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Fast rise in investment recorded
By Zhang Dingmin (China Daily)
Updated: 2004-03-18 08:45
China's fixed investment continued to surge in the first two months of the
year, refuelling inflationary pressures that many fear threaten the nation's
robust economic growth.
The National Bureau of Statistics (NBS ) said on March
17 urban fixed investment during the January-February period soared by 53
per cent on a year-on-year basis, which compares to 26.7 per cent recorded last
year.
"That was fast growth despite possible inaccuracies due to recent statistical
adjustments," said Qi Jingmei, an analyst with the State Information Centre.
"The situation gives us little reason to be optimistic (about the prospects
for inflation)," she added.
This year, the NBS adjusted the way it calculates fixed asset investments by
adding those made by collectively and privately owned businesses. But it said
the new figures are still comparable to last year's after adjustments.
The Chinese economy grew a robust 9.1 per cent last year, with fixed asset
investments seen as the biggest driver in comparison to the other two growth
engines of consumption and exports.
But over-investment was found in the steel, cement, aluminium as well as real
estate and auto sectors as banks lent aggressively to tap the growth momentum.
The NBS did not give separate figures for investment in those sectors, but
said investment in ferrous metal mining and processing, which mainly includes
steel, jumped by a rare 176.2 per cent on a year-on-year basis.
Investment in non-metal minerals, which covers cement, surged by 137.4 per
cent.
Real estate investment, which now covers real estate development - where
concerns of overheating are present - as well as logistics and other services,
rose by 43.6 per cent, the bureau said.
"Investment in over-invested sectors is still growing rapidly, which needs
special attention," Qi said.
Accelerating investment will lead to price increases and push up the consumer
price index, the key gauge of inflation, but she said it remains difficult to
judge when the upward pressure will become evident in prices.
Goldman Sachs also expressed its concerns yesterday, saying the fixed
investment data confirmed its view that "the sources of funding for investment
remain ample, reflecting the return of an appetite for investment in the private
sector, and only a marginal softening of bank lending."
Liang Hong, China economist at Goldman Sachs, said in a report: "This is a
clear testament to the strength of fixed investment going into 2004, and poses a
difficult challenge for the government to moderate investment growth through
administrative methods."
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