative to overall investment. Recent official data revealed a 0.2 percent contraction in private fixed-asset investment during the first six months of the year, while state entities saw an 8.1 percent increase in their investments, highlighting a lack of confidence in the private sector.

In addition to opening up sectors and encouraging private investment, the NDRC also pledged to bolster financial support for private-invested projects. A special fund from the central government budget will be established by the NDRC to provide annual support to 20 cities that exhibit high private investment growth and strong policy implementation.

With these measures in place, China aims to create a more conducive environment for private investors, promoting their involvement in crucial infrastructure projects and fostering a robust and sustainable economic recovery.