Fixed investment rises 30.3%
By Xu Dashan (China Daily)
Updated: 2004-09-17 00:25

China's urban fixed asset investment grew 30.3 per cent during the first eight months of this year compared with the same period a year ago, the National Bureau of Statistics said Thursday.

The bureau, which did not give figures for August, said the country's urban fixed asset investment stood at 3.2 trillion yuan (US$387.8 billion) during the first eight months.

Real estate investment rose a year-on-year 28.8 per cent to 718.5 billion yuan (US$86.6 billion) during the January-August period, the bureau said. The growth was 0.2 percentage points higher than the first seven months.

Investment in ferrous-metal industries, including steel factories, rose 46.3 per cent in the first eight months, 2.9 percentage points lower than in the first seven months, it said.

Zhang Liqun, a senior researcher with the State Council's Development Research Centre, said China's fixed asset investment growth was on the road to stability.

This was good for the country's economic development, he said.

"If fixed asset investment grows at about 30 per cent this year, the country's economy will grow faster than last year's 9.1 per cent," he said.

Niu Li, a senior economist with the State Information Centre, said fixed asset investment growth for the first eight months was in a healthy area, although it rebounded significantly since May.

Fixed asset investment grew a year-on-year 18.3 per cent in May, due to the central government's macro control measures.

But it began to rebound since then, to more than 30 per cent in July.

Zhu Jianfang, an economist at China Securities, said the rebound in fixed asset investment bore close relation to the government's recent policy changes.

"While continuing to curb investment in red-hot sectors such as cement and steel, the government increases investment in bottle-neck sectors such as energy and transportation," he said.

China's fixed asset investment grew rapidly since the second half of last year. It rose to 53 per cent during the first two months.

The government worries that excessive growth in some sectors and areas could have a serious impact on the economy.

As a result, the government has taken a raft of measures to try to cool the economy. The measures included raising bank reserve requirements three times and curbing unwanted fixed asset investment projects in red-hot sectors such as cement and steel.

In nationwide checks on 70,600 investment projects in industries such as steel, cement and property, the government has closed or delayed 4,150 development projects so far this year, involving 844.1 billion yuan (US$101.7 billion) in planned investment.

Premier Wen Jiabao said on Monday the government is moving closer towards its goal of an investment cool-down and healthy economic development.

Growth in fixed asset investment and loans, two major indicators that policy-makers have been closely watching for the impact of the cooling down measures, has been declining.

The government will continue with the macro control measures to prevent investment growth from rebounding, Wen said.

Governor Zhou Xiaochuan of the People's Bank of China said last week the central bank would review August's economic data before deciding on whether to take further tightening measures including a interest rate hike to curb investment.

But Zhang said the government should not take further tightening measures, because the measures would make growth in fixed asset investment decline too much.

"Fixed asset investment declining too much would increase the possibility of an abrupt economic slowdown," he said.

The government wants to bring economic growth down from the current levels where many resources such as oil have been constrained, but needs it to stay above 7 per cent to generate enough jobs.

China's economy grew a year-on-year 9.6 per cent during the second quarter of this year.

It rose 9.8 per cent year-on-year during the first quarter.

For the first six months, the country's gross domestic product grew 9.7 per cent year-on-year to around 5.9 trillion yuan (US$708.1 billion).

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