BEIJING -- Increased infrastructure investment is key to stabilizing China's economic growth, a top state adviser said Sunday, while calling on the central bank to lower the cost of financing for companies and increase overall credit. "Keeping relatively high growth of infrastructure investment is key to stabilizing economic growth" since property and manufacturing investment remains weak, said Yu Bin, head of the microeconomy-research department at the State Council's Development Research Cented.
China needs to speed up its 172 hydropower projects, develop 53 million hectares of high-standard agricultural land and increase investment in rural roads, Yu said. His comments came the day before the Chinese government is due to release third-quarter figures on growth in its gross domestic product (GDP), and his remarks were published in the government-owned Economic Daily Sunday.
Many economists expect China to report that economic growth last quarter dropped below 7 percent for the first time since the global financial crisis.
Premier Li Keqiang said Saturday that with the global economic recovery losing steam, achieving domestic growth of around 7 percent is "not easy."
President Xi Jinping also acknowledged "concerns about the Chinese economy," but he sought to allay them in a written interview with Reuters.
The Chinese government has taken several measures in recent months to accelerate construction investment, in part by attracting private financing through the increased used of public-private partnerships (PPP).
The Ministry of Finance (MOF) in September published details of 206 proposed PPP projects, including an expressway in Beijing, with a total value of 659 billion yuan ($104 billion). The MOF last month also launched a 180 billion yuan fund with China's biggest banks and financial institutions to invest in PPP projects.
Yu called on the central bank to be alert to macroeconomic adjustments, lowering the cost of finance for companies and allow for credit growth, while maintaining a prudent monetary policy. "Given the short-term rising downward pressure, it does not benefit China's structural adjustment if economic growth is too slow or too fast," he said.
China has launched a wave of measures to drive economic growth since late 2014, including cutting benchmark interest rates five times since November and lowering the reserve-requirement ratio for lenders. Many economists expect the central bank to further cut interest rates and the reserve requirement ratio by year-end.
Yu said China should implement fiscal, taxation and financial policies to encourage companies to merge and restructure, and allow bankruptcies to solve the problem of overcapacity.
(Reporting by Shu Zhang and Matthew Miller; Editing by Richard Pullin)