Chinese premier President Xi Jinping made a bold commitment to boost infrastructure construction in Beijing in an effort to boost economic growth of the COVID-19 hit economy.
All-out efforts must be made to spur infrastructure spending, Xi said Tuesday at a meeting of the Central Committee for Financial and Economic Affairs.
Infrastructure was a pillar of economic and social development, Xi added, according to a report from the state-run Xinhua News Agency.
However, the speed of construction could be difficult to accomplish as the government maintains it strict Covid Zero policy, locking down major cities like Shanghai. Fears grows further of lockdown in Beijing as the city undertakes mass testing.
“The challenge for China is sequencing,” Tim Moe, Goldman Sachs Group Inc.’s chief Asia Pacific equity strategist said in an interview on Bloomberg TV.
“The Covid situation needs to be dealt with to a greater degree before a full-fledged infrastructure investment can really take hold. If an entire city is locked down, it is hard to do a lot of infrastructure spending there.”
Moe said, investors are looking for ways to counter the “immediate shocks” to growth in the current quarter.
The development sent CSI 300 index climbing as much as 2.7% lead by really in tech and industrial shares. The offshore yuan strengthened 0.1% to 6.5832.