China's state planner takes action to boost private investment in infrastructure

China’s state planner has introduced a series of measures. The announcement, made on Monday, follows the recent release of guidelines aimed at enhancing the private sector, which has been facing challenges during the post-pandemic economic recovery.

The National Development and Reform Commission (NDRC) has revealed its plan to attract more private capital for the development of major projects. The sectors eligible for private investment include transportation, water management, clean energy, advanced manufacturing, and agriculture. While specific details on the opportunities will be provided later, the move signals the government’s commitment to facilitating private participation in critical sectors.

With China’s economy showing signs of losing momentum after the initial rebound from the COVID-19 impact, investors have been anticipating additional stimulus measures. However, the authorities’ previous piecemeal steps have left markets underwhelmed. In response to this concern, China’s new guidelines propose the creation of a “traffic light” system, clarifying the areas where private investors can engage.

Recognizing the importance of enhancing private investment, the NDRC aims to maintain a reasonable proportion of private fixed-asset investment among all investment types. Recent data reveals a contrasting trend, with private fixed-asset investment declining by 0.2 percent in the first six months of the year compared to an 8.1 percent increase in state entities’ investment. This disparity underscores the need to restore confidence in the private sector.

To further support private-invested projects, the NDRC is committed to strengthening financial assistance. A special fund, sourced from the central government budget, will be established to provide annual support to 20 cities exhibiting high private investment growth and robust policy implementation.

As China takes these steps to bolster private investment, market participants will closely monitor the implementation and impact of the measures on the country’s economic recovery and private sector development.