The Financial Times is reporting a rise of approx. 15% in the price of construction materials in major Chinese cities, reversing a recent trend of month-on-month declines. The data suggests an uptick in new infrastructure projects, a favored tool of policymakers to stimulate economic activity during periods of contraction.

But new fiscal stimulus is not without its own risks, particularly in the case of China, where the government is already struggling to deleverage the formal and informal lending sectors. A new state-led infrastructure bonanza could lead to more ‘white elephant’ projects which, though useful in stimulating economic activity over the short-term, seldom provide enough of a long-term growth dividend to justify the initial investment.