The Chinese government is preparing a gargantuan $1.1 trillion investment in national infrastructure intended to function as an under-the-radar stimulus for the slowing economy, according to sources speaking off the record to Bloomberg News.
The news follows indications in the Chinese market that the value of the yuan may be declining. While the decision to invest the money– 7 trillion yuan– into the nation’s infrastructure, is not yet public, “people familiar with the matter” told Bloomberg that Chinese Premier Li Kequiang has approve a total of 300 projects slated to be completed by 2016. The projects will include transportation development, oil and gas pipelines, and fuel projects involving both mining and clean energy.
On the same day Bloomberg published their report, Chinese state news outlet Xinhua reported on one specific infrastructure project: the “Silk Road fund,” a $40 billion project intended to facilitate transportation along the ancient Silk Road, which connects China to a number of nations to its west. This will include both the construction of numerous new roads and, pending on negotiations with other nations, develop new railways along the former silk road west.
The project had been announced previously by President Xi, though the newspaper now announces a new source of funding: the Asian Infrastructure Investment Bank (AIIB), a regional alternative to the World Bank that will be established by China and, according to the newspaper, “be up and running before the end of 2015.”
The new infrastructure programs are believed to be a way of anticipating any potential economic problems in 2015, after 2014 went on the record as being the slowest year for growth in the Chinese economy since 2009. As the International Business Times notes, it is highly possible that China’s GDP growth will fall below 7 percent next year, a critical point for the economy, and the greenlighting of hundreds of projects simultaneously “indicates the urgency the government is placing on boosting economic activity through development projects.” As Breitbart’s Chriss Street notes, China’s market has also been underperforming for years, despite common wisdom claiming that the Chinese market is among the world’s most consistent. This appears to have alarmed high-level officials that are concerned that a market plunge or economic lag may be on the horizon.