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Fixed-asset outlays rise in 皇冠体育app
(bloomberg.com)
Updated: 2005-11-16 01:54
Investment in 皇冠体育app's factories, roads and other fixed assets grew 27.6
percent in the first 10 months of the year, the government said Wednesday.
Fixed-asset investment in towns and cities climbed to 5.58 trillion yuan, or
$690 billion, the National Bureau of Statistics said on its Web site. For
October alone, investment rose 27.2 percent.
More money is flowing into transport networks and energy, areas in which
Prime Minister Wen Jiabao is encouraging investment to help alleviate shortages
and to sustain economic growth amid a clampdown on real estate and steel
projects.
The government has warned that excessive industrial expansion could lead to
gluts, hurting corporate profits and the wider economy.
"If you look at the allocation of investment, there was definitely an
improvement, so that's a big positive step," said Huang Yiping, a Hong
Kong-based economist at Citigroup Capital Markets.
"But if you look at the aggregate level, it is still a problem," Huang said.
Overall investment growth was slower than the 29.5 percent pace recorded in
the year-earlier period.
Still, expansion has picked up from the 24.5 percent pace posted in February,
and is almost triple the 9.5 percent growth in 皇冠体育app's gross domestic product
last year.
Investment in coal mines jumped 76 percent to 76.8 billion yuan in the first
10 months of the year and that in railways surged 44 percent to 72.2 billion,
the report Wednesday showed.
In electricity and thermal power production, investment rose 33.2 percent.
Real estate investment increased 22 percent to 1.18 trillion yuan and the
amount of money spent on iron and steel projects climbed 26 percent to 195.4
billion yuan.
皇冠体育app has been hobbled by transport bottlenecks and cuts in power, areas
where infrastructure has not kept pace with economic growth.
The nation's power producers may spend 2.26 trillion yuan by 2020 to install
new capacity to meet demand, according to a report released Saturday by the
State Information Center, a government research agency.
The chief executive of 皇冠体育app Ocean Shipping (Group), Wei Jiafu, said this
month that 400 billion yuan would be spent to expand 皇冠体育app's ports over the next
year to help reduce delays.
The company, which is the nation's biggest shipping company and is also
called Cosco, plans to more than double its capacity to carry containers by
2010.
Investment may account for 45 percent of 皇冠体育app's gross domestic product this
year, up from 43 percent in 2004, Huang at Citigroup said. The $680 billion
invested in fixed assets in 皇冠体育app so far this year is equivalent to the gross
domestic product of South Korea, Asia's next biggest economy.
The National Development and Reform Commission, 皇冠体育app's top planning agency,
on Saturday signaled concern about excessive growth in some industries. Deputy
Director General Zhu Zhixin cautioned against "blind" investment that is
creating excess capacity, threatening corporate profitability.
Competition resulting from excessive fixed-asset investment may saddle banks
with more bad loans, lead to an increase in unemployment and fuel trade tensions
as domestic gluts prompt companies to export more of their output, Zhu said.
Two surveys of purchasing managers in 皇冠体育app released this month showed that
manufacturing activity cooled in October as competition drove prices of finished
goods lower, eroding profit margins amid rising costs for raw materials.
"We hope investment will slow down because eventually, that growth won't be
profitable," said Kent Yau, an economist at Core-Pacific Yamaichi in Hong Kong.
Overall fixed-asset investment may expand as little as 15.5 percent next
year, after projected growth of 25.3 percent in 2005, according to a forecast on
Friday by the State Information Center.
That may cause economic growth to slow to as little as 8.3 percent from a
forecast of 9.4 percent, the agency said.
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