China will encourage local governments in the Yangtze River Delta around Shanghai to jointly set up investment funds for major infrastructure projects and ecological development.
The plan lays out targets to increase the density of roads, railways, airports and ports in the delta, an area already equipped with comparatively sophisticated infrastructure. Other big-ticket projects on the list include water conservancy facilities, power grids, and renewable energy plants. The plan didn’t specify a target value for the investment.
The Yangtze River Delta spans Shanghai City and the provinces of Jiangsu, Zhejiang and Anhui in eastern China, covering 358,000 square kilometres. In November last year, President Xi Jinping declared the development of the delta a “national strategy,” putting it on a par with the Belt & Road Initiative.
In order to fund these projects, the central government encourages localities to set up joint investment funds, a move intended to prevent any single locality from assuming too much of the debt burden, according to the plan. At the same time, Beijing also said it would increase the quota of bonds that local governments can issue.
Last week, China’s Finance Ministry issued a 1 trillion yuan ($142 billion) quota of “special bonds” earmarked for infrastructure projects and urged localities to allocate the spending to specific projects “as soon as possible.” Special bonds allow borrowing not counted in regular calculations of government debt levels.
The Yangtze River Delta is also being given a role in developing the manufacturing sector. At least six of the ten sectors featured in the “Made in China 2025” plan were highlighted in the new plan, including bio-medicine, aerospace, new materials, information technology, advanced equipment, and new-energy vehicles.
China quietly dropped references to the industrial plan after it became a focus of U.S. criticism in the course of the trade war. Nevertheless, recent endeavours include a 147.2 billion yuan ($21 billion) government-backed fund targeting the manufacturing sector and a new policy to upgrade and integrate the manufacturing sector with a modern services sector.
High-growth innovative companies will be encouraged to list on the Star board of the Shanghai stock exchange, the plan said.
The government aims to narrow the urban-rural income gap in the region by 2025. The plan says income for urban households shouldn’t exceed 2.2 times that of rural households. Per capita GDP in central districts shouldn’t be larger than 1.2 times the per capita GDP of the entire region. It is also targeting an urbanisation rate of 70% in the area.