The State Council has come up with another big move to boost infrastructure investment! The minimum capital ratio for railway, highway and other projects should be reduced.
The executive meeting of the State Council held on November 13 decided to improve the capital system for investment projects in fixed assets, to maintain and control them, to treat them differently, and to promote the combination of effective investment and risk prevention.
The meeting proposed, first, to reduce the minimum capital ratio for some infrastructure projects. Reduce the minimum share of capital for port, coastal and inland shipping projects from 25 per cent to 20 per cent. For infrastructure projects in the areas of highway, railway, ecological environmental protection, social and people's livelihood, on the premise of reliable returns and controllable risks, the minimum proportion of capital can be appropriately reduced by no more than 5 percentage points.
Second, infrastructure and other projects can raise no more than 50% of the capital through the issuance of equity and equity financial instruments.
Third, we should strictly standardize management and strengthen risk prevention. The project loan funds, etc., shall not be used as capital, the raising of capital shall not illegally increase the hidden debts of the local government, and shall not default on the project payment.
The minimum capital ratio for railways, roads, etc., may fall to 15%
Since its establishment in 1996, the capital system for investment projects in fixed assets has played a positive role in improving macro-control, adjusting the total amount of investment, adjusting the investment structure, ensuring the sound operation of financial institutions, and preventing financial risks.
In 2004, in order to cope with the overheating of the economy at that time, the proportion was appropriately increased, and in 2009, the proportion was moderately reduced in response to the international financial crisis. In 2015, the state adjusted the relevant contents again, with the exception of industries with severe overcapacity, the minimum capital ratio for other projects was reduced by 5% as a whole.
At that time, the minimum capital ratio for fixed assets investment projects related to the national economy and people's livelihood in ports, coastal and inland shipping, airports and other fields was adjusted from 30% to 25%, and the minimum capital ratio for railway, highway, and urban rail transit projects was adjusted from 25% to 20%.
This is another reduction in the minimum capital ratio for some infrastructure projects. This means that the minimum capital ratio for transport projects such as railways and roads is likely to fall to about 15 per cent.
Zhang Jun, chief economist at Morgan Stanley Huaxin Securities, said in an interview with the Shanghai Stock Exchange newspaper that in view of the fact that the previous steady growth was all about making up for weaknesses in infrastructure, Therefore, the further introduction of relevant policies to improve infrastructure investment will help to speed up the landing and promotion of previous policies, and provide a practical guarantee for stable growth.
He believes that there is no worry about achieving the full-year growth target by the end of the year, but in order to lay a good foundation for steady economic growth in the first half of next year, although the policy for the fourth quarter does not need a substantial "boost", it still needs to continue to "improve efficiency."
Capital can be raised through equity-based and equity-based financial instruments
It was proposed that projects such as infrastructure could raise no more than 50 per cent of capital through the issuance of equity-based and equity-based financial instruments.
"to allow the issuance of equity-based, equity-based financial instruments to raise capital, the so-called financial instruments will certainly be closely related to capital asset management. After the end of 2017, the channels for raising capital through asset management have basically died, this time it is tantamount to another opening, and asset management is likely to adjust accordingly in accordance with the policy. " Jin Yongxiang, chairman of Beijing Dayue Consulting Co., Ltd., told the Shanghai Stock Exchange News.
In his view, allowing to raise capital through capital management will improve the efficiency of the use of private funds and broaden the channels of private funds investment. In addition, the policy of the regular session of the State has substantially reduced the proportion of capital, and will also improve the investment capacity of social capital, which is of great significance to stable investment and stable growth, and is also conducive to promoting the development of private enterprises with weak financial strength.
Sprint of Local Major Project Construction at the end of the year
Shanghai News reporter combed found that since the fourth quarter, the local government accelerated the pace of major projects, many areas increased the number of key construction projects and the amount of investment during the year.
On November 7, the Zhejiang Provincial Development and Reform Commission issued a circular entitled "list of additions and withdrawal of key Construction projects in 2019", which was added to 74 key construction projects in the province, with a total investment of 302.9 billion yuan. Among them, there are many transportation projects, such as Hangzhou Airport Rail Express Line, Linjin Expressway Lin'an to Jiande Section and so on.
At the end of October, Jiangxi Province issued the "100-day Action Plan for the Construction of Major projects in the whole Province." It is clear that during the 100-day campaign, 550 new projects are planned, 830 projects are planned to be completed and put into production, and the investment of large and medium-sized projects in the province is increased by about 50 billion yuan on the basis of the annual plan of 645.5 billion yuan. We will make every effort to promote the investment of 206 billion yuan in key construction projects in 352 provinces for the whole year.
In addition, towards the end of the year, many provinces have increased their steady investment again, focusing on a number of major investment projects.
On November 7, Guizhou Province in the fourth quarter of 2019 major engineering projects and infrastructure "six networks battle" project held centralized construction activities. A total of 333 projects were launched, with a total investment of 207.8 billion yuan. Of these, 183 were started on traditional infrastructure projects, with a total investment of 89.8 billion yuan, and 14 on new infrastructure projects, with a total investment of 16.5 billion yuan.
On the 11th, Anning City, Yunnan Province, the fourth quarter of key projects focused on the start of the agreement, the total investment of 19.029 billion yuan;
On the 12th, Guangyuan City, Sichuan Province, in the fourth quarter of 2019, a batch of major projects were held, with a total investment of 18.9 billion yuan, involving infrastructure, industrial development, real estate and other fields.
On the 13th, 16 projects in Yantai City, Shandong Province began work, with a total investment of 12.8 billion yuan.
Since the beginning of this year, the growth rate of investment in fixed assets has slowed down and stabilized. Fixed asset investment rose 5.4 per cent in September from a year earlier, and institutions generally expect cumulative investment growth in October, to be announced tomorrow, to be the same as in September.
In recent months, the recovery in the growth rate of infrastructure investment has been very obvious. Infrastructure investment rose 4.5% in the first three quarters from a year earlier, 0.4 percentage points higher than in the second quarter, according to the Bureau of Statistics. Institutions generally predict that infrastructure investment will continue to pick up in October.