Fixed in­vest­ment growth rate de­clines

China Daily European Weekly - - Business - By WANG YANFEI wangyan­fei@chi­nadaily.com.cn

Im­prove­ment in de­mand for in­vest­ment will help con­sol­i­date the foun­da­tion for do­mes­tic eco­nomic growth this year, af­ter fixed-as­set in­vest­ment in the pri­vate sec­tor wit­nessed a mild uptick at the end of 2016, the Na­tional Bureau of Sta­tis­tics said on Jan 20.

Of­fi­cial data re­leased by the bureau showed that in 2016, fixedas­set in­vest­ment in­creased by 8.1 per­cent year-on-year, down by 0.2 per­cent­age points com­pared with the first 11 months.

The de­cline is in line with the slow­ing pace of the gov­ern­ment’s ap­proval for in­fras­truc­ture con­struc­tion projects.

The Na­tional De­vel­op­ment and Re­form Com­mis­sion, the na­tion’s eco­nomic reg­u­la­tor, ap­proved 227 fixed-as­set in­vest­ment projects val­ued 1.7 tril­lion yuan ($247 bil­lion; 229.7 bil­lion eu­ros; £198.1 bil­lion) in 2016.

In 2015, the com­mis­sion ap­proved a to­tal of 280 fixed-as­set in­vest­ment projects, val­ued 2.52 tril­lion yuan.

Although the year-on-year growth rate of fixed-as­set in­vest­ment slowed down to the low­est level since 1999, a closer look at the data break­down points to some promis­ing signs.

In­vest­ments made by pri­vate com­pa­nies grew by 3.2 per­cent in 2016 year-on-year, 0.1 per­cent­age points higher than the first 11 months, and the fourth con­sec­u­tive month to see im­prove­ment.

An im­prove­ment on the pri­vate side in­di­cated some im­prove­ment in con­fi­dence about the future out­look of the econ­omy, ac­cord­ing to Niu Li, an econ­o­mist at the State In­for­ma­tion Cen­ter.

Pri­vate in­vest­ment ac­counts for about 60 per­cent of to­tal fixed-as­set in­vest­ment, ac­cord­ing to the NBS.

Ren Zeping, chief econ­o­mist of Founder Se­cu­ri­ties, says the im­prove­ment in the pri­vate sec­tor was driven up by a warm­ing up in the man­u­fac­tur­ing in­dus­try and higher-thanex­pected prop­erty in­vest­ment.

In­vest­ment in the man­u­fac­tur­ing in­dus­try rose 4.2 per­cent yearon-year in 2016, up by 0.6 per­cent­age points com­pared to the first 11 months in 2016, the data showed.

Real es­tate in­vest­ment growth was 6.9 per­cent in 2016, up by 0.4 per­cent­age points higher than the first 11 months, ac­cord­ing to NBS.

Zhang Yip­ing, an econ­o­mist with China Mer­chants Se­cu­ri­ties, says that the month-on-month re­cov­ery will pro­vide more growth mo­men­tum this year. Zhang says he ex­pects that poli­cies in­tro­duced in 2016 to sup­port the pri­vate sec­tor — such as ex­pand­ing chan­nels for pri­vate in­vest­ment — will grad­u­ally take ef­fect in 2017.

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