Fixed asset investment jumps again
By Su Bei (China Daily)
Updated: 2005-11-17 06:19

China's urban fixed asset investment rose by 27.6 per cent year-on-year during the first 10 months of this year, the National Bureau of Statistics said yesterday.

The investment, which covers spending on things such as houses, roads and power plants, reached 5.58 trillion yuan (US$687.9 billion) during the January-October period.

Zhang Xueying, a senior economist with the State Information Centre, said the fast pace of growth was in line with the country's current economic developments.

"Both the economy and industrial production grew at a rapid pace," he said.

The Chinese economy grew by 9.4 per cent year-on-year during the first three quarters of this year. Industrial production rose 16.3 per cent during the same period.

Fixed asset investment is unlikely to decline too much in the remainder of this year and in the first few months of next year, Zhang added.

A number of projects will have to be finished because this year marks the end of the 10th Five-Year Plan (2001-05), he said. A number of other projects will also have to be started because next year marks the beginning of the 11th Five-Year Programme (2006-2010).

Zhuang Jian, a senior economist with the Asian Development Bank's mission in China, agreed with Zhang.

He said that strong investment growth was also a result of the fact that the government did not further curb investment because of worries that economic growth might slow down too much.

The government needs to maintain a proper growth of fixed asset investment to fuel its economy as it cannot yet rely on consumption and there have been uncertainties about exports, he said.

There were also loose credit controls during this period.

The People's Bank of China, the central bank, said last week that the broad money supply, or M2, rose by 18 per cent year-on-year at the end of October.

The growth rate was 0.1 of a percentage point higher than a month earlier.

Outstanding renminbi loans rose 13.8 per cent year-on-year at the end of October, close to the rate a month earlier.

The relaxed economic environment stimulated local governments' enthusiasm to invest in new projects, Zhuang said.

(China Daily 11/17/2005 page10)