It is reported that China's State Council has approved more than 400 infrastructure projects in seven major categories with a total investment exceeding 10 trillion yuan from the end of 2014 to 2016. About 300 projects are expected to start in 2015, with investment exceeding 7 trillion yuan. This measure aims to stabilize current economic growth by expanding effective investment and ensure that investment continues to play a crucial role in this year's economic growth.

　　According to relevant sources, specific projects have been issued to local governments, and some projects have already started at the end of last year. Investment funds are expected to come from central and local governments, bank loans, state-owned enterprises, and the private sector, etc.
　　After this news was exposed, the RMB exchange rate halted its two-day decline and rebounded. At the same time, the Australian dollar, known as a "proxy" for the Chinese economy due to Australia's large exports of iron ore and other infrastructure commodities to China, also climbed.
　　Data shows that these seven major categories of projects (referred to by Chinese officials as the seven major project packages) include: information and power grid, oil and gas and other major network projects, health and elderly care services, ecological and environmental protection, clean energy, grain and water conservancy, transportation, and oil, gas and mineral resources security projects.
　　In addition to the above project packages, the National Development and Reform Commission (NDRC) is currently studying investment projects in other industries and fields for the government's reference when greater support for the economy is needed.
　　Railway investment is expected to play an important role. At a meeting on January 5, Han Siyi, a researcher at Shenyin & Wanguo Securities, said that because railway investment in the past four years has fallen far behind the 12th Five-Year Plan (2011-2015), this year's railway investment will exceed 1.1 trillion yuan.
　　Bloomberg pointed out that China is looking for a recipe to promote growth without comprehensive stimulus.
　　"This is not another 2008," said Zhao Xijun, director of the Finance Department at Renmin University of China. "In 2008, in response to the global financial crisis, China carried out a massive 4 trillion yuan stimulus plan. At that time, China expected nothing but speed; but now, China is more concerned about the quality, efficiency, and sustainability of growth."
　　According to data from the National Bureau of Statistics, China's fixed asset investment in the first 11 months of last year was 45.1 trillion yuan. Among them, infrastructure investment in transportation, environment and water conservancy facilities, and heating, gas and water supply was 9.8 trillion yuan.
　　The pursuit of growth quality is not only reflected in the changing focus of infrastructure investment.
　　According to a notice from the Chinese government last Sunday, in order to promote the development of various high-tech fields from agriculture to healthcare in China, Beijing plans to triple the number of new domestic patents by 2020 compared to now. Reuters said that in the face of slowing economic growth and rising manufacturing costs, Beijing hopes to become a bigger player in the technology industry, which will also put pressure on countries that dominate in innovation.
　　Thomson Reuters published a study last December: in 2013, China published 629,612 patents, more than 200,000 more than the United States. However, per capita, China's new patents per 10,000 people that year were only 4, and the Chinese government hopes to increase this number to 14 by 2020.
　　Economic Insights
　　Stabilizing Growth: Transportation Project Package Still Accounts for Half
　　Since 2010, China's economic growth rate has continued to decline. Data released by the National Bureau of Statistics shows that in the third quarter of 2014, China's GDP growth rate was only 7.3% year-on-year, a new low in 22 quarters. The Chinese economy is transitioning from high-speed growth to a "new normal" of medium-to-high-speed growth. After the data was released, most market institutions believed that the economic growth rate in 2014 would be difficult to reach 7.5%, and predicted that next year's economic growth target would be set at 7%.
　　The Central Economic Work Conference held at the end of last year determined that a major task for this year is to maintain stable economic growth and promote a more balanced pull of the "three carriages." In 2013, the contribution rates of the "three carriages"—investment, consumption, and foreign demand—to GDP growth were 54.4%, 50%, and -4.4%, respectively. Investment still occupies an extremely important position in contributing to economic growth.
　　Given that the domestic social security system is not yet sufficient, residents' income levels cannot be rapidly increased in the short term, and the international economy is slowly recovering, it is difficult for consumption and foreign trade to boost economic growth. The importance of investment in stabilizing growth is highlighted. However, the investment situation remains severe. Data released by the National Bureau of Statistics shows that in the first 11 months of last year, the year-on-year growth rate of fixed assets was only 15.8%, a new low for the same period since 1999. The task of stabilizing investment is extremely severe.
　　The NDRC, as the department in charge of fixed asset investment, held two press conferences in late November and early December last year to introduce the selection and progress of the seven major project packages. Li Pumin, Secretary-General of the NDRC, said at the press conference: "(The seven major project packages) are major projects of overall, fundamental, and strategic significance for economic and social development, promoting the formation of new economic growth points."
　　According to the two press conferences held by the National Development and Reform Commission, the number of projects in the clean energy project package, mineral resources project package, and transportation project package are 26, 37, and 203, respectively. If Bloomberg's report that the seven major project packages total 420 projects is true, then the transportation project package accounts for half, and the transportation project package is the top priority among all project packages.
　　At the local level, Hebei and Zhejiang provinces both mentioned the need to promote the construction of the seven major project packages at their provincial reform and development meetings held at the end of last year. Among them, Xie Liqun, director of the Zhejiang Provincial Development and Reform Commission, disclosed that the province has 26 individual projects included in the seven major project packages. Xie Liqun also said that this year the state will place expanding effective investment in a very prominent position for stabilizing growth, and a promotion mechanism for major infrastructure construction projects (the seven major project packages) has been established at the national level.
　　"Infrastructure investment lays the foundation for the development of the next growth point; this is for medium-term development and cultivating new growth points," Liu Yuanchun told a 21st Century Business Herald reporter. "In addition, a very important short-term significance is that it pulls demand for many industries."
　　Industry Analysis
　　Related to Future Industrial Structure
　　Currently, China's steel, coal, and other industries have serious overcapacity. Therefore, investment areas and methods that neither exacerbate overcapacity nor promote the healthy development of the national economy urgently need to be studied. To this end, the National Development and Reform Commission launched relevant research in February last year, with the purpose of fully leveraging investment benefits and improving efficiency. This investment has been given the connotation of "effective investment" by the NDRC.
　　"Newly added national investment cannot be put into areas with overcapacity; it must be in livelihood projects such as healthcare and agriculture, so that the people can benefit. Investment that sees benefits and returns can be called effective investment," said Wu Yaping.
　　Xie Liqun said: "Today's investment structure is tomorrow's industrial structure, and the industrial structure determines the speed, stamina, efficiency, and competitiveness of economic development in the coming period."
　　In addition, the source of the 7 trillion yuan in funds is also a focus of attention. In terms of specific project advancement, central projects are mainly promoted by relevant departments of the State Council and relevant central enterprises, while local projects are mainly promoted by local governments and their relevant departments and project units. In fixed asset investment, funding sources are generally divided into national budget funds, loans, foreign investment utilization, and self-raised funds.
　　Regarding the source of project funds, the NDRC has clearly stated that it encourages social capital, especially private capital, to enter, and encourages the adoption of the PPP model.
　　"Under the downward trend of the Chinese economy, the expected returns of many investments are declining, so fully launching PPP now is not a particularly good timing," said Liu Yuanchun. "Any cooperation model must be transparent, pioneering in different regions and industries, and more importantly, the government needs deeper and more comprehensive reforms."