The Chinese government has announced that it is making funds available for construction projects to help the country out of its economic slump and boost employment in the downturn.

The relief funds in China do not come as a surprise as the country has used the stimulus packages before to bounce the country out of economic turmoil and hardships. However, the funds made available are set to remain in line with the country’s latest 5-year plan to grow high-tech and value-add industries. The 14th five-year plan highlights a focus on green energy, high-tech, AI and 5G. A kind of infrastructure very different from the roads and bridges building type of stimuli. Also, the recent cut in interest rates, against the global trend, confirms that China aims to rely on monetary policy (and probably on fiscal policy as well) rather than big infrastructure spending to stabilise its economy.

While previous stimuli have supported continued growth in steel production, the construction projects pointed towards with this latest relief fund will have different raw materials impacts. Amongst various infrastructure projects, renewable energy projects are central to the growth plans. Wind and solar energy technologies will underpin much of the new energy spend together with transition lines for distribution across the country. However, even with an announcement of relief, the question remains as to how this will balance against the strict zero-COVID policy, real estate downturn and capping of the steel industry. With the sprawl of cities across China slowing, the focus is shifting to upgrading cities and connecting via high-speed trains. Also, it will take time for these construction projects to hit the ground and Project Blue expects little relief between now and the Chinese New Year, suggesting economic rebound in Q1-Q2 2023.