A bird's-eye view of Huawei's data center in the Guian New Area of Guiyang, capital of Southwest China's Guizhou Province Photo: VCG

Both China and the US plan infrastructure programs to alleviate the huge negative impact of the coronavirus pandemic, but the US version may be less effective than China's due to their different economic structures and implementation capacities, experts said.

"China and the US are quite different with regard to their economic structures. US economic growth is driven mainly by consumption, which will make its infrastructure investment less effective in terms of economic growth than China, where investment plays an important role," Liu Xuezhi, a senior economist at the Bank of Communications, told the Global Times on Wednesday.

US President Donald Trump on Tuesday (US time) said on Twitter that "with interest rates for the United States being at zero, this is the time to do our decades long awaited Infrastructure Bill." The plan Trump called for will be "Big and Bold" and worth $2 trillion.

Liu estimated that China's new round of infrastructure investment would be worth about 50 trillion yuan ($7.05 trillion).

In the first quarter, China's local governments issued bonds worth 1.61 trillion yuan, which represented 83.5 percent of the quota set by the central government in advance, according to data from the Ministry of Finance.

Chinese Premier Li Keqiang on Tuesday stressed the need to further raise local governments' bond quotas to boost effective investments.

The US debt level is much higher than that of China, and large-scale US infrastructure investment will further push up its debt level, which will restrict the amount of investment, Liu pointed out.

China, by contrast, has maintained a low level of debt while investing heavily in infrastructure for many years. With accumulated experience and efficient implementation capacity, the economic effect of infrastructure investment would be much higher in China, Liu noted. 

Moreover, China has attached more importance to "new infrastructure" investment amid efforts to combat the fallout of the pandemic, which includes construction related to 5G and the Internet of Things.

Zhou Kunping, a senior economist at the Bank of Communications, said in a report that the new infrastructure investment is in line with the intrinsic requirements of the Chinese economy's high-quality development, which could also pave the way for its industrial upgrading.

Compared with Trump's "decades long awaited Infrastructure Bill", Liu noted that China's infrastructure investment plan — including both new and traditional projects — will be more effective in boosting economic growth amid the pandemic.

"Though the new infrastructure work still accounts for a relatively small proportion, it will bring in new growth drivers and an increasing growth rate," Liu said.


Newspaper headline: US infrastructure plan inefficient in economic stimulation