IT shares up on China's new infrastructure projects to spur economy


  • China
  • Wednesday, 22 Apr 2020

A technician of China Telecom installs a 5G base station in Shanghai. [Photo by Zhang Hengwei/China News Service]

CHINA DAILY/ANN, April 22 -- China is accelerating the development of new infrastructure in an effort to hedge against the impact of the novel coronavirus outbreak and spur the economy amid mounting downside pressure, said government officials and experts.

Unlike traditionally defined infrastructure such as railways, highways and airports, the new type of infrastructure projects include new infrastructure for digital transformation, intelligent upgrades and innovative development, said Wu Hao, director of the Department of High-Tech Industry at the National Development and Reform Commission.

"Led by new development concepts, the new infrastructure is driven by technological innovation and based on information networks to meet the needs of high-quality development," Wu said at a news conference on Monday.

The news caused shares of new infrastructure-related companies traded in Shanghai and Shenzhen to rise on Tuesday. According to Shanghai-based information provider Wind Info, shares of internet data centers companies increased by 3.34 percent, cloud computing firms by 1.97 percent and big data companies by 1.47 percent.

Wu's remarks came after the country urged faster development of a new round of new infrastructure such as 5G networks and data centers at a meeting of the Standing Committee of the Political Bureau of the Communist Party of China Central Committee last month.

According to Wu, the new infrastructure can be divided into three categories-information-based infrastructure, converged infrastructure supported by applications of new technologies such as the internet, big data and artificial intelligence, and innovative infrastructure that support scientific research, technology and product development.

Typically, the new infrastructure involves a number of key fields including 5G, internet of things, industrial internet, cloud computing, blockchain, data centers, smart computing centers and smart transportation, Wu said.

Experts said the big spending on new infrastructure is a key move to cushion the impact of the epidemic and is in line with the government's ambitions to transition from an export-led manufacturing economy toward a high-tech and innovation-driven one. It will also help expand domestic demand, maintain economic stability, restructure the economy and further advance China's core competitiveness.

"The new round of intelligent and digital infrastructure involves a series of key fields in social and livelihood fields such as telecommunications, electricity, transportation and digital economy," said Chen Duan, executive director of Zhongjing Digital Economy Research Center.

"In the short term, such big spending on new infrastructure will be a key move to strengthen countercyclical adjustment, which will also help weather the economic fallout of the coronavirus epidemic. In the long run, it will boost new types of consumption in fields such as online shopping, prompt the growth of new businesses such as livestreaming and accelerate the pace of upgrading the traditional industries."

Compared with the heavy-asset traditional infrastructure with long-term returns, the new types of high-tech infrastructure are more likely to attract investment from private investors, which will inject new impetus into the economy, Chen added.

"The new infrastructure has shown a direction for the better, with a key focus on invigorating a new type of production factor in data," said Cui Lili, director of the Shanghai University of Finance and Economics' Institute of E-Commerce. "Faster development in new infrastructure will fulfill the needs for deepening supply-side structural reforms and promoting industrial upgrades."

A new report released by GF Securities highlighted the need for more spending on new infrastructure, forecasting China would invest more than 1 trillion yuan ($141 billion) in new infrastructure projects in ultrahigh-voltage projects, new energy vehicle chargers, 5G base station construction, big data centers, artificial intelligence, industrial internet, high-speed railways and intercity railway transit in 2020.

Chen said the government needs to resolve any issues companies may face to invest in new infrastructure such as fundraising difficulties and a lack of supportive policies.

To further unleash the huge potential in new infrastructure development, the NDRC said it will work with related departments to make a big push to introduce supportive policies and revise rules to widen market access.

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