The nation’s top economic regulator has quickened the pace of fixed-asset investment project approvals in a move to ease downside risks to the economy.
In the third quarter, 147 such projects valued at 697.7 billion yuan ($101.1 billion) were approved by the National Development and Reform Commission, which is 4.8 times more in terms of value than that seen in the second quarter, the NDRC said.
Compared with the first half, during which the central government placed a higher emphasis on high-tech projects, the key focus shifted toward transportation sector projects in the second half, the commission said.
As the economy may face strong headwinds in 2019, local governments have prepared “a large number of projects that are able to play a role in stabilizing the economy,” said an official at a provincial bureau of the commission, who declined to be identified.
“Only a few have entered into the construction phase, and many have not, with anticipated construction start dates possibly in early 2019,” the official said.
Approval rights of many fixed-asset projects in China have been given to local governments as part of efforts to streamline government administration.
Only strategically important projects — large scale projects often valued in the billions of dollars — require commission approval.
“The government will not tolerate a sharp decline of fixed-asset investment,” said Robin Xing, chief China economist at Morgan Stanley.
Some policy maneuvering has taken place at the top decision-making levels, Xing said.
The annual limit for local special bond issuances is often set in March, but it is expected to come out earlier next year, in January. This represents the government’s strong intention to accelerate the issuance of special-purpose bonds by local governments to stabilize investment, expand domestic demand and strengthen areas of weakness, he added.
The issuance of special bonds is a funding measure introduced in 2017 to boost fixed-asset investment and ease funding pressure to help make debt burdens more transparent.
Fixed-asset investment ticked up in the second half after it slumped in August.
It expanded 5.9 percent year-on-year in the first 11 months, picking up pace for the third straight month from a nadir in August, and exceeding market expectations, according to the National Bureau of Statistics.