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Fixed asset investment growth slowing
By Xu Dashan (China Daily)
Updated: 2004-06-14 21:17 China's fixed asset investment growth slowed
further in May compared with April, due to central government efforts to cool
off the still-growing economy.
Fixed asset investment stood at 439 billion yuan (US$52.9 billion) during
May, a year-on-year increase of 18.3 per cent, the National Bureau of Statistics
said Monday.
The growth rate was 16.4 percentage points lower than April, the bureau said.
For the first five months, fixed asset investment rose a year-on-year 34.8
per cent, also slowing from the 42.8 per cent growth for the first four months,
it said.
Economists have been worried that fixed-asset investment growth, which grew
year-on-year at 53 per cent during the first two months, would heavily affect
the country's economic growth.
"Excessive growth in some sectors and areas was putting a strain on
transportation and power suppliers and driving up the prices of raw materials,"
said Fan Gang, director of the National Economic Research Institute.
Overheating in some industries -- including steel, aluminum, cement and
automobile sectors -- could have a serious impact on the economy, he said.
Since the second half of last year, China has taken a raft of measures to try
to cool the economy, including raising bank reserve requirements three times,
curbing unwanted fixed asset investment projects and issuing tighter
restrictions on new projects in "over invested" industries such as property and
steel.
"Those measures are working," said Zhang Liqun, a senior researcher with the
State Council Development Research Centre.
Economic data released so far for May has shown factory output and money
supply rising at their slowest annual pace in several months, increasing hopes
that China is on track to avoid a hard economic landing.
Foreign direct investment, another important economic figure, grew at a
year-on-year 11.34 per cent during the first five months. That is also a slower
pace.
Premier Wen Jiabao said on Friday the overall situation in the Chinese
economy is fine, with the government's macro economic controls having taken
effect.
"The overly-rapid growth of investment has been curbed, the increase of money
supply and credit has slowed down, the prices of production means have started
to drop, and the destabilizing, unhealthy factors in economic operations have
been checked to some extent," Wen said.
Meanwhile, China's national economy has maintained rapid growth, with both
agriculture and industry further strengthened and the people's livelihood
further improved, he said.
The country's foreign trade has witnessed a constant rise and the
government's revenues have reported a sharp increase.
"All these have shown that the macro economic control policies and measures
adopted by the central authorities are timely, correct and effective," Wen said.
However, the premier conceded that "macro economic controls remain an
extremely arduous task" as "there are still no fundamental solutions to the
outstanding problems in economic operations."
The supply of coal, electricity and oil and the country's transportation
capabilities are still under quite a strain judging from the actual demands, and
the investment scale is still larger than normal, he said.
"In our macro-control efforts, we must lay emphasis on deepening reforms,
readjusting structure and changing the mode of economic growth," he
said.
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