CHINA / National
China: Investment curbs paying off
(Reuters)
Updated: 2006-10-17 07:11
BEIJING -- China's efforts to curb runaway expansion in some industries
are starting to pay off, but fixed-asset investment growth remains too
rapid, the country' top economic planning official said in remarks
published on Monday.
Ma Kai, head of the National Development and Reform Commission, said
curbing the launch of new investment projects remained the main focus of
the broad array of macro-control measures that Beijing was deploying.
A labourer walks on a steel frame at a construction site in Nanjing, east
China's Jiangsu province October 15, 2006. [Reuters]
In a speech made on Friday and posted on the agency's Web site, Ma said
the economy was in good shape but the country faced some striking
problems: fixed-asset investment and credit were still expanding too
fast, while the trade surplus was too large.
"The government has taken a series of timely macro-economic measures and
these measures have initially helped contain the momentum of blind
expansion in some industries, but the problem of overcapacity has yet to
be fundamentally resolved," the top economic planner Ma said.
Excess capacity in sectors such as steel, alumina, coking and autos
showed no let-up, while risks remained for overinvestment in other
industries including coal, power and textiles, he said.
Fearful that overcapacity could wipe out profits and deluge banks with
new bad loans, the government has taken a raft of measures to cool some
fast-growing sectors.
Investment growth slowed in August, but Ma said the authorities needed to
keep tight controls on bank credit and land supply while implementing
tougher environmental and safety standards.
"The top priority of macro-economic policy is to strictly control the
launch of new projects," Ma said.
Toward that end, the central government has dispatched six inspection
teams to the provinces to spearhead a drive launched in early August to
scrutinize new projects, he said.
Half of all new coking industry investments flouted government rules, Ma
said. The figure for coal was 42 percent, for cement 35 percent, for
electricity and steel 26 percent and for textiles 22 percent, he added.
Echoing Ma's comments, Cheng Siwei, a top legislator, was quoted by the
official Xinhua news agency as saying that overly rapid investment and
credit growth and the swelling trade surplus were the biggest concerns
for China's economy.
The underlying source of those imbalances was the country's overly high
savings rate, which pushed interest rates down and fueled capital
spending, said Cheng, who is vice-chairman of the standing committee of
the National People's Congress.
That, in turn, was largely the result of the social security system being
relatively underdeveloped, he was quoted as saying.
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