The southern Chinese province of Guangdong will keep pouring money into infrastructure and job creation this year to stabilise the economy as it battles strong economic headwinds, provincial officials said on Wednesday.
But the province was in good financial shape and could fund its building and investment drive through local revenue and bond issues, the officials said on the sidelines of the provincial legislature’s annual conference.
Chen Yiwei, director general of the Guangdong Department of Human Resources and Social Security, said the province was facing challenges from China’s slowing economic growth and external issues like the China-US trade war.
“We will face great complications and difficulties in the new year to keep employment stable,” Chen said. “This is caused by mounting downward pressure on the economy and because of the trade conflicts between China and the United States.”
Officials at the conference said Guangdong, an export powerhouse, had set a relatively low growth target of 6 per cent for 2020. Last year, the province, one of the richest in the country, registered a modest 6.3 per cent growth, down half a percentage point from 2018.
Guangdong would increase spending virtually across the board, it would target the service sector for job creation in 2020, they said.
Authorities would encourage more employment through ventures like the Didi ride-hailing service and popular online food delivery firm Meituan Dianping. In addition, the government would help university graduates set up businesses and early retirees to rejoin the workforce.
Chen said the government would step up vocational training for migrant workers and offer support to young entrepreneurs from Hong Kong and Macau to launch businesses in Guangdong, particularly in the Greater Bay Area.
The officials also projected infrastructure to help keep driving the economy, unveiling massive investment plans for highways and railroad networks across the province.
Guangdong originally planned to put 650 billion yuan into major infrastructure projects in 2019 but overshot the target by more than 20 per cent, reaching 784.9 billion yuan, according to Ge Changwei, head of the Guangdong Development and Reform Commission.
“Through increased investment in major projects, [we have] effectively stabilised and supported our fixed capital [growth], and contributed to the stable economic growth of the province,” Ge said.
“In 2020, our budgeted investment will amount to 700 billion yuan in a total of 1,230 major projects, up 50 billion yuan from last year.”
Much of the money would be used to expand the transport network, including highways, high-speed rail and new airports.
Dai Yunlong, head of the Guangdong Department of Finance, said the province would issue more government bonds to finance the investment plans but also offer tax breaks to enterprises, especially small businesses to support the job market.
Guo Wanda, from the China Development Institute, a Shenzhen-based think tank, said Guangdong’s economic game plans were in line with China’s national strategies to keep employment, finance, trade and investment stable in the new year.
“Infrastructure investment is an important aspect that can ease the effects brought by the trade frictions [between China and the US],” he said.
Hu Xingdou, a Beijing-based economist, said China’s economy would continue to face downward pressure in 2020 but unemployment would be under control and not cause social instability.
Hu said new businesses like start-ups would help absorb some people left jobless by the economic downturn but, in the long term, “China will need to put greater emphasis on the private sector” to help create jobs, he said. “That’s the key to solving the unemployment problem.”
In the near term, the government would likely focus on finding jobs for new graduates and support them through tax breaks and subsidies, Hu said..=
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This article Guangdong bets on infrastructure amid slowing growth and US-China trade war first appeared on South China Morning Post