China offers cash for urban revamp, testing new ways to boost growth

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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China will hand out billions of yuan to help cities renovate run-down public buildings and upgrade infrastructure, as policymakers seek ways to inject life into an economy weighed down by a housing slump.

Fifteen qualified cities can get as much as 1.2 billion yuan ($166 million) each, the Ministry of Finance said in a statement late Monday. The money will go to improve pipelines, power networks or drainage systems, and to overhaul public buildings and ensure they’re accessible for children and older people, it said. The program is due to last for three years.

Urban renovation, along with affordable housing and multi-functional infrastructure, is one of Beijing’s “three major projects” seen as key to offsetting a property slump that has dragged consumer confidence down. The People’s Bank of China said last year it’s ready to back them with 500 billion yuan in loans.

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The Ministry’s statement offers rare details about the magnitude of direct government funding for the projects, which will likely start on a trial basis and then potentially get rolled out more broadly.

“If the pilot program is successful, it will likely increase the investment in future,” said Bruce Pang, chief economist for Greater China at Jones Lang LaSalle Inc. That could lead to more transfers to local governments and relieve their financial stress.

The statement also suggests China will increase the role of fiscal policy, in coordination with monetary easing, to help finance the three major projects in a more sustainable way, Pang said.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow