In­crease in fixed as­sets promised

China Daily (Canada) - - FRONT PAGE - By WANG YANFEI in Bei­jing wangyan­fei@chi­nadaily.com.cn

The Na­tional De­vel­op­ment and Re­form Com­mis­sion pledged to in­crease in­vest­ment led by the cen­tral govern­ment in ma­jor fa­cil­i­ties in in­dus­try and pub­lic ser­vice, af­ter the na­tion re­ported lower growth in in­vest­ment in fixed as­sets last year.

In­vest­ment in pub­lic pro­grams has been a main method for China to keep up its GDP growth. But in year-onyear terms, its in­vest­ment in fixed as­sets amounted to 55.1 tril­lion yuan (nearly $8.5 tril­lion) last year, show­ing a growth of only 10 per­cent, down from a growth of 15.7 per­cent in 2014 and 20.6 per­cent in 2012.

Fixed-as­set in­vest­ment in the man­u­fac­tur­ing sec­tor grew by only 8 per­cent last year.

In an at­tempt to pre­vent too rapid a de­cline from up­set­ting the whole econ­omy, the cen­tral govern­ment has in­jected 5 tril­lion yuan, since Fe­bru­ary 2014, into the pro­grams it se­lected for in­dus­trial and pub­lic ser­vice de­vel­op­ment.

In Jan­uary alone, a new com­mit­ment of 54.1 bil­lion yuan was made to such pro­grams, said Zhao Chenxin, the NDRC spokesman, on Wed­nes­day.

“The in­vest­ment projects that the cen­tral govern­ment ap­proved are mainly de­signed to im­prove peo­ple’s liveli­hood,” Zhao said, such as ex­pand­ing the power sup­ply and build­ing more wa­ter­works.

The in­vest­ment pro­grams led by cen­tral govern­ment cover 11 ar­eas, of which the de­vel­op­ment of in­for­ma­tion and en­ergy net­works has al­ready cost around 1.56 tril­lion yuan, while 1.2 tril­lion yuan has been spent on trans­porta­tion sys­tems.

The other ar­eas in­clude clean en­ergy, en­vi­ron­men­tal pro­tec­tion, en­ergy and min­eral re­sources, health and re­tire­ment care ser­vices, lo­gis­tics, ur­ban rails, tech­nol­ogy in­dus­tries, and what Zhao de­scribed as projects to boost the core com­pet­i­tive­ness in the man­u­fac­tur­ing in­dus­try.

Econ­o­mists said that de­spite the econ­omy’s in­tended tran­si­tion and an in­evitable slow­down, “ap­pro­pri­ate stim­u­lus”, es­pe­cially in­vest­ment in projects of strate­gic im­por­tance, would still be needed to al­low China to keep up its growth mo­men­tum and meet de­mands in the fu­ture.

How­ever, it is un­likely that such in­vest­ment will see a ma­jor in­crease in over­all terms, said Zhou Dadi, for­mer di­rec­tor of the NDRC’s En­ergy Re­search In­sti­tute, “be­cause there are in­dus­tries asked by the cen­tral govern­ment to di­vest some of their ex­ist­ing ca­pac­ity and to re­duce their work­force.”

There is no point in in­creas­ing in­vest­ment in steel and coal in­dus­tries, he added.

Ac­cord­ing to Liu Yuanchun, as­so­ciate dean of the School of Eco­nom­ics of Ren­min Univer­sity of China, Bei­jing, the coun­try can­not af­ford to com­pletely stop fi­nanc­ing fixed as­set in­vest­ment be­cause such in­vest­ment will ben­e­fit the econ­omy in the long run.

Last year’s growth rate in fixed as­set in­vest­ment was al­ready too slow, said He Zhicheng, chief econ­o­mist at Agri­cul­tural Bank of China.

“It would be dan­ger­ous to let slide below 10 per­cent.”

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