China to spend RMB 5tn on infrastructure despite debt alarm

The Chinese government is to pump almost RMB 5tn into transport infrastructure over the next three years, in a sign of its determination to use state investment to keep the economy humming, reports the Financial Times. However, analysts said the announcement by the Ministry of Transport added to a sense of confusion about the direction of Chinese economic policy – in recent years infrastructure spending has resulted in white elephants, industrial overcapacity, economic distortions and debt. The size of the investment is equivalent to 6.9% of China’s 2015 gross domestic product, comes despite other influential voices in China warning this week of the alarming degree of leverage in the Chinese economy.