Local governments should focus on ensuring effective investment

At a time when China's economic development is facing the triple pressures of shrinking demand, supply shocks and weakening expectations, local governments could try launching major projects, attaching greater importance to the role of investment in promoting economic growth.

Although consumption has become the driving force of China's economic growth, it is closely related to household income, social security and development expectations and is thus unlikely to get a boost within a short period. In contrast, investment is expected to play a key role in promoting economic growth.

Compared with developed countries, China is still seeing rapid development of a new type of industrialization, information technology, urbanization and agricultural modernization, all of which require huge investments. Therefore, while making every effort to stabilize foreign trade and boost consumption, it is necessary for local governments to make investment an important tool for stabilizing economic growth.

Also, the investment must be targeted and effective. In recent years, China's infrastructure has improved greatly, but transportation, energy, water conservancy, environmental protection, logistics and other traditional infrastructure could do with further improvement. New infrastructure such as 5G network, data centers and industrial internet being the future, their development needs policy support.

At the same time, greater investment should be made in the upgrading of traditional industries, the construction of low-income housing, urban renewal and pipeline network renovation, education, culture, health, sports and other areas related to people's well-being.

Effective investment is inseparable from financial support, which requires both targeted government investment and active participation of private capital. On the one hand, China should give full play to the leveraging role of budget investment, and pay attention to improving the quality of project construction and the efficiency of fund use. On the other hand, it should fully mobilize the power of private capital investment, improve the mechanism for private capital participation, advance the reform of the project approval system, and improve the business environment.

The authorities should actively improve relevant institutional designs to ensure reasonable returns on social capital investment, stabilize and enhance its investment expectations, and form a virtuous cycle of investment.

ECONOMIC DAILY