China seeks private investors for $591 billion of projects

BEIJING - China is seeking private investment in thousands of projects worth a total of 3.2 trillion yuan (S$591 billion) in Beijing’s latest efforts to improve business sentiment and boost the faltering economy.

The National Development and Reform Commission (NDRC) has compiled a list of more than 2,900 projects from local governments that private investors can participate in, Mr Luo Guosan, head of the agency’s investment department, told reporters on Monday.

The NDRC also promised to improve funding support for the projects.

Local governments typically announce major construction projects during the year, which are funded through a combination of private and public funds and take months to get off the ground.

For investors waiting for stronger policy action, including direct stimulus measures, the NDRC’s steps are unlikely to give an immediate boost to business sentiment.

“A push as powerful as this is a positive sign,” said Mr Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Bank. “But the recovery of private sector confidence takes time. Even if investment improves as confidence rebounds, project preparations will take time, too. Therefore, I’d expect effects to be felt next year and beyond.”

Among the key sectors that the NDRC – the nation’s main economic planning agency – is targeting for private investment are transport, water conservation, clean energy, new infrastructures, advanced manufacturing and modern agricultural facilities.

Mr Luo said the NDRC will soon launch a platform where investors can access information on the recommended projects.

The latest announcement by the NDRC comes days after Beijing pledged to improve conditions for businesses, which have been bruised by years of strict pandemic controls and regulatory crackdowns on key sectors such as technology and property.

Private investment in China has contracted in 2023, and now makes up just 53 per cent of overall fixed asset investment, down from a peak of 65 per cent in May 2015, official data shows.

The NDRC said on Monday its aim is to maintain the share of private investment at a “reasonable level”.

Project funding

Mr Luo said at the briefing that the NDRC has set up a trial programme for investment loan cooperation with seven banks, including China Development Bank and the Industrial and Commercial Bank of China.

The agency is preparing a list of private investment projects to guide banks to increase loan support, he added.

According to the agency’s statement, qualified private investment projects will be supported to issue infrastructure real estate investment trust (Reit) products to expand the financing channels of private companies, lower their debt-to-asset ratio and improve their ability to reinvest.

Mr Han Zhifeng, another official of the agency, said at the same press conference on Monday that the NDRC has discussed 71 infrastructure Reit projects in 2023 with the securities regulator, the Shanghai and Shenzhen exchanges and industry experts, including 19 from the private sector, involving shopping malls, solar and wind power, and big data centres.

Private companies will also be encouraged to buy state-owned enterprises’ assets and use infrastructure Reits as a way to exit the investment, Mr Han added.

The NDRC official said business confidence was affected by factors including weak demand in the economy. There were also some “unreasonable” restrictions on private companies’ entry into some projects, and their access to funding and land remains limited, Mr Han said. BLOOMBERG