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China's investment growth to slow
(Xinhua)
Updated: 2006-08-03 16:10
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A report from China's economic watchdog predicted that China's investment growth in 2006 should be no more than 20-25 percent.
The National Development and Reform Commission (NDRC) said that the investment growth rate depends on macro control measures taken by China's central government, the Xinhua-run China Securities News quoted the report as saying on Thursday.
China's fixed asset investments reported galloping growth in the first half year. Policy makers called for greater efforts to slow down soaring fixed asset investments, which could lead to an economic bubble.
The National Bureau of Statistics said that fixed asset investments for the first six months were more than 4.23 trillion yuan (530 billion U.S.dollars), up 29.8 percent year on year.
The sizzling investment rise has resulted in excessive use of land and credit loans. Figures showed that in the first half loans reached 2.14 trillion yuan (268 billion U.S dollars), 85.7 percent of the government's whole-year budget, and way beyond expectations. Land demand in the first quarter was three times greater than anticipated.
Experts from NDRC said though tertiary investment rose in the first half, distribution was unequal, with a sharp contrast between 9.4 percent growth in education and 88 percent growth in financial services.
This imbalance would hinder the pace of expanding domestic demand, NDRC experts warned.
The report stressed that China's economy has reached a critical juncture, with the growth rate at its upper limit.
However, the fast growth of investment in the first half did not cause inflation or shortages of coal, power, oil and transport services, so China's economy cannot be said to be overheated, the report maintained.
Mild precautionary and adjustment measures should be adopted to curb soaring fixed assets investments, including stricter controls on the number of new projects, more stringent land management, tighter bank lending, and a more reasonable investment structure, the report suggested.