Planners forecast tail-off in fixed-asset investment
By Dai Qian (Shanghai Daily)Updated: 2007-03-02 15:26 China's fixed-asset investment may grow at a slightly slower pace this year as macroeconomic controls on land and lending continue to gain traction.
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"The pace of growth will moderate as the government maintains its curbing measures," said Wang Yuanjing, a researcher at the National Development and Reform Commission, the nation's top planning body.
"Spending on properties and factories by local governments, which made up more than 88 percent of total investment in 2006, may decelerate further this year."
Visible deceleration started late last year, led by the reinforcement of tightening policies in the second half. The yearly rise in overall fixed-asset spending declined last year from the 29.8 percent growth in the first half and the 25.7 percent rise in 2005.
The central bank has stepped up land controls to make project approvals harder to come by, hiked interest rates and ordered banks to set aside more money to cap lending and surging investment that has left the country with too much production capacity.
Cooling trend
Recent government reports predicted that the economy may cool, led by smaller growth in investments and exports as the central bank works to rein in excess liquidity.
The trade surplus may widen this year to US$189 billion from last year's
record US$177.5 billion, after jumping from 2005's US$102 billion, said a
February report by the Academy of Macroeconomic Research, an affiliate of the
top planning body. Export growth may slow to 18 percent this year from 27.2
percent in 2006, led by a slowdown in the United States economy, while imports
will probably climb 20 percent, the same rise as in 2006.
The yuan
settled at 7.7435 against the US dollar yesterday, posting 6.4 percent growth
since July 2005 when China scrapped its longstanding peg of 8.28 yuan to the
greenback and allowed the currency to float against a basket of foreign
currencies.
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