Home News China’s Xi Announces Another Infrastructure Push To Boost Growth As COVID Drags On

China’s Xi Announces Another Infrastructure Push To Boost Growth As COVID Drags On

China’s Xi Announces Another Infrastructure Push To Boost Growth As COVID Drags On

As Covid controls drag down growth, China plans to boost its economy with more infrastructure investment.

That’s the same approach the government has used in the past, and one that analysts say adds to problems for sustainable growth in the long term.

Chinese President Xi Jinping on Tuesday called for an “all-out” effort to construct infrastructure. Proposed projects range from waterways and railways to facilities for cloud computing.

Xi was speaking at a meeting of the Central Committee for Financial and Economic Affairs, a group he heads.

“The meeting suggests to us that Chinese policymakers have been increasingly aware of the strong growth headwinds from Covid restrictions and continued property downturn, and thus becoming more determined to ramp up policy easing measures,” Lisheng Wang and a team at Goldman Sachs said in a note Wednesday.

“We believe infrastructure investment should be one key policy lever to stabilize growth,” the Goldman analysts said, noting expectations for slowing growth in exports, weak private investment, and the zero-Covid policy remaining in place for much of the year and hurting consumption and services.

Since March, mainland China has faced its worst outbreak of Covid-19 since the initial shock of the pandemic in early 2020.

Although first-quarter GDP topped expectations with 4.8% year-on-year growth, several investment banks have cut their full-year growth forecasts as travel restrictions and stay-home orders disrupt supply chains, especially in and around the metropolis of Shanghai, home to the world’s busiest port.

Economists have pointed out how zero-Covid affects consumer spending far more than factories, which can sometimes maintain limited production under the policy.

Retail sales fell by 3.5% from a year ago in March — more than the 1.6% decline forecast by a Reuters poll.

Fixed asset investment for the first quarter grew more than expected, with that in infrastructure up by 8.5% from a year ago.

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