China To Strengthen Support For Projects Stemming From Private Investments by Increasing Credit Support

By: Asia Business Outlook Team | Friday, 05 May 2023

China's state planner will increase credit support for projects involving private investment, according to state-run media. According to the People's Daily, this reinforces efforts to encourage more private capital investment in major projects.

Despite stronger-than-expected economic growth in the first quarter, the world's second-largest economy's recovery has seen public investment far outpace sluggish private investment.

According to official data, private sector fixed-asset investment increased by 0.6% year on year in January-March, while state sector investment increased by 10%.

According to a National Development and Reform Commission (NDRC) official, in order to encourage private investment, private capital would be treated equally and without discrimination when distributing government investment funds.

"In recent years, as a result of the effects of the global economic situation and the pandemic, some private firms suffered declining profits, cash flow shortage, and inability to reinvest," an NDRC official was quoted in the newspaper as saying.

"In addition, some private firms face financing difficulties and high financing costs," which has prevented them from participating in large infrastructure projects, like "a small horse pulling a big cart," according to the People's Daily.

Some private firms stated that they were willing to participate in projects in exchange for high returns, but that there were still "tangible or intangible barriers to market access."

According to an NDRC official, local governments will promote more than 50,000 projects to investors in 2022, with approximately 9,000 of them attracting private capital worth approximately 2.9 trillion yuan ($419.44 billion).

The Politburo, the ruling Communist Party's highest decision-making body, stated last week that the government would boost business confidence and private investment.