The enduring significance of the "Six Networks" for expanding domestic demand lies in establishing a cycle where investment generates supply, supply unlocks consumption, and consumption, in turn, drives investment, embedding infrastructure development into a more sustainable domestic demand loop.
The ancient Chinese classic, the I Ching, states, "Uninterrupted flow is called connectivity." This concept of continuous, unhindered circulation aligns perfectly with the economic function of infrastructure—connecting resources, allocating factors, and smoothing market operations. For an extended period, a primary mission of China's infrastructure construction was to shrink physical distances, linking cities through highways and railways, and connecting resources via power and water networks. With the progressive completion of these traditional systems, the connection requirements of economic development are evolving. There remains significant potential for further integration between energy and computing power, computing power and industry, logistics and consumption, and also between urban underground utilities and public services.
In April 2026, the Political Bureau of the CPC Central Committee explicitly proposed, for the first time, strengthening the planning and construction of the "Six Networks." The National Development and Reform Commission (NDRC) estimates that investment in these networks and related key sectors will surpass 7 trillion yuan this year. The macro-level significance of the "Six Networks" isn't just about launching a fresh infrastructure investment cycle; its true importance lies in steering China's infrastructure development from simple expansion towards network integration, and from merely addressing shortcomings to boosting efficiency.
In the short term, major projects can translate into tangible work and provide solid support for effective investment. In the medium term, network integration can improve the allocation of resources like water, energy, computing power, and information. In the long run, enhanced infrastructure efficiency will improve corporate investment returns and the consumer experience, fostering a new domestic demand cycle.
As China's economy transitions to a phase of high-quality development, the role of investment is shifting from merely expanding capital formation to optimizing supply-side capabilities. For years, real estate development and traditional infrastructure were the primary vehicles for fixed-asset investment, closely tied to urbanization and industrialization. However, as the property market undergoes adjustment, the incremental space for traditional infrastructure is also diverging. Investment must now shoulder more responsibility for industrial upgrading, technological innovation, energy transition, and improving people's livelihoods.
The 15th Five-Year Plan integrates "building a modern infrastructure system" into the broader goal of creating a modern industrial system. It advocates for "moderately advanced construction of new infrastructure" while also promoting the upgrade and digital-intelligent transformation of traditional infrastructure. This clearly indicates a shift in infrastructure investment from scale expansion towards structural optimization. Looking at the investment structure, with the decline in real estate's share, manufacturing investment, high-tech industry investment, and infrastructure upgrades are becoming key pillars of fixed-asset investment. In this process, investment creates not just immediate demand but also the capital stock that defines the economy's future supply capacity and production efficiency.
The Investment Network: Sustaining New Growth Momentum
Within this new investment framework, the "Six Networks" provide fresh investment focal points. They span water networks, new-type power grids, computing networks, next-generation communication networks, urban underground pipeline networks, and logistics networks, covering areas like traditional infrastructure renewal, energy system upgrades, and digital infrastructure development. The NDRC expects investment in these networks and priority sectors to exceed 7 trillion yuan in 2026, with key areas including comprehensive transportation corridors, consumer, low-altitude economy, "AI+", education, and healthcare infrastructure. Clearly, the investment demand generated by the "Six Networks" carries strong public and long-term attributes, offering crucial support for the structural transformation of fixed-asset investment.
In terms of direction, the "Six Networks" can be viewed in three tiers. The first tier focuses on shoring up weaknesses in traditional infrastructure, primarily involving water and urban underground pipeline networks. The water network is vital for water resource security, flood control, and urban-rural water supply, a role made even more critical given the heightened risk of extreme weather linked to a strong El Ni帽o. The "15th Five-Year Plan for Urban Renewal" targets constructing or upgrading approximately 770,000 kilometers of pipelines for gas, water supply, drainage, sewage, and heating during this period, a reduction from the 1 million kilometers in the previous plan, reflecting a focus on stock renewal and enhanced safety resilience in the context of new urbanization.
