China’s infrastructure spending strategy for post-COVID recovery



Author: Will Needham Published on: May 23, 2020

This article contains translated extracts from an article published here, on 2020/05/16, by Gao Qing. Shared in interests of knowledge-sharing and collaboration.

For the first time since its inception, China will not be meeting their annual GDP growth target of 6% per annum, it was reported this week. So how do they plan on recovering?

Like many countries, China plans to use infrastructure spending as a core financial instrument to get their economy back on track, just as they did in recovering from the 2008 financial crisis.

However, this recovery will focus on “new infrastructure” over “old infrastructure”. Qinq explains the differences as follows.

What is “old infrastructure”?

“In the past, China talked about infrastructure, usually described as “iron cock”, which refers to railways, highways and bridges, water conservancy, energy and other facilities. In the past, to stabilize the economy, it was customary to invest heavily in such infrastructure to boost economic growth. But the biggest problem with the old infrastructure is the sequelae of repeated construction, waste of resources and overcapacity. After the global financial turmoil in 2008, the central government invested trillions of dollars to stabilize the economy, and the resulting economic bubble has not yet been completely eliminated”

Gao Qinq, china.hket.com

Chinese president to focus on digital infrastructure

In a speech this week, president Xi Jinping made clear how the country planned to invest to fuel an economic recovery:

“We must seize the opportunities afforded by industrial digitalization and digital industrialization, accelerate the construction of new infrastructure such as 5G networks and data centers, and seize the layout of the digital economy and life Strategic emerging industries such as health and new materials, and future industries, vigorously promote technological innovation, strive to expand new growth points, and form new development momentum.”

Xi Jinping, President of China

Three pillars of infrastructure recovery in China

The Chinese National Development and Reform Commission recently gave a statement on that summarised these intentions of the Chinese President into three core pillars of infrastructure investment to fuel the economic recovery.

Information infrastructure

Whilst already being world leaders in Information Infrastructure, they will continue to invest heavily in these areas, including data centers, 5G, Internet of Things, Artificial Intelligence & Blockchain.

Converged infrastructure

Secondly, they will be investing heavily in what they call converged infrastructure. This represents the convergence of physical infrastructure (roads, rail, bridges) and digital infrastructure (sensors, actuators, industrialised IoT). This will result in the upgrading of existing ‘traditional’ infrastructure, resulting in intelligent transport solutions, and smart energy infrastructure.

Innovation infrastructure

Thirdly, an investment in innovation infrastructure. This can be described as the mechanisms to be put in place to support scientific research, technology development, and product development. This includes major scientific and technological infrastructure, science and education infrastructure and industrial technology innovation infrastructure.

China to lead a Smart revolution in the 2020’s

In the 2010’s, China invested in traditional infrastructure to fuel economic recovery. They built infrastructure at an unprecedented rate which is unrivaled by any other country.

The pace of innovation we are about to see from China in the 2020’s is sure to be no different. But this time they will focus on new priorities. Priorities to maintain their leadership in digital infrastructure, technology and innovation.

This article is a translation of the recent news article, published here, on 2020/05/16, by Gao Qing. Shared in interests of knowledge-sharing and collaboration.

Future Distributed Newsletter

Get fresh insights from the leading minds in the Built Environment sector. Gathered from around the world, and delivered to your inbox.

Future Distributed is the global knowledge-sharing platform on a mission to transition the Built Environment sector, so that it supports thriving citizens and a thriving planet. Read more here.