## 'Soft' Infrastructure Is Crucial for Stable and Balanced Growth in China

_IMF Blog, March 2, 2017_

## Source details

**Canonical URL:** ['Soft' Infrastructure Is Crucial for Stable and Balanced Growth in China](https://www.imf.org/en/blogs/articles/2017/03/02/soft-infrastructure-is-crucial-for-stable-and-balanced-growth-in-china)

## Other formats

- [Markdown version](/en/blogs/articles/2017/03/02/soft-infrastructure-is-crucial-for-stable-and-balanced-growth-in-china/index.md)
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## Bibliographic details
- Authors: iMFdirect
- Published: March 2, 2017

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### Context and case for change
- China built an "astonishing network" of "hard" infrastructure (roads, power stations, communication networks) that supported its remarkable economic growth.
- China is the second largest economy and contributes one-third of the world’s growth.
- China needs to move toward a new stage of reforms to help rebalance its economy from investment-led to more sustainable, consumption- and services-led growth.
- Date of publication: March 2, 2017.

### Definition and components of "soft" infrastructure
- Soft infrastructure covers a broad range of fiscal, monetary, financial policies and statistics.
- It relates to governance and financing of state-owned enterprises and local governments.
- It is the collection of institutional frameworks that support sustained economic and social progress.
- Examples and elements cited:
  - Fiscal policies that make it easier to manage the economy and avoid the build-up of excessive risks.
  - A fair tax system.
  - A financial system that channels peoples’ savings to productive uses.
  - Corporate governance that protects consumers and workers.
- Soft infrastructure is built on a foundation of open markets.

### Key issues highlighted
- Concerns about debt buildup in the state enterprise sector, where many companies exist as “zombie” entities.
- The current role of government in directing and owning resources needs to shift toward being a facilitator and regulator of private initiative, enterprise, and innovation.

### Policy implications and recommendations
- Move away from directing and owning resources; adopt a new role as facilitator and regulator of private initiative, enterprise, and innovation.
- Strengthen fiscal, monetary, and financial policy frameworks to better manage macroeconomic risks.
- Reform governance and financing arrangements for state-owned enterprises and local governments to address debt build-up and "zombie" firms.
- Improve tax fairness, financial intermediation, and corporate governance to support a rebalancing toward consumption, services, and environmentally friendly growth.

### Expected benefits and goals
- Help shift the economy toward consumption, services, and environmentally friendly growth.
- Better manage the challenges of a constantly changing world.
- Support sustained, stable, and balanced growth that contributes to global prosperity.

*Source: iMFdirect article "‘Soft’ Infrastructure Is Crucial for Stable and Balanced Growth in China", March 2, 2017.*

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## Content in this bundle

- **“软”基础设施对中国稳定、均衡增长至关重要; 2017年3月2日; IMF博客**
  - [“软”基础设施对中国稳定、均衡增长至关重要; 2017年3月2日; IMF博客 (Markdown version)](/external/chinese/np/blog/2017/030217c.pdf.md){rel="alternate" type="text/markdown"}
  - [“软”基础设施对中国稳定、均衡增长至关重要; 2017年3月2日; IMF博客 (PDF)](/external/chinese/np/blog/2017/030217c.pdf){rel="external" type="application/pdf"}

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## References

- [http://www.elibrary.imf.org/view/IMF071/23209-9781513539942/23209-9781513539942/23209-9781513539942.xml](http://www.elibrary.imf.org/view/IMF071/23209-9781513539942/23209-9781513539942/23209-9781513539942.xml)
- [Modernizing China: Investing in Soft Infrastructure](http://www.elibrary.imf.org/page/modernizing-china)

_Source: https://www.imf.org/en/blogs/articles/2017/03/02/soft-infrastructure-is-crucial-for-stable-and-balanced-growth-in-china_