China doubles up on ‘new infrastructure’ investments

China is doubling up on infrastructure investments in a bid to position itself as a high-tech powerhouse in the post-Covid-19 world.

As part of its plan to build a so-called “new infrastructure”, the country is shoring up investments in cloud computing, datacentres, the internet of things (IoT) and other smart solutions built on existing infrastructure.

Urged on by China’s leaders, many local governments have now introduced that term into their own development plans to help the recovery of the local economy.

The tech industry, among others, has also been quick to respond to government appeals, with major players Baidu, Alibaba and Tencent pledging almost $1tn in investment efforts.

451 Research analysts said that although there is limited information on how China will direct its resources, the plan will encourage the transformation of traditional infrastructure while countering the short-term economic impact of Covid-19.

For a start, China is expecting more than CNY27tn ($3.8tn) in new infrastructure investments in the next five years, while more than 20 regions have included new infrastructure in their plans and reports.

In Shanghai, for example, new infrastructure spending is expected to hit $270bn over the next three years. And this year alone, Yunnan province is investing CNY589bn ($83.9bn) in new infrastructure.

Local government investments are expected to be made via the issuance of special bonds, public-private partnerships and credit supports.

The term “new infrastructure” was first coined by China’s central government in 2018 as part of proposals to embark on key national tasks in 2019.

It started to gain traction in April 2019 when Wu Hao, head of China’s National Development and Reform Commission, used and clarified the term at a press conference.

Hao said new infrastructure is led by “new development concepts, driven by technological innovation and based on information networks to fulfil the needs of high-quality development”.

It covers information-based infrastructure such as 5G and IoT (internet of things), converged infrastructure including big data and artificial intelligence, and innovative infrastructure that supports scientific research and technology development.

Datacentres also fall under the new infrastructure umbrella, which, together with cloud computing and blockchain, will drive growth for future network and digital development.

While sounding similar to the “Made in China 2025” plan, the key difference with “new infrastructure” is that it focuses on high-tech deployment,without specifying the origin of the technology, said the 451 Research analysts.

The Made in China 2025 plan was aimed at reducing the country’s reliance on foreign supply chains.

In May 2017, China’s C919, the first commercial airliner built under the Made in China 2025 plan, made its maiden flight, marking a historic moment in China’s aviation industry. The aircraft uses 3D-printed parts and has a range of up to 5,555km.