China To Spend $100 Billion on Infrastructure, Baltic Dry Index Hits New Low

China will spend CNY682 bln, about $100 billion, on 23 major infrastructure projects with work starting this year, according to Marc Chandler on the blog Credit Writedowns.

For comparison, China spent CNY2.2 trillion on 120 infrastructure projects from the period 2000 to 2009.

"The announcement seems to have coincided with the rekindling of the risk appetite and the lifting of the commodity currencies," write Chandler.

Chandler also notes that China has become a major buyer of Japanese government bonds.

"Last year China appears to have sold  a net JPY80 bln of Japanese government bonds.  In the first four months of this year, China appears to have bought JPY541 bln of JGBS, of which JPY200 bln appears to have been purchased in the month of April alone," writes Chandler.

In other news, the Baltic Dry Index fell for the 28th consecutive session making this the longest decline in six years.

"The main driver seems to be concerns about the cooling of China’s steel sector.  Steel is the biggest user of iron ore.  Iron ore and coking coal account for more than a third of the Baltic dry freight," writes Chandler.