The second tier aims to elevate the capacity of traditional infrastructure, mainly through new-type power grids and logistics networks. Over the "15th Five-Year Plan" period, investment by the two major State Grid corporations is expected to exceed 5 trillion yuan, focusing on transmission corridors, inter-provincial power interchange, urban distribution network upgrades, and county-level grid improvements. The logistics network seeks to boost the efficiency of commodity circulation by coordinating hub nodes, trunk corridors, storage facilities, transport equipment, and information systems. The "Logistics Network Construction Implementation Plan" aims to reduce the ratio of total social logistics costs to GDP to 13.1% by 2030.
The third tier is oriented towards future-oriented new infrastructure, primarily computing networks and next-generation communication networks. The State Information Center projects that new direct investment in computing networks during the "15th Five-Year Plan" period will be around 4 trillion yuan, with a significant portion coming from enterprises, highlighting its potential to leverage private capital. The next-generation communication network will center on 5G-Advanced, 10G-PON, 6G, and satellite internet. Among 109 major projects, the information and communication network project plans to build 1 million 50G PON ports and 500,000 5G-A base stations.
The Efficiency Network: Unleashing New Infrastructure Effectiveness
While the scale of investment determines the "Six Networks"' short-term support for growth, the efficiency of connections between the networks determines their long-term economic value. For an economy like China's, which already possesses a vast infrastructure stock, the marginal value of infrastructure increasingly lies in its ability to connect different regions, industries, and production factors efficiently. Research based on Chinese firm and provincial infrastructure data from 1999 to 2007 indicates that the average return on infrastructure investment is around 6%. However, when accounting for nationwide spillover effects, this return roughly triples, suggesting that infrastructure generates significant external benefits through cross-regional connectivity.
From an industrial linkage perspective, economic connections formed by the flow of goods and services between sectors can create substantial productivity spillovers. Notably, economic distance often holds more explanatory power for these spillovers than geographic distance. The closer the industrial ties, the more easily infrastructure improvements can diffuse to related sectors. This is where the true value of the "Six Networks" lies. The coupling of new-type power grids with computing networks is forging closer spatial links between energy resource allocation and computing layout. The "East Data, West Computing" project connects renewable energy resources in the west with computing demands in the east, bringing energy flows, data flows, and industrial needs into a unified allocation system.
Furthermore, communication and computing networks reduce the time and space costs of information and data flow, laying the foundation for industrial internet, smart terminals, and digital consumption. Logistics networks further integrate production, distribution, and consumption, while water and underground pipeline networks enhance coordination between resource security and urban public services. Therefore, the transformation brought by the "Six Networks" isn't just an increase in infrastructure stock, but also improved synergistic operation between different networks. As economic distances shrink further, existing infrastructure can achieve higher utilization efficiency, and production factors can be reallocated on a larger scale. Ultimately, this extends the benefits of infrastructure investment from individual projects to the broader economic system.
The Domestic Demand Network: Opening New Spaces for Expansion
The domestic demand effect of traditional infrastructure was primarily seen in the investment pull during the construction phase. The far more significant value of this new round of infrastructure construction lies in improving public capital supply and converting one-off investment into sustained consumption and private investment. Research by scholars like Tang Dongbo reveals that infrastructure investment has a pronounced "crowding-in" effect on private investment. Improved infrastructure lowers business operating costs, expands market reach, and raises the marginal return on private capital. Further research by scholars like Yan Zhiyu indicates that this "crowding-in" effect also applies to household consumption. Infrastructure investment can significantly "crowd in" household consumption through income and expectation channels, demonstrating that public capital formation not only creates demand during construction but also releases future consumption potential by improving consumption conditions and future expectations.
Thus, the enduring significance of the "Six Networks" for expanding domestic demand lies in creating a virtuous cycle: investment builds supply, supply unlocks consumption, and consumption drives investment, embedding infrastructure investment within a more sustainable domestic demand loop. This logic is fully aligned with policy directives. The "15th Five-Year Plan" places "expanding effective investment" and "promoting a virtuous cycle between investment and consumption" within the same framework of "building a strong domestic market." It explicitly proposes "driving improvements in consumption capacity and willingness through effective investment" and "guiding investment direction optimization through consumption upgrading," while emphasizing "leading new supply with new demand, and creating new demand with new supply." In this phase of high-quality development, where the share of real estate investment has declined and the marginal impact of traditional infrastructure has weakened, network-based infrastructure capable of connecting investment with consumption, and public capital with private capital, is most likely to emerge as the new vehicle for expanding domestic demand.