“The move to support and facilitate the use of special purpose local government bonds for infrastructure projects is more of an enhancement of an existing fiscal stimulus rather than a new measure,” Rory Green, an economist at TS Lombard, tells Barron’s via email. “However it is important as it will speed up transmission of fiscal policy to the real economy and will have a clear impact on investment. We should see a further pick up in the continuing strong recovery in fixed asset investment, which is being led by infrastructure and state firms.” Green notes that the projects favored for these investments are those related to China’s national strategy, such as the Belt Road Initiative, developments along the Yangtze River to combat pollution, railways, roads, energy, and health care.
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