Excess infrastructure, bond quota confusion

Beijing’s new airport is a timely microcosm of a nationwide trend in which local governments have built unusually extensive infrastructure, much of which is under-utilised. As a result, investment will need to slow in the coming years to give the economy time to grow into the infrastructure that it already has. Meanwhile, there is little evidence that local governments will be allowed to dip into their 2020 bond issuance quotas next quarter, despite media reports to the contrary.