By Xu Wei, Institute of Market Economy, the DRC

Research Report No 175, 2013

Abstract:

Fixed-asset investment in the country maintained steady growth in the first half of 2013. The growth rate was in line with the goal set at the beginning of the year. Investment in infrastructure and real estate development grew quickly, but industrial investment continued to decrease due to lackluster demand and low return of capital.

In the second half, investment in infrastructure and real estate are expected to stay stable, but estimates for growth are not high. Investment in industries, particularly the heavy and chemical sectors, will continue to be lukewarm.

In order to keep growth of full-year fixed-asset investment at roughly the same level as 2012, the country should improve macro control measures, efficient use of fiscal capital and the financing regulation mechanism. It should also mitigate debt risks and over-reliance on the market, strengthen structural tax reduction, broaden the openness of the service industry, and stimulate investment growth.