China will set up a state infrastructure investment fund worth 500 billion yuan ($74.69 billion) to spur infrastructure spending and revive a flagging economy
China's economy has started a slow recovery from the supply shocks caused by extensive lockdowns since the second quarter, although headwinds to growth persist, including from a still subdued property market, soft consumer spending and fear of any recurring waves of infections.
The fund is expected to be set up in the third quarter, the sources said without providing further details.
China has unveiled a raft of economic support measures in recent weeks, although analysts say the official gross domestic product target of around 5.5% for this year will be hard to achieve without doing away with its strict zero-COVID strategy.
Much of the support for the world's second-biggest economy has come from fiscal stimulus to counter the impact from COVID-19 this year, with the central bank steadily easing liquidity conditions to lower financing costs.
Authorities are doubling down on an infrastructure push, dusting off an old playbook to revive the economy, pledging 800 billion yuan in new credit quota and 300 billion yuan in financial bonds for policy banks to fund big projects.
Chinese consumers are tightening their belts amid job losses and falling incomes while exporters face headwinds from a potentially sharp global economic downturn as major central banks tighten policy to fight soaring inflation. The Ukraine war, high raw material costs and supply chain snags also pose risks to the outlook, analysts say.
For now, China's consumer inflation is largely under control, providing headroom for authorities to stimulate the economy, though some analysts caution the global cost-push factors could start to show up in domestic prices later in the year.
Channeling more money into big-ticket infrastructure projects is Beijing's most viable move, but that may not be enough to pick up the slack as property spending weakens.
With returns on traditional projects like highways, railways and airports now much lower, China has been trying to expand new infrastructure focused on 5G, artificial intelligence and data.
