China is launching a massive national infrastructure project worth 7 trillion yuan ($1.03 trillion) to connect water systems, power grids, AI computing facilities and logistics networks across the country. Analysts say the initiative — known as the "six major infrastructure networks" — is designed both to counter US technology restrictions by strengthening AI and advanced manufacturing competitiveness, and to prop up investment and growth that have slowed amid a prolonged real estate slump.
China's authorities estimate the project will require about 7 trillion yuan, according to the People's Daily, the Chinese Communist Party's official newspaper, on Sunday. The initiative links six categories of infrastructure: a new-type water network, a power grid, a computing network, a next-generation communications network, an urban below-ground pipeline network and a logistics network.
The People's Daily likened the six networks to the "arteries and veins" of a modern industrial system, saying the computing and next-generation communications networks are "essential infrastructure for the AI era — the new water, electricity and coal."
Premier Li Qiang personally chaired a meeting Monday to receive progress reports on the project, signaling that Beijing is accelerating efforts to elevate the six-network initiative to the status of a core national policy.
Yangtze Securities estimates that related investment over the next five years could reach 26.9 trillion yuan.
Among the six networks, the water network includes the South-to-North Water Diversion project, which channels abundant water resources from southern China to the drier north. The new-type power grid centers on expanding ultra-high-voltage transmission lines and ESS capacity.
The computing network — considered the centerpiece of the plan — aims to link national computing hubs and data centers nationwide into an integrated system. A particular focus is building a "computing-power collaboration" framework that connects data centers in energy-rich regions with areas of high computing demand.
Analysts say the initiative is a strategic move to connect the power, data and logistics supply chains needed for AI, semiconductors and advanced manufacturing on a national scale — countering US technology restrictions while simultaneously strengthening industrial competitiveness and economic security.
Some observers argue that Beijing is also pushing the mega-infrastructure program in direct response to the slowdown in real estate and the pullback in local government investment.
Reuters assessed that as fiscal strains and debt burdens have squeezed local governments and curtailed traditional civil engineering and real estate investment, the central government is fast-tracking state-led strategic infrastructure projects to ease downward pressure on the economy.
However, doubts about the plan's effectiveness are widespread.
Reuters cited an anonymous Chinese government policy adviser who said such large-scale investment "has little economic justification and will likely lead to a vicious cycle of borrowing to repay existing debt." The adviser added that some policy consultants believe the money should be spent on people rather than poured back into inefficient or low-impact fixed-asset investment and infrastructure.
Meanwhile, China's fixed-asset investment fell 5.7 percent year-on-year in the first half of the year, while real estate investment plunged 18 percent. Investment in infrastructure fell 2.4 percent and manufacturing investment declined 1.2 percent, with analysts noting that the figures point to a broad loss of economic momentum.
mokiya@heraldcorp.com
