“Old” beats “new” in near-term infrastructure boost

Despite all the recent focus on hi-tech “new infrastructure”, policymakers are still leaning far more heavily on traditional infrastructure construction, which looks set for a boom judging by the recent surge in excavator sales. Given that China’s physical infrastructure is already well developed, the medium-term returns on this investment are likely to be low. But in the short-run it will drive a rebound in the number of high paying jobs for migrant workers, who were hardest hit by the COVID-19 downturn. This in turn should ease the strains on household balance sheets that are holding back the recovery in consumption.