Chinese Media Still Asking How To Pay For Mini-Stimulus?

China's mini-stimulus has two parts. One is the acceleration of investment projects, pulling economic activity into the current quarters. The other part is increased investment. For the latter, the question asked by Chinese media is how to pay for it?

In July, I posted: Chinese Local Governments Have 10 Trillion in Stimulus Planned, But No Way to Pay For It

This latest unofficial count is at ￥6 trillion in stimulus, but with tighter controls on shadow banking, concern about local government debt levels and declining land sales, local governments find their finances constrained. If there's no way to pay for projects, there will be no stimulus.

From the article below:

Chinese Academy of Engineering Wang Meng-shu told reporters that this year's 800 billion yuan implementation is very slow, since the funds are not in place, part of the project construction speed is very slow.

There's ￥1 trillion for shantytowns, but other projects aren't as favored.

There are also rising costs to deal with:

"In 2011, the former Ministry of Railways submitted to the National Development and Reform Commission's project proposal is expected that the project be estimated 146.3 billion yuan investment. The end of July this year, the NDRC approved the feasibility study for the project, said the estimated total investment of 193 billion yuan this project. Due to rising raw material, labor costs, land acquisition and other costs, the project may eventually need 250 billion yuan. "Wang Meng-shu said.

It is overstating things to say the mini-stimulus is merely the wish list of provincial and city governments, but unless there's credit available, many projects considered part of the mini-stimulus are at least wait-listed. Growth was pulled forward into Q2, but governments cannot pull their budgets forward again once the money's gone. If credit growth doesn't increase and no alternative source of funding is available (muni markets? treasury bonds? foreign investors?), many of the the mini-stimulus projects will remain on the drawing board.

地方版微刺激投资额或超6万亿

In the face of economic reality of the downward pressure is still large, the central level around the "steady growth, structural adjustment, improve people" directed force of "micro-stimulus" policies are rolled out, the local government also introduced a number of supporting measures, introduced a number of key projects. Experts estimate that the provinces this year, the total investment in major projects planned or already up to 6 trillion yuan, due to the state of the shadow banking comprehensive monitoring, coupled with the prevention and control of local debt risk, how to ensure that the biggest challenge of funding the implementation of these projects.

Early March of this year, Sichuan raised the value of the investment plan, the launch of 500 key projects with a total investment amounted to 2.88 trillion yuan, 415.1 billion yuan annual investment. Since the focus of Guangdong have also introduced a list of items 3.67 trillion yuan, the annual investment of about 450 billion yuan, higher than 2013's 420 billion yuan. And Zhejiang, Henan goal is more ambitious, annual planned investment was 640 billion yuan and 1.2 trillion yuan. Heilongjiang, Hebei, Chongqing, Shanghai, Guangxi, Fujian and other provinces have also expanded investment steady growth. According to experts incomplete statistics, the total planned investment of major projects this year, the provinces have been up to 6 trillion yuan.

This round directional "micro-stimulus" measures covering tax, shantytowns and Midwest railway construction, stability as well as in the areas of trade, such as the introduction of a number of infrastructure to encourage social capital to participate in the projects. In line with the landing "micro-stimulus" policies, measures have been put around, introduce a number of key construction projects.

Transportation investment is an important aspect of the implementation of "micro-stimulus" policies. Transportation Research Institute of Finance and the Ministry of Transport Finance Research Institute胡方俊to the "Economic Information Daily ( microblogging ) , "told reporters, roads and general areas of national highways broken road bottleneck sections of national highway construction is the implementation of the national" micro-stimulation "of The key, bank support for such projects is relatively large, vehicle purchase subsidy has been tilted to these two roads, vehicle purchase arrangements this year grew 25%, reaching 277.9 billion yuan.

Place on railway construction enthusiastic. Early July, EJINA to Hami Railway, Beijing-Shenyang passenger line, Huangshan to Hangzhou railway, Harbin to Jiamusi Railway 14 railway projects have recently started construction. Reporters learned from the Guangzhou Railway Group, China's longest high-speed rail stuff to Shanghai-Kunming high-speed railway construction is progressing according to schedule, Shenmao railway has started construction, and is currently advancing according to plan, the financial aspect does not yet exist. But there are some projects faced funding problems, especially in the Midwest Railroad.

Chinese Academy of Engineering Wang Meng-shu told reporters that this year's 800 billion yuan to implement very slow, since the funds are not in place, part of the project construction speed is very slow.

Recently, the State Development and Reform Commission for the New West Inner Mongolia coal railway in central China to channel feasibility study report to approval. Investment of this project continues to rise, at full capacity when it can no timetable. "In 2011, the former Ministry of Railways submitted to the National Development and Reform Commission's project proposal is expected that the project be estimated 146.3 billion yuan investment. The end of July this year, the NDRC approved the feasibility study for the project, said the estimated total investment of 193 billion yuan this project. Due to rising raw material, labor costs, land acquisition and other costs, the project may eventually need 250 billion yuan. "Wang Meng-shu said.

Hufang Jun said that the transport sector to implement the national "micro-stimulus" policies, but also increased the national and provincial trunk of the building, but due to national and provincial trunk can not charge, in recent years, national and provincial trunk of planning, construction, form a raise on behalf of construction mode, facing financing difficulties.

Arrangements invest 800 billion yuan this year, railway, completed 199.6 billion yuan in the first half, completed a quarter of the annual amount insufficient. Arrange invest 1.47 trillion yuan highway, complete 587.2 billion yuan in the first half, completed less than 40 percent the amount of the year. Project implementation relations "micro-stimulus" effect, in some places pay close attention to project implementation, as proposed in the second half of Sichuan everything possible to promote the progress of construction projects to speed up construction, the government will carry out the implementation of investment projects to clean up inspection before the end of June 2014 has been arranged construction projects at the national and provincial financial resources, and strive all started before the end of September; overdue started, as the case may recover the funds have been disbursed.

Sources said that because of traffic projects with large investment, long cycle, low income, social capital to launch these transportation infrastructure projects, it is difficult to attract social capital to enter, the NDRC recently also pay close attention to all areas of recent investment in any new signs Which challenges, "micro-stimulus" how it works. Development and Reform Commission recently issued a document that is actively coordinate and promote Beijing's new airport, West Inner Mongolia to the Central Transport Corridor, from Lhasa to Nyingchi railway and other major transportation project preparatory work for the early construction.

Deputy director of the Department of Economics, National School of Administration Zhang Xiaode said that this round of "micro-stimulus" to boost the economy, there are two aspects, one is a direct investment in the sex industry have a direct role in boosting the economy, such as railways will use cement, steel and other materials . Second, the investment will have a multiplier effect, investment in railway, bringing the demand for cement, steel, and this will boost investment in the cement, iron and steel industry, investment in these industries will generate linkage effects, but these benefits may be linked will lag some.

"2008's 4 trillion leveraged investment has played a function, when the idea is that state investment to promote local investment, local investment has led direct and indirect financial investment, the total of more than ten trillion investment in irrigation type, some backward, polluting industries that control and let go of this. compared to 2008 to invest in, the investment is fixed, directed and controlled, limited, targeted investments. "Zhang Xiaode said.