China is to pump almost Rmb5tn ($770bn) into transport infrastructure over the next three years, in a sign of its determination to use state investment to keep the economy humming.
However, analysts said the announcement by the transport ministry added to a sense of confusion about the direction of economic policy. Infrastructure spending served China well when it was growing rapidly and seeking to build a modern economy, but in recent years it has resulted in white elephants, industrial overcapacity, economic distortions and debt.
The announcement yesterday of the spending programme — Rmb5tn is equivalent to 6.9 per cent of China’s 2015 gross domestic product — comes despite other influential voices warning this week of the alarming degree of leverage in the Chinese economy.