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Fixed assets may prop up economy

By Wang Bo (China Daily)
Updated: 2009-01-23 09:40

China's investor sentiment picked up in December despite the deceleration in the growth of the country's investment on fixed-assets, said Ma Jiantang, head of the National Bureau of Statistics in Beijing yesterday.

The overall fixed-asset investment grew 25.5 percent in 2008 year-on-year, up 0.7 percentage points from 2007.

The figure was 1.3 percentage points lower than the figure for the first 11 months of 2008 and 1.5 percentage points lesser than the first three quarters of 2008. Fixed-asset investment growth this year, however, is expected to maintain the same momentum as last year if the nation's economic stimulus packages have the desired effect, analysts said.

"Although the Chinese economy took a heavy blow from the ongoing financial crisis we have already seen some positive signs emerging from the investment sector, such as the rebound in investors' confidence in December," said Ma, who became NBS chief in September. He also quoted from a survey released by Netherlands-based financial group ING, which said investor sentiment index in China rose to 103 in the fourth quarter of 2008 from 88 in third quarter.

Fixed asset investment is a key driver of China's economic growth and accounts for 57 percent of the nation's total GDP in 2008.

As the export sector sagged due to deteriorating foreign demand in the wake of the global financial crisis, investment is expected to shoulder more in shoring up the slowing economy.

The central government unveiled a 4 trillion yuan capital investment plan on Nov 9 to combat the economic slowdown.

The plan envisages huge cash infusions for rural and urban infrastructure, welfare housing, healthcare services and other social safety net projects.

"The nation's fixed asset investment is expected to pick up in the next few months, as the stimulus package takes effect," said Li Jianwei, economist and director of the macroeconomics department of the Development Research Center under the State Council.