China is accelerating already-budgeted national infrastructure investment projects to stabilize economic growth this year, reducing the likelihood of large-scale fiscal stimulus. Beijing intends to counter a surprising across-the-board fall in investment, which data showed has dragged on growth this year, while maintaining tight control over local government spending.

Investment Engine

The decline comes as local officials face stricter scrutiny of capital expenditure, which authorities blame for unproductive infrastructure projects, industrial overcapacity and deflationary price wars among manufacturers. Accelerating national infrastructure projects could help cushion the blow from tighter local budgets.

Beijing plans to spend 7 trillion yuan ($1 trillion) this year on upgrades and new construction spanning water networks, logistics, underground pipelines, power grids, telecommunications and computing power centers, according to state media. Changjiang Securities estimates such investment could total 26.9 trillion yuan over five years.

Technology Focus

Policymakers are betting that projects championed by the central government, along with capital channeled into high-tech industries more broadly, will generate jobs and productivity gains, breaking a decade-long pattern in which investment generated more debt than growth. China is now putting everything behind technology to raise productivity, said Dan Wang, China director at Eurasia Group.

Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.