China has added stimulus worth more than CNY 1 trillion ($158 billion) as the National Development and Reform Commission (NDRC) approved a slew of infrastructure projects this week to help the economy counter the global gloom, which has increasingly diluted export gains.
The Chinese stock market surged after reports revealed that regulators have given go-ahead to several projects. According to Xinhua, the country's top economic planner has approved 55 investment projects in the past two days.
The government this week approved 25 rail projects that would require an investment of around CNY 800 billion. The NDRC said that the government has also approved construction of 2000 kilometers of highways in the country.
Citing a statement from the NDRC, the Shanghai Daily reported that second-tier cities such as Xiamen in Fujian Province and Taiyuan in Shanxi Province are given approval to build metro lines, while Shanghai and Harbin in Heilongjiang Province will be constructing extensions to their existing urban rail systems.
The projects approved also included subways, ports as well as sewage treatment plants, among others.
In response to the 2008/2009 global financial crisis, China had unveiled a massive CNY 4 trillion stimulus plan to prop-up its economy.
In a report today, ING Bank Asia Chief Economist Tim Condon noted that infrastructure spending was a major beneficiary of the earlier stimulus, much of it financed by bank lending to local government investment vehicles.
"The unintended consequences of this are legion," Condon said. They include corruption scandals, poor quality construction and stretched local government finances, he added.
Premier Wen Jiabao has repeatedly vowed to continue fine-tuning of government policies to stabilize economic growth, that hit a three-year low of 7.6 percent in the second quarter of 2012. Exports remained weak reflecting poor demand from abroad.
Manufacturing has also showed considerable weakness in the recent months, as evidenced by the latest purchasing managers' surveys.
China is due to release a slew of economic data on Sunday. The National Bureau of Statistics is set to publish industrial production, retail sales and fixed asset investment data for the month of August.
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