Beijing is ramping up fiscal spending in an effort to boost a flagging economy and buy more breathing space as it negotiates a trade deal with Washington, giving the green light to $125 billion of new rail projects, the Financial Times reports.
China will build 6,800 kilometers of new rail lines in 2019, a 40% increase on last year, according to China Railway Corp. This is a stark contrast with the trend last year, when Beijing cancelled several urban rail projects that it considered wasteful in an effort to prevent local governments from ramping up more debt.
The abrupt shift back toward high investment has likely been triggered by worries over the slowdown in China’s economy, with manufacturing activity declining for the first time since 2016 last month.
Beijing has used a variety of monetary policies to attempt to boost the economy, but experts expect the government to lean more on fiscal stimulus this year as the monetary easing has so far proven mostly ineffective.
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