He said the nation’s infrastructure was still “incompatible” with national development and security needs, according to the state-run Xinhua news agency. Xi called for more transport, energy and water projects, as well as new facilities for supercomputers, cloud computing and artificial intelligence. He did not specify how much China intends to spend on promoting the new infrastructure. According to the latest government statistics, infrastructure investment has already increased by 8.5% in the first quarter of 2022 compared to a year earlier. The remarks by Xi – who rarely sets out detailed economic plans, leaving them to Prime Minister Li Keqiang – show that Beijing is increasingly concerned about the country’s deteriorating development prospects and is backing down from a policy it has downgraded in recent years. reduce the pressure on local government finances and promote growth through consumption. But lockdowns for Covid have brought the world’s second-largest economy “close to the brink”, Société Générale analysts wrote earlier this week. However, the harsh restrictions in Shanghai and other major Chinese cities are just the latest blow. China has already felt the impact of a real estate downturn and the crackdown on private companies. Unemployment reached a 21-month high in March. Some investment banks cut their growth forecasts for China last month. And the International Monetary Fund said last week that it expects growth of 4.4% this year, lower than the previous forecast of 4.8%, citing risks from Beijing’s strict policy of zeroing Covid. This is much lower than China’s official forecast of about 5.5%. “THE [Tuesday’s] Our meeting suggests that Chinese policymakers are increasingly aware of the strong winds of growth from Covid restrictions and the continuing recession in real estate, and [are] “We are thus becoming more determined to step up policy easing,” Goldman Sachs analysts wrote on Wednesday. Citi analysts, meanwhile, believe China’s infrastructure investment is likely to grow by 8% in 2022, well above the 0.4% increase seen in 2021. “The infrastructure boost is real,” they wrote in a note Wednesday. “The turning point for real policy action may have been reached and the incentives are likely to come more obviously by the end of the second quarter.” This is not the only move by Chinese politicians this week to calm the nerves and stimulate growth. On Monday, the People’s Bank of China reduced the amount of foreign exchange to be held by banks as reserves to 8% from 9%. This move would substantially increase the supply of dollars in the market and analysts widely believe that the decision is intended to stem the rapid fall of the yuan. The Chinese currency has weakened sharply in recent days, sinking to its lowest level since November 2020, as rising Covid-19 cases in Beijing sparked fears that the Chinese capital could be locked in Shanghai and other major cities. Chinese stocks also plunged deeper into a bear market earlier this week, with the Shanghai Composite Index down 21% so far this year, making it the second worst-performing market in the world after Russia, according to Refinitiv Eikon. . The market disaster comes as China remains determined to maintain its strict restrictions on Covid despite its high economic price. Shanghai’s financial and construction hub has been on a lockdown for about a month, forcing businesses to close and worsening the disruption of the global supply chain. Beijing launched mass tests on Monday for its 21 million people to curb a “rapid and furious” outbreak, a city government spokesman said.
