COVID-hit Shanghai unveils $257 billion in projects in infrastructure push

6:00 am Tuesday, September 20th, 2022

BEIJING (Reuters) -China’s commercial hub of Shanghai on Tuesday announced eight infrastructure projects with total investment of 1.8 trillion yuan ($257 billion), after the city was hit hard by COVID-19 lockdowns in April and May.

The economy of China’s biggest city slumped 13.7% in the second quarter, the worst performance among all 31 of China’s province-level regions.

In the first eight months of the year, Shanghai’s infrastructure investment fell 27.4% versus an 8.3% gain nationwide, data from local statistics bureaus showed on Monday.

Shanghai’s infrastructure push echoed national policymakers’ calls to revive sluggish economic growth, which has been hurt not just by COVID outbreaks and lockdowns, but by a protracted property downturn, sluggish domestic consumption, and a fading trade outlook.

To spur growth, authorities have also dusted off an old playbook, issuing debt to fund big public works projects.

The eight projects include a transport hub in eastern Shanghai’s Pudong area, urban railways and housing improvement, as well as offshore wind power demonstration projects and a nature park, according to the Shanghai municipal government’s Tuesday announcement.

Recent months have seen a pick-up in infrastructure investment in Shangahi, the municipal government said, with contracts signed for 597 big projects from mid-June to mid-September, and investment of 941 billion yuan, while 296 of those have begun construction.

Policymakers have announced more than 50 economy-supporting measures since late May and stressed that this quarter was a critical time for policy action.

The cabinet told local governments to complete selling more than 500 billion yuan in special bonds by the end of October under carryover quotas from 2019.

Such bonds, on top of the annual quota of 3.65 trillion yuan, will help to fund infrastructure projects.

“China’s infrastructure investment will in the coming years bolster its slowing economy,” Moody’s analysts wrote in a recent note.

($1=7.0086 Chinese yuan renminbi)

(Reporting by Ellen Zhang, Albee Zhang and Ryan Woo; Editing by Clarence Fernandez and Edmund Klamann)