A highway to Wuhan, Central China's Hubei Province is under construction in Anqing, East China's Anhui Province on March 28, 2022. With major infrastructure projects kicking off across multiple provinces in China, fixed-asset investment is on a fast track, and it's expected to drive economic growth. Photo: cnsphoto

With accelerated use of special bonds, abundant funds and credit support, and high-quality project reserves, the growth rate of infrastructure investment is expected to further improve, which will be an important driving factor for economic growth in the second half of the year, experts said.

As the COVID-19 epidemic has been largely brought under effective control, a number of local governments have sped up the construction of infrastructure projects, in a bid to expand effective investment to further stabilize the economy.

By the end of July, a total of 3.47 trillion yuan ($514.4 billion) of new special-purpose bonds had been issued in China, with localities having almost completed full issuance, half a year earlier than last year, data from China's Ministry of Finance showed.

As of the end of July, special bond funds had supported the construction of more than 26,100 projects, of which about 14,400 are under construction and about 11,700 are new projects.

"Investment driven by special bonds has played an important role in supporting economic stabilization and recovery in the first half of the year despite the combination of external shocks, economic downturn and the impact of the pandemic," Chen Jia, an independent international strategy research fellow, told the Global Times on Sunday.

For example, in the second quarter, fixed-asset investment grew by 4.2 percent from a year earlier compared with a 4.6 percent drop in consumption as an important force supporting economic stabilization and recovery, according to data from the National Bureau of Statics.

Among them, infrastructure investment grew 7.1 percent year-on-year in the first half of this year.

In South China's Guangdong Province, the cross-sea channel connecting Zhongshan and Shenzhen is under construction. The project has issued a total of 4.73 billion yuan in special-purpose bonds, of which 377 million yuan were new issues this year.

In Guigang's Gangbei district in South China's Guangxi, 92 percent of this year's special-purpose bonds have been invested in new-energy projects, with a cumulative issue amount of 1.55 billion yuan, driving effective investment and complementing the local industrial chain.

In Baoan district in Shenzhen, the construction project of a nursing home has issued a total of 179 million yuan in special bonds, and the main body of the project has been topped out and is expected to be completed by the end of the year.

Chen noted that the issuance for special bonds used for project construction in 2022 has been implemented much earlier, with a wider coverage than previous years.

At an executive meeting of the State Council held on March 29, it was made clear that the use of special bonds would be expanded in a reasonable way, and that public service projects with certain benefits would be supported.

The increased investment areas include projects aimed at improving people's livelihoods and alleviating their worries and strengthening areas of weakness.

Under the requirement of basically completing the issuance of new special bonds by the end of June, the issuance of new special bonds soared in May and June this year, totaling 2 trillion yuan, Securities Times reported.

It is expected that the remaining special bonds will be used intensively in the third quarter and bring the growth rate of infrastructure investment to over 10 percent in the third quarter, Wu Chaoming, deputy head of the Chasing Research Institute, told the Global Times.

"In accordance with policy requirements, the new special bonds issued between May and July will be basically used by the end of August, providing a strong fund guarantee for infrastructure investment in the third quarter," Wu said.

At the same time, an executive meeting of the State Council in June decided to provide an 800 billion yuan credit quota from policy banks and issue 300 billion yuan of policy and development financial instruments, which will also provide credit support for project construction, experts said.

It is estimated that the 300 billion yuan of financial instruments should be able to leverage a fund of 2 trillion yuan to power infrastructure investment growth, Wu said.

From September 2021 to January this year, local governments registered 71,000 special bond projects reservations.

There is still a considerable surplus of special bond projects and wide room for further policy action, Chen said.