MNI China Press Digest Jan 14: Infra Invest, Debt, Outbreak

The following lists highlights from Chinese press reports on Friday:

• China’s infrastructure investment may grow 8% this year on strong policy support and early issuances of local government debt, the Shanghai Securities News said citing economist Lian Ping of Zhixin Investment. Many major projects across the country have begun as the central government urged quick use of the funds from CNY1.2 trillion special-purpose bonds issued in Q4, the newspaper said. The year 2022 will be a period of fiscal expansion, with increasing government spending and debt, the newspaper said citing Feng Xiaolin, a researcher at the Development Research Center of the State Council.
• Chinese local governments are facing increased bond repayment pressure amid falling revenues from land sales due to slumping property markets, while implicit debts piled up in recent years threaten their ability to borrow more, Yicai.com reported citing Ma Guangrong, deputy director of Institute of Public Finance and Taxation at the Renmin University. Local governments are highly dependent on selling land to repay special bonds, with the ratio of such income to general budget revenue rising to 74% from 33% between 2008 to 2020, said Ma. During this period, the debt sustainability index measuring legal and implicit debts fell to 60.1 from 87.7, indicating local governments face persistently rising debt risks and pressure to fiscal sustainability, Ma was reported as saying. Local authorities rely on raising debt to pay for public service and infrastructure investment, the newspaper cited Ma as saying.
• Volkswagen and Toyota's factories in China’s Tianjin city have been shut since Monday as employees undergo Covid tests amid a new outbreak confronting the port city, the Global Times said. Production lines in other parts of China will try to make up for the potential capacity losses, the newspaper said citing unidentified sources within the industry. Tianjin reported 41 domestically transmitted infections with confirmed symptoms on Wednesday, up from 33 on Tuesday, adding the total to 256 confirmed cases. The outbreak in Tianjin has spread to at least two other cities - Anyang in central Henan province and Dalian, a port city in northeast Liaoning.