China Puts up $1tn in Next Two Years to Push Growth

China is accelerating 300 infrastructure projects valued at 7 trillion yuan ($1.1 trillion) this year as policy makers seek to shore up growth that’s in danger of slipping below 7 percent.

Premier Li Keqiang’s government approved the projects as part of a broader 400-venture, 10 trillion yuan plan to run from late 2014 through 2016. The National Development and Reform Commission, will oversee the projects.

The move illustrates concern among officials that China’s planned shift to a domestic-consumption driven economy has yet to produce enough growth momentum. The yuan rose, halting a two-day decline, and Australia’s dollar - a proxy for China due to its shipments of iron ore and other commodities used in construction - climbed after the news.

The approvals contrast with past moves to boost growth via infrastructure in which the government gave the green-light to projects individually. They are part of efforts to respond to weak output, according to the people.

The projects will be funded by the central and local governments, state-owned firms, loans and the private sector, said the people. The investment will be in seven industries including oil and gas pipelines, health, clean energy, transportation and mining. They said the NDRC is also studying projects in other industries in case the government needs to provide more support for growth.

Rail Investment at $700bn

Rail investments may exceed 1.1 trillion yuan this year as investments in the previous four years lagged behind the five-year plan for 2011-2015.

China has sought ways to stimulate growth without resorting to full-blown stimulus as it seeks to keep a lid on total debt that is now more than200 percent of gross domestic product. The central bank added liquidity into the banking system last year and announced an interest-rate cut on Nov. 21.

“It’s not 2008 again,” Zhao Xijun, a finance professor with Renmin University of China in Beijing, said in reference to a 4 trillion yuan stimulus China unleashed at that time. “When China launched the big stimulus package in 2008 to deal with the global financial crisis, China wanted nothing but faster growth; now China is focusing more on quality, efficiency and sustainability.”

Infrastructure Spending

China’s total fixed-asset investment in the first 11 months of the year was 45.1 trillion yuan. Infrastructure spending totaled 9.8 trillion yuan in transportation; environment and water management; and the supply of heat, gas and water.