China earmarks US$75bn for infrastructure fund

To boost infrastructure spending and revive a sputtering economy, China will establish a national infrastructure investment fund worth 500 billion yuan (US$74.69 billion), two individuals with knowledge of the subject told Reuters on Tuesday (Jun 5).

China’s economy has started to slowly recover from the supply shocks brought on by the widespread lockdowns that have been in place since the second quarter, but growth still faces challenges from the still-sluggish real estate market, weak consumer spending, and concern over any future infection waves.

The sources stated without going into further detail that the fund is anticipated to be established in the third quarter. Requests for comment from Reuters were not immediately answered by the National Development and Reform Commission or the Ministry of Finance.

Although analysts claim it will be difficult to attain China’s stated gross domestic product target of about 5.5% this year without abandoning its stringent zero-COVID plan, the country has recently launched a slew of economic support measures.

In order to offset the effects of COVID-19 this year, fiscal stimulus has played a significant role in supporting the world’s second-largest economy, and the central bank has been gradually easing liquidity conditions to reduce borrowing costs.

The government is stepping up its infrastructure campaign, reviving an old economic strategy, and committing 800 billion yuan in new credit quota and 300 billion yuan in financial bonds for policy banks to finance large projects.

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