Beijing, October 18

Increased infrastructure investment is key to stabilising China’s economic growth, a top state advisor said today, while calling on the central bank to lower the cost of financing for companies and increase overall credit.

‘Keeping relatively high growth of infrastructure investment is key to stabilising economic growth’ since property and manufacturing investment remains weak, said Yu Bin, head of micro economy research department at the State Council’s Development Research Centre.

China needs to speed up its 172 hydropower projects, develop 53 million hectares of high-standard agricultural land and increase investment in rural roads, Yu said.

Yu’s comments come a day before Chinese government is due to release third-quarter gross domestic product (GDP) growth figures, and were published in government-owned Economic Daily today.

Many economists expect China to report that July to September economic growth dropped below seven per cent for the first time since the global financial crisis.

Premier Li Keqiang said on Saturday that with the global economic recovery losing steam, achieving domestic growth of around seven per cent is ‘not easy’.

President Xi Jinping also acknowledged ‘concerns about the Chinese economy’ but sought to allay them in a written interview with Reuters.

The Chinese government has taken several measures in recent months to accelerate construction investment, in part by attracting private financing through the increased used of public-private partnerships (PPP).

The Ministry of Finance (MoF) in September published details for 206 proposed PPP projects, worth a total value of 659 billion yuan ($104 billion), including an express-way in Beijing.

MoF last month also launched a 180 billion yuan fund with China’s biggest banks and financial institutions to invest in PPP projects.

Yu also called for the central bank to be alert to macro-economic adjustments，lowering the cost of finance for companies and allow for credit growth, while maintaining a prudent monetary policy.

“Given the short-term rising downward pressure, it does not benefit China’s structural adjustment if economic growth is too slow or too fast,” he said.

China has already launched a wave of measures to drive economic growth since late 2014, including cutting benchmark interest rates five times since November and lowering the reserve requirement ratio for lenders.

Many economists expect the central bank to further cut interest rates and the reserve requirement ratio by year-end.

Yu also said China should implement fiscal, taxation and financial policies to encourage firms to merge and restructure, and allow bankruptcies to solve the problem of over capacity.

Differing financial regulations

BEIJING: China could tailor its financial regulations to help boost poorer regions, as part of efforts to raise 70 million people out of poverty, a senior central bank official said. The government could use differing reserve requirement ratios, re-lending, re-discount and differing regulations, to encourage financial institutions to increase support for poor areas, Pan Gongsheng, vice governor of the People’s Bank of China, said. Pan’s remarks, which were made on Friday at a poverty reduction forum jointly held by the central bank and the State Council, were carried in a statement published by the central bank on Sunday. Internet finance, industry investment funds, venture capital and private equity should also be directed towards poverty elimination efforts, Pan said. China’s President Xi Jinping told the forum that the government wants to lift the country’s 70 million people out of poverty by 2020, according to state television. That averages a rate of a million people a month.