BEIJING: China is channelling more financial support to infrastructure construction amid national efforts to catalyse domestic demand and sustain economic recovery.
The fresh move came as a State Council executive meeting announced last week that the quota of “policy-backed and development-oriented financial instruments” would be expanded by another 300 billion yuan (RM195bil) to better fund major infrastructure projects.
Prior to this, 300 billion yuan in total had already been allocated via such instruments, namely two funds operated by China Development Bank (CDB) and Agricultural Development Bank of China.
Introducing how the instruments work, Zhang Hui, executive vice-president of CDB, said that the aforementioned fund run by the policy bank comes from multiple sources, including the issuance of financial bonds.
The fund contributes as much as 50% to the capital base for an infrastructure project, while the remainder is financed by project initiators and social capital, Zhang said.
A case in point is a new highway construction project in the eastern province of Zhejiang, where some 6.3 billion yuan (RM4bil) was required as a capital base.
“Our financial strain in early stages was greatly alleviated, thanks to the 1.8 billion yuan (RM1.2bil) from the CDB fund,” said Li Feng, chairman of the relevant construction company. — China Daily/ANN
