China’s recovery from the COVID-19 outbreak has primarily been driven by infrastructure construction, funded by additional local government special revenue bonds (SRBs), with infrastructure projects receiving a larger proportion of these bond proceeds compared to last year. Infrastructure investment’s boost to China’s economy this year will be around 2.2% of GDP at most: meaningful, but far short of the policy support seen in 2009 or 2016. While infrastructure will help to place a floor under activity growth, signals from the property sector and domestic consumption will be more important for the overall cyclical outlook this year.
