Shanghai to increase financial support for new infrastructure projects

Editor's note:

Shanghai, a well-established destination for investment from home and abroad, is confident it will attract more quality investment thanks to better policies and services.

Shanghai released new measures on Tuesday to support new infrastructure construction projects.

The Shanghai Development and Reform Commission released "Guidelines for Discount Management of Shanghai's New Infrastructure Construction Projects (2024 Edition)," a supplement to the action program (2023-2026) issued in 2023, expecting to achieve the new infrastructure framework system set for 2026.

In 2024, the government work report emphasized the development of new quality productive forces.

"Supporting and promoting the construction of new infrastructures fits perfectly with the requirements of accelerating the development of new quality productive forces," said Qiu Wenjin, deputy director of the Shanghai Development and Reform Commission.

The newly released guidelines for 2024 has 17 parts, covering areas such as the rules for subsidizing interest rates, the selection of partner banks and the process of filing and reviewing.

The guidelines encouraged the establishment of specialized preferential interest rate credit funds with a total scale of over 100 billion yuan (US$13.9 billion), focusing on supporting network infrastructure, arithmetic infrastructure, data infrastructure, innovation infrastructure, and terminal infrastructure.

The guidelines also required that the rules for interest rate subsidy shall be implemented on a first-paid, first-subsidized basis and that the cooperative banks responsible for organizing and accepting credit projects and credit risk control shall have their preferential interest rate loans denominated in renminbi (RMB) and shall be limited to project loans only.

In addition, the loan placement date should be no later than the end of December 2026, and the discount period is generally no more than three years; particularly significant projects can be appropriately extended after approval by the government.

CFP

The term "new infrastructure" can be traced back to the national economic conference in December 2018, when the term was first explicitly proposed.

In April 2020, the government clarified the scope of new infrastructure for the first time: new infrastructure is an infrastructure system that is led by new development concepts, driven by technological innovation, based on information networks, and oriented to the needs of high-quality development to provide services such as digital transformation, intelligent upgrading, and convergence and innovation.

The Shanghai government issued the "Shanghai Action Program for Promoting the Construction of New Infrastructure (2020-2022)" to immediately implement this ideology in the same year.

Compared with the 2020 version, the new guidelines featured lower loan interest to reduce financing costs for enterprises. For example, the quoted interest rate for loans of five years and more can have a cut of at least 70 basis points from the original rate.

The declaration conditions have also been loosened. The investment threshold for project declaration will be adjusted from 100 million yuan to 50 million yuan to ensure that more projects can enjoy the interest rate policy.

"The new infrastructure construction is precisely the cornerstone that supports the development of new business, new industries and new services," said Zhang Yu, a senior expert at ICBC Shanghai Branch.

Up to now, ICBC has completed several new infrastructure credit projects such as "AI Robot Intelligent Factory" and "Bio-Monoclonal Antibody Drug Digitalization Factory," the total amount of which accounts for a third of Shanghai's "new infrastructure construction" credit projects with preferential interest rates.

Similarly, China Development Bank (CDB) has also made positive contributions in supporting the new infrastructure sector.

In 2023, it issued infrastructure loans totaling 1.51 trillion yuan, advanced manufacturing, and strategic emerging industries loans of 551.8 billion yuan.

Four projects in the Lingang New Area have received interest rate support since 2020, according to Zhuang Qingsong, deputy director of the development and reform department of the Lingang New Area management committee.

At present, there are 2,647 network base stations in Lingang New Area, with eight sizable arithmetic centers covering an area of 714,000 square meters. With a total power of 604 watts, these arithmetic centers can dispatch about 20 percent of the power in Shanghai.