Center

Investment cools slightly in 2006

By Zhi Ming (China Daily)
Updated: 2007-01-26 08:58

Despite the slowdown in fixed asset investment growth last year, the current level could still cause problems.

Liu Wei, dean of Peking University's School ofEconomics, calculated that a fixed asset growth rate of 23 percent would be appropriate for the Chinese economy. Any more than that could squeeze out consumption and have an adverse effect on the economy.

The central economic work conference last December called for balanced growth in investment and consumption.

The downward trend of late 2006 is expected to continue into this year, at least in the first quarter, economists predicted.

Song Guoqing, an economist with Peking University's China Center for Economic Research, said the growth rate of fixed asset investment would definitely be lower than last year.

"It would be considered high if it hit 20 percent," Song said.

Wang Jian, secretary-general of the Chinese Academy of Macroeconomy, told a recent economic forum that the figure in the second half of this year could even be as low as 15 percent.

Investment in property development, a major engine of the country's economic growth, increased by 21.8 percent last year, or 0.9 percentage points more than the previous year, according to the NBS.

Still, in some big cities, investment growth seems uncontrollable despite the tightening measures.

InBeijing, for example, investment in property development accounted for more than half of all investment, according to a municipal government spokesperson.

Although the central government has taken a series of policies to stabilize house prices, property prices still increased by 5.5 percent in 70 major cities last year.

                                                                          (China Daily 01/26/2007 page4)