Investment Updates News
- Investment, output rebound poses risks
Date: 27-Apr-2007 Sources: (Shenzhen Daily)
THE country still faces the risk of a rebound in fixed-asset investment and also needs to be on guard against letting a pick-up in industrial production lead to economic instability, the top planning agency said Thursday.
Zhu Hongren, vice head of the economic operation department of the National Development and Reform Commission (NDRC), said that a recent acceleration in industrial output growth, to an annual 18.3 percent in the first quarter, could herald a range of challenges for the economy.
'If industrial production keeps expanding, it will not only accelerate economic growth, lead to over-consumption of resources and energy and increase emissions of pollutants, but also make it more difficult to adjust the economic structure, put pressure on economic stability and therefore lead to possible big swings in the economy,'Zhu told a news conference.
He said that industrial output could see a further pick-up in the second quarter, putting pressure on the supply of coal, power and oil products, especially diesel.
While supply and demand for those products were generally in balance and the strain on the power supply was easing, some regions could see distribution bottlenecks for them, he said.
Some manufacturing centers have been hit by electricity brownouts in recent years, especially in the summer months.
Still, Zhu said that overall, China's economic indicators for the first quarter, which showed gross domestic product expanding by 11.1 percent from a year earlier, did not suggest that the economy was overheating.
The agency also said that the government would take further steps to curb exports of energy-intensive products, which contributed to what it called acute challenges in reducing pollution and conserving energy.
Jia Yinsong, another vice head of the NDRC's economic operation department, told the same news conference that exports of steel products, charcoal and iron alloy were still growing too quickly.
Overall production of some energy-intensive products, including aluminum, alumina, iron alloy, charcoal and cement, was also growing too quickly, Jia said, with the risk of a rebound in investment especially in aluminum and cement.
Jia said that government efforts aimed at reining in misguided investments had achieved initial success but that some local governments continued to flaunt the rules by offering favorable policies to attract investment in energy-intensive and highly polluting industries.
The government has taken a range of measures, including interest rate rises and tougher requirements for carrying out construction projects, in an effort to rein in investment and keep the world's fourth-largest economy on an even keel.
Fixed-asset investment grew 23.7 percent from a year earlier in the first quarter, compared with 27.7 percent in the first quarter of 2006.
Sponsor Results:
