While Guangdong’s leading economic indicators mostly slowed in May, along with the rest of the country’s, investment into “new infrastructure” continued to grow strongly, official data shows. Overall investment in fixed assets slowed to a year-on-year growth rate of 22% in the January-May period, down from 28% in January-April, and infrastructure investment in the province grew just 10.3% year-on-year. But among that, investment in Internet and related services rose 218.5% year-on-year, giving a two-year average growth rate of 62.9%. No total amount was provided.
Although industrial production continued to hum along, with growth among larger enterprises coming in up 21% year-on-year, this too was slightly down, from 23.9% growth in January-April. Consumption continued its relatively sluggish post-pandemic recovery. From January to May, retail sales hit 1.80 trillion yuan, up 23.9% year-on-year, but just 2.3% on a two-year basis. Exports also continued to slow, growing by 30% year-on-year, down from 36% in the January-April period.
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Hard on the heels of weak trade data showing a sharp fall in imports, the central government is easing restrictions on local governments’ borrowing for major infrastructure investments.
According to Caixin Global, local governments will be allowed to use proceeds from special-purpose bonds to raise project capital for major and strategic investments in highways, railways, electricity and gas projects. Citing a document issued by the central government, Caixin says it also encourages local authorities and financial institutions to expand funding sources for major projects through market-based financing methods “as long as they follow the rules”.
Special bonds must be used for projects that are proven to make certain returns on investment, according to the statement. Local officials should strengthen risk controls for special bond issuance and project management, it added.
China previously prohibited local governments from using any borrowed money as project capital put up by investors for initial investment in infrastructure to curb local debt surges.