CHINAS SURPRISE decision last week to inject an extra 625bn into its already expanding infrastructure programme over the next three years is being seen as a major boost to UK firms now established in the worlds fastest developing economy.
Finance for up to half the increased spend is expected to be sourced internationally through foreign lending agencies and will force many of the planned projects to be offered through international tender.
The Asian crisis has left China very keen to attract foreign investment and curb rising unemployment, said Ben Pap from the Department of Trade and Industrys China desk. This could be the impetus that naturally cautious British companies need to get more involved in Chinas construction boom.
Much of the current five year plan including 40 new airports, 20 metros and over 50 power plants had been earmarked for internal finance. But the Asian financial crash has not only robbed China of previously burgeoning investment from the neighbouring Asia-Pacific rim, but has also hit its export market to the West as Korean and Malaysian labour becomes even cheaper.
Additionally, its recent political move from a command-led to a market driven economy, heralding the closure of over 100,000 state-run companies, has created the previously unknown phenomenon of more than 12M unemployed. Increased spending on major construction is seen as the quickest way to avoid the political instability high unemployment could trigger.
It remained uncertain earlier this week whether the dramatic infrastructure boost would be from all new money or an acceleration of the existing five year programme started in 1996. Either way, government officials have promised many more roads, railways and bridges, plus power, water and sewage treatment plants.