MNI: China To Boost Infrastructure Spending As Tariffs Hit

--Spending to target agriculture and transportation

     BEIJING(MNI) - China will increase infrastructure investment in agriculture

and transportation, the economic planning department said Tuesday as the

country's exports faced a fresh onslaught from U.S. tariffs.

     "The National Development and Reform Commission's next step ... will

increase infrastructure investment to improve related weaknesses, stabilize

effective investment and enhance investment efficiency," Meng Wei, spokeswoman

of the commission told a press conference.

     The comments came as China's Ministry of Commerce announced it would "have

to retaliate simultaneously," after the administration of President Donald Trump

announced 10% tariffs on Chinese products worth $200 billion.

     Infrastructure spending will focus on agriculture, environment protection

and poverty reduction. The country has started construction of 130 of 172

hydraulic engineering projects worth more than one trillion yuan, the NDRC

noted.

     The announcement helped the Shanghai stock market and Hang Seng Index close

higher, despite the U.S. measures.

     A fall in infrastructure spending has been the main reason for slower

Chinese investment growth, according to Liu Shihu, associate counsel of the

investment bureau of the NDRC. Fixed-asset investment growth slowed to 5.3% in

the first eight months of the year, a record low.

     "China needs to increase infrastructure investment and to stabilize

effective investment." Liu said.

     But the officials said local governments should increase investment within

their fiscal capacities, and should avoid taking on excessive debt.

     The NDRC will also ensure funds are used in areas which promote

high-quality development, Meng stressed.

     Investment in agriculture will focus on hydraulic engineering projects to

prevent floods, improve irrigation, and enhance environmental protection. The

government will increase transportation investment, especially in the

underdeveloped middle and western regions, with railway projects to be

accelerated.

     "We will encourage private capital to actively participate in

transportation infrastructure investment through regulated public-private

partnerships," Ma Qiang, deputy director of the infrastructure bureau of the

NDRC said. "We will facilitate joint-stock and mixed ownership system reform of

railway projects, and advance market-based and law-based debt-to-equity swaps."

--MNI London Bureau; +44208-865-3829; email: Jason.Webb@marketnews.com

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