Fixed asset investment up 29% in November
By Su Bei (China Daily)
Updated: 2005-12-16 06:21

China's urban fixed asset investment rose a strong 29 per cent in November compared with a year ago, accelerating from October's rate of 27.2 per cent, the National Bureau of Statistics said yesterday.

The investment, which covers spending on assets such as apartment buildings, airports and power plants, rose 27.8 per cent to 6.33 trillion yuan (US$780 billion) during the first 11 months of this year.

Zhuang Jian, a senior economist with the Asian Development Bank's resident mission in China, said the strong growth was partly due to the fact that the government did not carry out new tightening measures amid the increasing worries of an economic slowdown.

"A proper growth (of fixed asset investment) is needed to maintain economic growth," he said.

Fixed asset investments are unlikely to decline too much in December or in the first several months of next year.

Zhuang pointed out that as this year marks the end of the 10th Five-Year Plan, meaning a number of projects would have to be finished.

By the end of November, 230,000 projects were under construction, an increase of 35,733 compared with the same period a year ago.

These projects involved a combined planned investment of 16.5 trillion yuan (US$2.1 trillion), up 28.2 per cent.

Construction of a further 161,000 projects also began in November, 29,209 more than a year ago.

The planned investment for the projects stood at 5.5 trillion yuan (US$678.1 billion), up 28.1 per cent.

According to the statistics bureau, investment in real estate rose 22.2 per cent year-on-year during the first 11 months to 1.32 trillion yuan (US$163.3 billion).

Investment in coal mining and processing was up 75.5 per cent during the period, and the investment in railways rose 38.3 per cent.

Fixed asset investment has continued to be an important driving force for the country's economy, Zhuang said.

Fuelled by the 27.7 per cent year-on-year fixed asset investment growth during the first three quarters of this year, the Chinese economy grew 9.4 per cent.

Ma Kai, head of the National Development and Reform Commission, said that the current growth of fixed asset investment was still too fast.

Overcapacity has already affected the steel, aluminium and auto sectors and could also become a problem for the cement, power, coal and textile industries, he said.

Although demand and supply were basically balanced in some industries, the potential for overcapacity could not be ignored, he said.

The commission revealed government targets for fixed asset investment growth at the beginning of the year to be 16 per cent for this year.

(China Daily 12/16/2005 page10)