Concerns mount over investment growth
By Sun Min (China Daily)
Updated: 2006-07-19 08:45 Real estate remains in the spotlight in the anti-overheating
campaign.
The sector reported a 24.2 per cent growth in investment during
January and June, 0.7 of a percentage pint higher than a year ago.
Total
investment in urban real estate development reached 769.5 billion yuan (US$96.2
billion) in the period.
Investments in coal-mining, oil and natural gas
exploitation, and rail transportation expanded by 45.7 per cent, 30.3 per cent
and 87.6 per cent respectively in the first half of the year.
"Prosperity
continues but problems also accumulate," wrote Chen Jijun, a macro economics
analyst with CITIC Securities, in a monthly report to clients in mid
June.
His report indicates that excessive investment growth in certain
sectors demands more attention and tightening measures.
And his concerns
are shared by the government also in mid June, after the release of the
May figures, the State Council said it would strictly control the scale of urban
construction and the number of new projects in real estate and sectors with
excessive capacity.
Meanwhile the central bank urged domestic banks to
control medium- and long-term lending and improve their loan structures.
On July 5 higher reserve requirements were introduced for banks.
It
will take time to see exactly how much these tightening measures will affect
investment growth, but most economists agree there is still much more to be done
to upgrade the nation's economic structure.
Chen estimated fixed asset
investment growth at around 28 per cent for the whole year.
The State
Information Centre estimated 27 per cent, a minimum level to support the fast
economic growth.
As the economy is expected to continue to boom in the
second half of this year and next year, the government will undergo more tests
of its ability to tame investment growth and lift economic
efficiency.
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