In less than two months, China has fully allocated a new 500-billion-yuan ($70.3 billion) policy-based financial instrument to propel mainly tech-driven projects and urban renewal programs, which analysts see as a strategic shift from traditional infrastructure spending toward a new paradigm focusing on innovation and emerging industries to foster new drivers of growth.

Li Chao, spokeswoman for the National Development and Reform Commission, China's top economic regulator, said recently that the NDRC has supported more than 2,300 projects with a total investment of about 7 trillion yuan through the instrument, in coordination with the Ministry of Finance, the People's Bank of China and other departments to accelerate fund deployment.

"The funds mainly target the digital economy, artificial intelligence and consumer-related infrastructure, as well as urban renewal projects in areas such as transportation, energy and underground utility network upgrades," Li said.

Lou Feipeng, a researcher at the Postal Savings Bank of China, said earlier rounds of policy-based financial instruments were largely designed to fix infrastructure gaps, focusing on traditional projects such as railways, highways and water conservancy.

"The latest round, however, takes a more strategic and forward-looking approach, directing funds toward innovation-driven areas like the digital economy and AI," Lou said. "It reflects China's stronger push to cultivate new quality productive forces as a key driver of future growth."

Data from policy banks show that the Export-Import Bank of China's portion of the policy-based financial instrument has supported over 150 projects in the digital economy and AI sectors, with loans to these areas accounting for more than 40 percent of its total. China Development Bank has financed 128 projects with private-sector participation totaling 68.59 billion yuan, or 27.4 percent of its portfolio.

Lou said the rising participation of private capital reflects a transition from government-led investment to stronger public-private collaboration, encouraging private capital to flow into high-tech and high-value-added sectors.

Moreover, the NDRC said at the news conference that China has arranged 500 billion yuan within the local government debt ceiling, including 200 billion yuan in new special bond quotas, to enhance local governments' fiscal capacity and expand effective investment.

"The two funding tools form a 'twin-engine' mechanism for driving investment," Lou said. "The policy-based financial instrument mainly helps fill capital gaps and accelerate project initiation, while the special bonds provide long-term, low-cost financing for project implementation, together creating a complete funding chain that combines equity and bond financing."

The new measures come amid soft demand conditions, as China's manufacturing purchasing managers' index came in at 49.0 in October, down 0.8 percentage point from the previous month, said the National Bureau of Statistics.

Zhang Chenxu contributed to this story.