Infrastructure projects set to boost growth

China announced 80 major public infrastructure projects on Wednesday to arrest the economy's slowdown while experimenting with wider access for private and overseas investors.

The decision was made at a State Council executive meeting with Premier Li Keqiang presiding, the second meeting in a month to focus on infrastructure investment.

The projects will cover railway and harbor construction, new infrastructure needed by information technology, major clean energy projects such as hydropower, wind power and photovoltaic power, as well as modernization projects in oil and gas and chemical industries.

The projects and their total value are still to be specified.

Economists say overseas investors are likely to benefit from the new infrastructure investment program along with domestic private-sector investors.

The State Council said private investment will be encouraged to enter fields that are "monopolistic in nature" or "used to be dominated by government investment and State-owned enterprises".

In 2013, private-sector investment accounted for 63 percent of China's total capital investment, according to the government, which had previously unveiled steps to encourage private capital in the construction of railways and affordable housing.

The State Council also decided that oil and gas exploration, public utilities, water resources projects and airport construction will be the next to open to private-sector investment.

To that end, the central government will sell 150 billion yuan ($24.2 billion) of railway financing bonds this year.

A railway development fund that welcomes private investment will rise to about 200 billion to 300 billion yuan each year, according to the National People's Congress Standing Committee.

"All the railway projects that have been approved by the State Council should start construction as soon as possible, and preliminary work should be done to ensure railway investment will grow steadily," the State Council said.

Signs of a slowdown in the first quarter had been evident in a series of economic indicators, prompting the government to unveil measures to promote growth, although it has ruled out a major stimulus.

The HSBC Purchasing Managers Index for April rose to 48.3 from March's 48.0, but it was the fourth consecutive month below the 50 line separating expansion from contraction.

The State Council also said guidance for foreign investment review and approval will be released as soon as possible.

Ding Jihua, deputy director of the research and consulting department at Beijing New Century Academy On Transnational Corporations, said foreign companies in China will also be affected by Wednesday's decision to open up some market access to private capital. "Foreign companies in China can take part in these monopolized industries in joint ventures or as a sole investor," Ding said.

He suggested the government use the Public-Private Partnership as a way to encourage investment of private capital in infrastructure.

Tong Youhao, an official from the China Center for Promotion of Small and Medium-sized Enterprises Development, wondered if the policies can be as effective as they are meant to be, because the entry of private capital into monopolized industries involves reshuffling interests and has been difficult to carry out.

His concerns were echoed by Wang Yuanzhi, former chief of the small and medium-sized enterprises department under the National Development and Reform Commission. "The government has promised private investment into these industries for a long time, but it is too difficult to carry out in areas that can touch the interests of the monopolistic sectors," Wang said.