Fixed-asset investment increases in September

Investment in fixed assets picked up in September, signaling an acceleration of investments in infrastructure construction, especially after the new government takes office in March next year, analysts said.

In September, fixed-asset investment increased 1.63 percent month-on-month from August, according to figures released on Thursday by the National Bureau of Statistics.

Month-on-month growth in fixed-asset investment had slowed for two consecutive months, going from 1.71 percent in June to 1.33 percent in August.

In the first nine months, such investments stood at 25.7 trillion yuan ($4.11 trillion), up 20.5 percent year-on-year, or 0.1 percentage point higher than that in the first half, but still 4.4 points lower than in the same period last year.

"New project investment picked up further in September, indicating infrastructure investment will continue to rise in the coming months," said Zhang Zhiwei, chief China economist at Nomura Holdings Inc.

From January to September, investments backed by the central budget increased by 2.3 percent, 2.1 percentage points higher than that for the period from January to August. Investments at the local level rose by 21.8 percent, up by 0.2 percentage point.

The central government has approved up to 7 trillion yuan for infrastructure investments since May to shore up an economy that has lost steam for the seventh straight quarter.

Infrastructure investments in the first three quarters were up by 10.2 percent, 5.8 percentage points higher than that of the first half.

"We believe the implementation of these investment projects will accelerate after the leadership change," said the Australia and New Zealand Banking Group in a research note.

The data mosaic suggests that economic activity has become stable, but not yet recovered, said Jeremy Stevens, economist at Standard Bank, adding the new leadership perhaps will move more aggressively to bolster growth.

In the fourth quarter, fixed-asset investment will continue to rise and register a year-on-year increase of 21 percent by the end of 2012, said Tang Jianwei, analyst at the Bank of Communications Ltd.

And next year, investment will continue to accelerate, he said.

"The new government will lay out new plans once it takes office. And urbanization-oriented policies call for expansion of infrastructure construction," Tang said.

In addition, investment in manufacturing will be restored as exports and the domestic economy stabilize, while financial support from banking credit and non-banking finance is likely to rise in 2013, Tang said.

New yuan lending among commercial banks shrank last month compared with August while aggregate financing continued to rise, as local construction projects may have found different sources of financial support.

New trust loans in September stood at more than 202 billion yuan, compared with 118 billion yuan in August.

Analysts have questioned whether the investment plans to stimulate the economy will work if they fail to get sufficient financial backing, given that lenders have become more prudent as asset quality deteriorates.

In the fourth quarter the authorities will proactively adjust aggregate financing and maintain reasonable market liquidity and new loans, Premier Wen Jiabao said at an executive meeting of the State Council on Wednesday.

"The need to engage the private sector more in the investment engine to improve productivity is another must-do," said Chris Leung, a senior economist at DBS Bank.

"Give it another six months, and we shall know more details of the grand plan ahead. By then, the investment theme will be more complicated.

"It is not simply about where the government is going to spend the money. The challenge is to gauge whether the government spends the money smartly."

wangxiaotian@chinadaily.com.cn