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Investment cools slightly in 2006

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

Fixed assetinvestment increased by 24 percentyear-on-yearlast year, two percentage points less than a year earlier.

Investment growth has slowed in recent years as the authorities have introduced measures to keep the economy from coming to a boil.

Urban fixed asset investment grew at a year-on-year pace of 24.5 percent, 2.7 percentage points less than a year earlier. The slowing trend was especially obvious last month, when the rate was 13.8 percent. 

Overall investment in fixed assets like property and infrastructure grew by 29.8 percent in the first half of last year. The figure was 25.7 percent in 2005 and 26.4 percent in 2004.

Xie Fuzhan, director of the National Bureau of Statistics (NBS), attributed the slower pace to the tightening measures the government had put in place to rein in areas like real estate investment, lending and market entry.

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"The structure of investment has also improved," he said, adding that investment in some industries suffering from over-capacity had also slowed.

However, the large amount of excess liquidity in the economy has also put pressure on investment growth. Xie said it remains a serious problem for Chinese economy.

China's broad measure of the money supply, or M2, which reflects the overall state of money supply in the country, grew by 16.9 percentyear on yearlast year, which was slightly less than the 2005 level. Considering the huge amount of money already in the market in 2005, however, the growth rate was still impressive, analysts said.