JAKARTA - IHS Global Insight China economist Brian Jackson has just provided latest report on China’s economy with a focus on transportation development.
Following is the highlights:
- China’s Ministry of Transport and National Development and Reform Commission today announced a joint plan to spend CNY4.7 trillion on 303 transport infrastructure investment projects during 2016-18.
- Railway spending will focus on improving the national high speed railway network, increasing basic railway coverage in central and western China, and accelerating the integration of city clusters via railway linkages, all aligned with its 13th Five-Year Plan goals.
- Highway spending will also concentrate on regional development of inland national highway networks and increasing the construction quality of all roadways.
- Waterway spending will emphasize Yangtze River development and port upgrading related to the “One Belt, One Road” plan.
- Airport spending will concentrate on further developing a hub and spoke system, with emphasis on accelerating investment in branch airports.
- Metro and light rail spending will also focus on intercity connections, similar to railways, as well as reducing intra-city congestion. A list of the 303 projects indicates that the projects will spend CNY2.1 trillion in 2016, CNY1.3 trillion in 2017, and CNY1.3 trillion in 2018.
Significance:
As always in China, the enormous size of the economy makes any spending figure seem astounding, but on its own, the data is of limited value for those assessing macroeconomic or even sector-level growth. The CNY4.7 trillion pegged for its 3-year plan generated significant buzz in domestic and foreign media, but that excitement is misplaced. China invested just over CNY4 trillion in similar categories of transport infrastructure in 2015 alone, indicating that the 3-year plan represents a nearly two-thirds reduction in total transport investment during 2016-18 if not complimented by additional projects.
This drawdown is consistent with China’s 2016 Work Report, which indicated that spending on railways and highways would fall by approximately CNY1.2 trillion from 2015, to a mere CNY2.45 trillion in 2016. While China is certain to maintain a large pipeline of infrastructure projects to prop up growth in some regions’ labor markets, as well as stabilize demand for construction materials sectors, current government plans are for this pipeline to diminish gradually over time, not to expand. (*)