BEIJING — China will deploy policy-based financial tools to the value of 500 billion yuan ($70.25 billion) to accelerate investment projects, the state’s planner said on Monday, as part of efforts to support the slowing economy.
Authorities are using the new financing tools to boost financial services and effective investment, Li Chao, a spokesperson for the National Development and Reform Commission, said.
“We are working with relevant parties to promptly allocate funds from these new policy-based financial instruments to specific projects,” Li told a media briefing.
“The total scale of these new policy-based financial instruments is 500 billion yuan, all of which will be used to supplement project capital.”
The state commission will urge local authorities to speed up project starts and construction, boost effective investment, and support stable economic growth, Li said.
“The launch of the program suggests Beijing is becoming more concerned about the growth outlook, especially the slump in investment in July and August, reinforcing our more cautious views for H2,” said Ting Lu, chief China economist at Nomura, in a research note on Tuesday.
The new funding, which could come from the central bank or the bond markets, could leverage up to 5 trillion yuan over the next few years, Lu said, but the actual impact could be smaller and slower due to official concerns about local debt.
The funding will be used as seed capital for projects in areas including the digital economy, artificial intelligence, the low-altitude economy, consumption infrastructure, transportation and logistics, according to local media reports.
The move will help local governments that must meet minimum equity capital requirements for new investment projects but face funding strains. The remaining funds typically come from bank loans or private investment, analysts say.
China’s manufacturing activity shrank for a sixth month in September, an official survey showed on Tuesday, suggesting producers are waiting for further stimulus measures to boost domestic demand, as well as clarity on a trade deal with the US
Analysts say Beijing may need to increase policy support to meet its growth target of around 5 percent this year, but aggressive stimulus is unlikely given that there was earlier relief from a tariff truce with Washington and stock markets are performing well.
August data showed factory output and retail sales had their weakest growth since last year, keeping the pressure on Beijing to roll out more stimulus to try to revive the world’s second-largest economy.
Fixed-asset investment also grew at a slower-than-expected 0.5 percent pace in the first eight months year-on-year, from 1.6 percent in January-to-July, marking its worst performance since the height of the pandemic.
