Not just the stock market, one burner of China's red-hot economy
is fixed-asset investment, which headed straight up the first five
months of this year.
The booming investment in everything from new computers to new
factories poses an additional challenge to the country's achieving
its energy and environmental goals.
The latest figures from the National Bureau of Statistics show
that fixed-asset investment in urban areas, including manufacturing
equipment and home furnishings, soared 25.9 percent - 3.2 trillion
yuan (US$418 billion) - from January through May, compared with a
year earlier.
Particularly noteworthy, the total planned investment for new
projects rose 6.1 percent in May, reversing the decline for the
first four months of the year.
Such a rebound in new projects on the back of the existing
high-speed growth in fixed-asset investment means that, for the
foreseeable future, this investment will continue to surge if no
effective tightening measure is quickly adopted. If no change takes
place, the country's efforts to rebalance its economic growth away
from reliance on investment and export will achieve little.
Last week Premier Wen Jiabao urged further measures to cool the
economy. While admitting that industrial production is growing at a
faster rate than desired and that the trade surplus is too big, he
said the monetary policies should be "moderately tightened" to
secure a stable and fast-growing economy.
Obviously, the authorities are considering policy responses to
the accelerated fixed-asset investment growth.
A blanket ban on new investment projects is certainly
undesirable. After all, the strong rebound of investment is based
on the country's long-term upward trend of industrialization as
well as rising profits.
To get twice the result with half the effort, the government
should significantly raise the environmental and energy-efficiency
requirements for new fixed-asset investment projects.
To fulfill the country's five-year goal of raising energy
efficiency by 20 percent and cutting emissions of key pollutants by
10 percent by 2010, it is necessary to make sure that all existing
enterprises go greener.
Part of this challenge is to prevent new polluters and
energy-guzzling enterprises from entering the market.
At the same time, aggressive enforcement of existing
environmental and energy laws will greatly help curb many
investment projects that still fail to adequately factor in
environmental costs.
(China Daily June 18, 2007)