Could China’s economy-boosting infrastructure plans throw a contradictory monkey wrench in the works?

Striving to reduce local government debt while boosting China’s local-level economies through investment is, in itself, a conflicting approach, analyst says

Meanwhile, one of the world’s biggest makers of construction machinery says operating hours in China have fallen, suggesting fewer economy-boosting projects

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One of the world’s top makers of construction machinery says China appears to be using excavators less, suggesting that work has slowed on infrastructure projects. Photo: NetEase

Published: 8:30pm, 22 Feb 2024Updated: 8:40am, 23 Feb 2024

While China is pinning hopes on an economic resurgence being fuelled by infrastructure projects across the country, recent industrial indicators suggest that such engines for growth may not yet be firing on all cylinders.

Japan’s Komatsu, one of the world’s top makers of construction machinery, has reported that its excavator operation hours in China during January declined by 11.4 per cent from December. And the firm’s overall equipment-operating time for all of last year saw a 3.2 per cent drop from 2022, when China’s stringent pandemic policies were still in place.

The numbers, which could point to a slowdown in growth from China’s traditional economic engine, emerged as Beijing has been asking provincial officials to cultivate “new productive forces” in discussions about how to revitalise and transform the economy, largely by supporting technological innovations at local levels.

Yet, infrastructure still appears to be a main focus of investment, despite attempts to boost resources in “new strategic industries” and “hi-tech manufacturing”, according to provincial-level meetings that have been taking place over the past month.

Speaking to the Post on Thursday, economist Yu Miaojie, who is also the president of Liaoning University, noted how China’s leadership has identified “investment” as a major accelerator for its economy. Therefore, Yu expected that policy would remain focused on “increasing government spending and lowering taxes”.