The Asia Pacific region has had great news in store for infrastructure investors over the past two months. In an effort to raise money for new infrastructure, Australia’s government committed $A5 billion (€3.4 billion; $4.7 billion) in incentives over five years to states and territories to divest assets last May. This came on the back of the A$1.75 billion sale of Port of Newcastle, the latest in a string of large Aussie privatisations.
But momentous news also came from less expected quarters. At the end of April, the Chinese government announced that it would allow private investment in 80 projects in sectors including railway and ports construction, information technology, oil and gas and chemical industries. The tenders, it said, would also cover renewable energy, with a focus on solar, hydro and wind; the specific nature and value of the projects considered were not detailed.
The pledges were made at a State Council executive meeting presided by Premier Li Keqiang, the second top-level gathering in a month to focus on infrastructure investment. They also included hints that oil and gas exploration, utilities, water projects and airports would be the next sectors to open up to more private investment. Specific initiatives consistent with this vision were detailed on the sidelines, with a railway development fund due to increase to between CNY200 billion (€23 billion; $32 billion) and CNY300 billion annually.
China’s gradual opening is not entirely surprising. The government has shown a willingness to reignite a fresh infrastructure push at a time when the Chinese economy is slowing down. Yet figures compiled by Infrastructure Investor Research and Analytics show that the country closed $2.4 billion worth of infrastructure projects last year, compared with $3.8 billion in India and $7.8 billion in Brazil – at least in part because most of the sectors involved were under state monopoly.
Its determination to rein in rising public and corporate debt, as well as instil more efficiency in the world’s second-largest economy, is now leading Beijing to more openly court private capital for funds and expertise. Investors will be hoping Mr Li puts his money where his mouth is.