Urban fixed investment rebounded significantly in April, adding
to fears that the economy may be in danger of overheating.
The figure hit 2.26 trillion yuan (US$294 billion) in the first
four months, up 25.5 percent on the same period last year, the
National Bureau of Statistics said yesterday.
It not only exceeded the 2006 full-year growth rate of 24.5
percent but also was 0.2 percentage points higher than in the first
quarter.
"This has followed the typical pattern: Fixed-asset investment
growth usually accelerates in the second quarter after the Chinese
New Year as firms get new credit from banks and workers go back to
normal work schedules after the holidays," Sun Mingchun, an
economist with Lehman Brothers, said.
The number of new investment projects rose 2,121 to 51,683 in
the first four months, the statistics bureau said, the first
increase since last November.
"Also, high profits and strong bank lending growth point ready
availability of funds for fixed investment," said Sun.
Industrial enterprises' profits jumped 43.8 percent in the first
two months this year, 22 percentage points higher than in the same
period last year.
Meanwhile, domestic banks granted 422 billion yuan in new loans
in April, bringing the amount for the first four months to 1.8
trillion yuan - more than half the total for the whole of 2006.
Some industries far outpaced overall investment growth in the
January-April period, with non-metal mining investment soaring 48.3
percent and the ferrous metal sector up 47.2 percent, according to
the statistics bureau.
Rapid investment growth in such high-energy-consuming sectors
will undermine China's efforts to meet its goal on energy saving
and pollution reduction, officials from the State Development and
Reform Commission recently warned.
China has set a goal of slicing energy consumption per unit of
domestic gross product (GDP) by 20 percent and discharge of SO2 and
chemical oxygen demand by 10 percent between 2006 and 2010.
"The acceleration of real estate investment also calls for more
tightening measures from the government to cool down the overall
economic growth," Zhang Qi, deputy director of the Institute of
Economic and Resources Management affiliated to Beijing Normal
University, said.
Investment in real estate rose 27.4 percent to 526.5 billion
yuan in the four months, again serving as a locomotive of
investment growth.
"Real estate investment appeared to have bottomed out since
year-on-year growth slowed from more than 40 percent in early 2004
to about 20 percent early last year as a result of macroeconomic
controls," Zhang said.
"The latest acceleration would need more tightening measures to
rein in investment growth," he siad.
Besides, retail sales rose 15.5 percent in April, highlighting
strong consumer spending.
The trade surplus for the first four months increased to US$63.3
billion, 88 percent more than a year earlier.
Given these conditions, accelerated investment growth will
further add to the country's difficulties in preventing the economy
shifting from fast growth to overheating, said Zhang.
The economy registered a higher-than-expected growth of 11.1
percent in the first quarter.
(China Daily May 18, 2007)