Fixed-assets investment is showing no sign of slowing, with
year-on-year growth of 26.7 percent from January to August,
according to figures released on Friday.
The National Bureau of Statistics said on Friday 6.6 trillion
yuan was pumped into new projects in the period, and more than
one-fifth of the money was channeled into real estate.
The pace picked up from the January-July rate of 26.6 percent
after investment growth dipped slightly in July due to extreme
weather, especially flooding, according to Goldman Sachs' Asia
Economics Research Group.
Fixed-assets investment growth has slowed from around 30 percent
last year to the current 26.7 percent in the previous eight months.
But it is still higher than the 25 percent set by economists as the
warning line.
Property developers and local governments are still driving
fast-paced growth, according to statistics. The central government
has listed curbing fast investment, the trade surplus and high
inflation as its major targets for macroeconomic control since
2003.
Together with other economic indicators made public this week,
Friday's new figures indicate the government's tightening measures
have failed to meet their targets. The statistics bureau said on
Wednesday that China's consumer price index for August had reached
an 11-year high of 6.5 percent.
Meanwhile, property prices are still going up. The National
Development and Reform Commission said the average housing price in
70 major cities had increased by 8.2 percent in August compared
with the same period last year.
Property developers poured 1.42 trillion yuan into the economy
in the first eight months, 29 percent more than the same period
last year.
Lin Yueqin, a researcher with the Chinese Academy of Social
Sciences, said the latest figures are a cause for concern. "It's a
dangerous sign that inflation and property prices have been rising
at the same time," said Lin.
He said local governments are the main drivers of the investment
spree as their performance assessment system puts emphasis on
economic achievements. Local governments' fixed-assets investment
has risen 28.4 percent year-on-year, while that of the central
government grew 13.2 percent in the past eight months.
The investment growth rate of local government was about 27.9
percent in the first seven months of the year, while that of the
central government was 15.4 percent.
(China Daily September 15, 2007)
