Investment Updates News
- Fixed-asset investment growth slows
Date: 15-Dec-2006 Sources: (Shenzhen Daily)
THE country's spending on factories, real estate and other fixed assets grew at a slower pace for the fifth straight month in November after the government curbed lending and project approvals.
Fixed-asset investment in urban areas rose 26.6 percent in the first 11 months from a year ago to 7.9 trillion yuan (US$1 trillion), after gaining 26.8 percent through October, the National Bureau of Statistics said Thursday. Record exports are pumping cash into China, complicating government efforts to cool the world's fastest-growing major economy. The government has been trying to rein in lending and project approvals to curb excessive spending on factories and real estate.
'They can't afford to relax,'' said Michael Kurtz, senior managing director at Bear Stearns Asia Ltd. in Hong Kong. 'The drive to bring down investment growth isn't done.''
Spending on real estate development rose 24 percent in the first 11 months, while investment in production of non-ferrous metals climbed 35 percent, the National Bureau of Statistics said.
The industrial production growth held close to a two-year low in November, another sign of a gradual slowdown. The central bank has said it is concerned money inflows from exports may prompt an investment rebound.
China will adequately control bank lending and investment next year, the government said after an economic meeting last week of the State Council, the country's Cabinet.
The world's fourth-largest economy grew 10.4 percent in the third quarter, slowing for the first time in a year. China expanded 11.3 percent in the prior three months, the fastest pace in more than a decade.
Besides forcing lenders to set aside more money as reserves and raising interest rates, the central bank Dec. 11 sold 120 billion yuan of one-year bills, the biggest sale this year, to drain cash from the banking system.
'The government doesn't have a choice given the huge trade surplus,'' said Huang Yiping, chief Asia economist at Citigroup Inc. in Hong Kong.
China will double construction land fees from Jan. 1, the Ministry of Land and Resources, the Ministry of Finance and the central bank said in a joint statement Nov. 21.
Still, the World Bank on Nov. 14 raised its estimate for China's economic growth in 2007 to 9.6 percent, saying the government may relax the clampdown on lending after investment growth slowed last quarter. The Paris-based Organization for Economic Cooperation and Development expects China to expand more than 10 percent in each of the next two years.
'I think we pretty much hit the bottom,'' Ma Jun, an economist at Deutsche Bank AG in Hong Kong, said. 'Growth will reaccelerate as the government gradually relaxes.''
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