Economic planner warns of FAI rebound
(Xinhua)
Updated: 2005-03-27 23:27

China should guard against any possible rebound of fixed assets investment (FAI) even though the growth rate in the first two months has declined as compared to a year ago, said an official with the state economic planner on Sunday.

Cao Yushu, deputy secretary general of the National Development and Reform Commission, made the remarks at a forum held here on corporate management.

The development of urban fixed asset investment slowed to 24.5 percent in January and February from a staggering 53 percent in the same period of 2004.

"But strong investment impetus still exists," acknowledged Cao, "leaving possibility of an investment rebound."

For example, added Cao, even though the growth of real estate investment slowed to 27 percent in the first two months of 2005, the amount remains high.

"That's one of the reasons for the central bank to raise interest rate for private housing loans a few days ago," said Cao.

Investment may still increase through three channels, said Cao. First, Chinese companies have run pretty well last year and accumulated profits. Secondly, the long-term treasury bonds worth of 80 billion yuan issued this year may fuel the investment. And thirdly, with abundant deposit, the commercial banks are willing to make loans to big companies.

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