Hydro projects to boost economy

Hydrological infrastructure received prominent mention at the State Council’s executive meeting on Tuesday as a key area for government spending to avoid an economic downturn. 

“Many market entities are in a very difficult situation,” went the State Council’s gloomy assessment of China’s economic health, which has been hit hard by zero-Covid measures keeping cities such as Shanghai in strict lockdown since March. It went on to list 33 policy items to stimulate the economy, including by accelerating the construction of hydro infrastructure, supported by long-term loans from banks.

The Ministry of Water Resources had said in mid-March that it would strive to invest more than 800 billion yuan in hydrological infrastructure, a target reaffirmed by the State Council the same month. This is about the same as last year’s 802.3 billion yuan, and an increase of 4.2% from 2020. It includes infrastructure for flood mitigation, water supply and irrigation. 

In early April, the ministries of water resources and finance, along with the National Development and Reform Commission, said they would expedite the planning, pre-project study and approval processes of new hydro projects and accelerate those already being built.

Infrastructure investment has been a go-to for the government to spur economic growth and ward off recession. In recent months, Wei Shanzhong, vice minister for water resources, has said repeatedly that every 100 billion yuan invested in major hydrological projects will spur GDP growth by 0.15% and create 490,000 jobs. So, he says, the 800 billion would contribute significantly to stabilising macroeconomic fundamentals.

As the fervour to invest in new infrastructure builds, the Jiangxi provincial government released an environmental impact assessment for a 10-day public consultation on 9 May of a sluice wall between Poyang Lake and the Yangtze River, rekindling a 20-year debate over the fate of one of China’s largest lakes. Many expect that, given the current political context, this project will now go ahead. But debates over it and other hydro projects are not likely to be over.

Read China Dialogue’s recent guest analysis of the “national water grid” central to the hydro infrastructure boom.