CITIC Securities: Infrastructure still a key driver of economic momentum

Having played a pivotal role in shoring up economic momentum against headwinds in the past few years, infrastructure, this year — when China has seen many other economic engines vrooming again fueled by supportive measures in various fields — is still seen by experts as a key economic driver for China over the short term.

Investment in infrastructure construction is expected to continue to expand in the first few months of this year and log a growth figure between 10 percent and 15 percent in January, said a recent report by CITIC Securities.

As a highlighted part in the plan issued by the State Council, the nation's Cabinet, in December, the role of infrastructure construction in expanding domestic demand has been prioritized by many high-level meetings, said Ming Ming, chief economist at CITIC Securities.

Also, buoyed by enhanced special local government bond support and other financial tools offered by policy and commercial banks, infrastructure builders are expected to make faster steps in their projects nationwide in the first half, giving a stronger lift to industries along the chain affected by COVID-19 disruptions and other woes in the past few years, the report said.

Projects nationwide have been reported to be progressing at a faster pace since the beginning of this year. China Railway 24th Bureau Group Corp Ltd (CR24), a State-owned contractor, said its construction teams are stepping up efforts on key infrastructure projects, with many projects listed in local five-year plans charting paths for development.

The SOE, a unit of China Railway Construction Corp, said its builders working in Ningbo, Zhejiang province, have started a key urban road project in Cixi, a county-level city.

CR24 builders said they had faced a series of complicated preparation tasks, such as a tight schedule for building, transportation and additional arrangement work for neighboring networks. Since this year, an overall improvement has been seen in areas from working efficiency to labor supply, significantly pushing forward progress.

Currently, its builders are installing the first pillar of a rail bridge, CR24 said on Friday.

To better address traffic congestion issues haunting the city, the local government has prioritized a plan to build more roads to this end in its five-year plan of urban transportation and aims to further facilitate trips between Cixi and neighboring areas.

Also, a major milestone is achieved by builders in Jiande, Zhejiang province, on a key bridge project for the Jinhua-Jiande High-speed Railway.

"Thanks to enhanced support from the local government and accelerated efforts of construction workers, many of whom stayed on the construction site during the Spring Festival holiday, and we have finished the installation of the last pillar of the Xin'an River Bridge," said Lu Chenghua, manager of the project team with CR24.

"We are quite encouraged by the rapid progress and strive for an earlier completion of the project," Lu said.

Connecting the three cities of Jinhua, Lanxi and Jiande with China's major railway network, the Jinhua-Jiande High-speed Railway, which is scheduled to open before October 2025, aims to help cities further develop tourism attractions and provide a faster link between Zhejiang and inland provinces.

Apart from reporting the faster progress of projects nationwide, the State-owned builder said it is participating in new projects, especially those vital to local development and livelihoods.

CR24 said it recently won the bid for the phase-1 project of Jiangxi Aviation Vocational and Technical College's Fuzhou campus in Jiangxi province.

Covering 200,000 square meters, the bid undertaken by CR24 includes the construction of 14 buildings on the campus. The project is listed in Jiangxi's five-year plan of education and the campus is an expansion project of the college specializing in cultivating aviation industry talent.

During a news conference on March 1, Xu Hongcai, vice-minister of finance, said special local government bonds are important to expanding effective investment and stabilizing the economy, and vowed that appropriate special bonds will maintain stable government investment this year.

Facing pressure from the uncertainties of shrinking external demand and lingering impacts brought by COVID-19, expanding effective investment and domestic demand is still important this year. The special bond support will generate direct benefits in various industrial chains and attract social investment indirectly, Tan Ying, a partner with Ernst & Young, was quoted as saying in a report by Securities Daily.