China's fixed asset investment growth slowed further in May
compared with April, owing in large part to the central
government's efforts to cool the economy. Fixed asset investment
came in at 439 billion yuan (US$52.9 billion) for May, a
year-on-year increase of 18.3 percent, the National Bureau of
Statistics said Monday. The growth rate was 16.4 percentage
points lower than in April.
For the first five months, fixed asset investment rose 34.8
percent year-on-year, also slowing from the 42.8 percent growth of
the first four months, it said.
Economists are worried about the impact on overall economic
growth of fixed-asset investment, which showed a blistering rise of
53 percent year-on-year during the first two months.
"Excessive growth in some sectors and regions 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 industries--including steel, aluminum, cement and
automobiles--could have a serious impact on the economy, he
said.
Since the second half of last year, a raft of measures has been
taken to cool the economy, including raising bank reserve
requirements three times, curbing unnecessary fixed asset
investment projects and issuing tighter restrictions on new
projects in over-invested industries such as real estate and
steel.
"Those measures are working," said Zhang Liqun, a senior
researcher with the State Council Development Research Center.
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 course for a soft
economic landing.
Foreign direct investment, another important economic figure,
climbed 11.3 percent year-on-year in the first five months, also at
a slower pace.
Premier Wen Jiabao, on an inspection tour of central China's Hubei
Province on Friday, was reportedly satisfied with the overall
economic situation.
"The overly rapid growth of investment has been reined in, the
increase of money supply and credit has slowed, the costs of
production 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.
Foreign trade has witnessed a constant rise and revenues there
increased markedly.
"The figures show that the macroeconomic control policies and
measures adopted by the central authorities are timely, correct and
effective," Wen said.
However, the premier conceded, "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 groaning under the strain and
investment remains higher than normal.
"In our macro-control efforts, we must emphasize deepening
reforms, readjusting structure and changing the mode of economic
growth," said Wen.
(China Daily June 15, 2004)
