Xi Jinping vows ‘all-out’ construction spending spree to save China’s economy Business

However, the fallout from Covid restrictions could spread as Beijing’s strategy compounds global supply chain problems. Rising congestion outside Chinese ports could add to inflationary pressures that are already weighing on household finances.

Lisheng Wang, Economist at Goldman Sachs, said: “Chinese policymakers are increasingly aware of the strong headwinds to growth from Covid restrictions and the continued slowdown in real estate, and are therefore increasingly determined to intensify policy easing measures.

He predicted growth in infrastructure spending will remain in double digits year-on-year given slowing exports, zero Covid policies and weak private investment.

Wang added: “President Xi has been emphasizing both economic returns and ‘overall returns’ from infrastructure projects, which we believe signals a gradual relaxation of the selection threshold for projects, as “overall returns” could include improving [the] livelihoods of people and related projects.

Beijing has targeted 5.5% GDP growth this year, but economists have warned output could rise less than 4% as huge cities are locked down.

Panic buying hit the capital Beijing this week after local officials said the Covid situation was “serious” and quarantined several areas of the capital. Residents flocked to supermarkets for supplies after mass testing was ordered in a major district, fueling fears of widespread restrictions looming.