China is looking to "new infrastructure" projects to hedge against the economic fallout of the novel coronavirus outbreak and boost the country's economy in the long term, experts said.
A meeting of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee held earlier this month called for accelerated efforts to build new infrastructure, such as the 5G network and data centers, which prompted market gains in the related sectors.
A report by the country's state broadcaster China Central Television later listed seven areas of the "new infrastructure." They include 5G, ultra-high-voltage power facilities, inter-city transport, vehicle charging stations, big data centers, artificial intelligence, and industrial internet.
Huang Qunhui, director of the Institute of Economics of the Chinese Academy of Social Sciences, said this was not the first time that the term of "new infrastructure" has been put forward. He noted that the Central Economic Work Conference, a key annual meeting to plan for the national economy, had called for such efforts in late 2018.
Huang said that the new infrastructure should be understood as new public facilities that serve the needs of new industrialization, as opposed to the traditional infrastructure construction such as railways, roads, and airports.
As of March 10, 25 provincial-level regions had announced a total of 49.6 trillion yuan (US$7 trillion) of investment in 22,000 projects, including 7.6 trillion yuan for this year, according to figures tallied by China Economic Weekly.
Zhang Liqun, a researcher with the Development Research Center of the State Council, said he believes the response of the capital market and the media reflected people's enthusiasm for investment in infrastructure in general, noting that the growth rate of government-led investment in infrastructure had declined for years.
In the first two months of this year, China's fixed asset investment dropped 24.5% year on year, and investment in infrastructure in particular plummeted 30.3%, according to data released by the National Bureau of Statistics on Monday.
Lyu Tingjie, a professor of Beijing University of Posts and Telecommunications, said that even the narrowly defined new infrastructure has huge potential to boost the Chinese economy in the short term, and that it has strategic significance in the longer term.
He said that, among the seven areas, the fifth generation wireless technology is the key of all, as it paves the way for the other areas such as AI and industrial internet.
China's telecom carriers are already answering the call. China Mobile announced on Thursday a whopping 100 billion yuan to invest in 5G this year, making up around 56% of the company's capital expenditure, compared to only 14% last year.
Lyu said investment in 5G will create jobs right away, as more base stations will be built and more equipment manufactured. In the future, the investment will also shape new manufacturing and bring forth new industries.
Accumulative investment in 5G network construction in China is estimated to reach 1.2 trillion yuan by 2025, and the total investment in the entire industry chain and related industries is expected to top 3.5 trillion yuan by that year, according to the China Academy of Information and Communications Technology, a research institute under the Ministry of Industry and Information Technology.
But Zhang said he believes the scope of new infrastructure will be expanded gradually in the future beyond 5G and other high-tech sectors, to include transportation, public health, education, etc. He said it will be very important to plan and lay a strong foundation for a sustainable economic growth.
