Investment Policy News
- High investment rate needed
Date: 15-Mar-2007 Sources: (Shenzhen Daily)
CHINA needs to maintain a high level of investment to keep the economy growing at a healthy clip, the head of the statistics agency said in comments published yesterday.
Xie Fuzhan, director of the National Bureau of Statistics, said that China needs large amounts of investment because it is still undergoing the processes of industrialization and urbanization.
'A relatively high investment ratio is a necessary condition for the economy to take off,'Xie said in an interview in the China Information News, a newspaper run by the statistics agency.
Still, Xie reiterated that over the long run, the government is aiming for the economy to rely more on consumption to drive growth, meaning that investment growth eventually needed to come down as growth in consumption picked up.
Xie singled out some unnecessary projects backed by local governments as one type of wasteful investment that threatened the stability of local economies.
He did not specifically comment on the outlook for fixed-asset investment growth in the near term, which the government is trying to rein in.
The central bank has twice raised benchmark lending rates and increased the amount that commercial lenders have to hold in reserve five times since last April. The government has weighed in with orders to local governments to cut wasteful capital spending.
Ma Kai, head of the National Development and Reform Commission, the powerful economic planning agency, said over the weekend that the government is hoping overall investment growth would slow this year from last year's 24.0 percent pace.
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