China is building more subways, highways and sewage plants to counter a growth slowdown, a senior Chinese economic planning official said today.
Xu Lin, head of the planning department at the National Development and Reform Commission, told reporters in Beijing newly approved projects, including roads and subways in 18 Chinese cities, were only a part of a pipeline of infrastructure projects being developed in the nation.
"In an economic slowdown, the government has to take some counter-cyclical measures -- it's absolutely normal, and it's part of macro-economic control," Xu told reporters at an academic forum in the Peking University. "China still has large demand for infrastructure projects."
Premier Wen Jiabao, who pledged last week to employ monetary and fiscal policies to spur growth, has increased infrastructure spending and refrained from introducing another stimulus package, with fiscal support limited to tax cuts and accelerated project approval. The economy grew 7.6 percent in the second quarter from a year earlier, the smallest increase since March 2009.
Xu's comments come after the NDRC this month published approvals for building as much as 2,018 kilometers (1,254 miles) of roads and subway projects across the country. Nomura Holdings Inc. estimated the total value of projects approved at about 1 trillion yuan ($158 billion). The NDRC has also green-lighted a slew of railroads, sewage-treatment plants, ports and warehouses.
China's stocks today fell the most in 10 weeks on speculation the government won't ease monetary policy as quickly as anticipated. At least 12 banks and brokerages have cut their gross domestic product forecasts so far this month, with UBS AG, Morgan Stanley and Barclays Plc. now predicting the nation's growth will sink to a 22-year low of 7.5 percent this year.
Xu said the accelerated project approval did not mean the government is rolling out more stimulus. A 4-trillion yuan package of state spending and tax cuts announced in 2008 stoked inflation and sparked concern local governments took on more debt than they can afford.
"These projects are already in our plan," Xu said. "Infrastructure is the backbone system for national economy and a society. In the long-term, if infrastructure is good, it's helpful for overall efficiency."