More effort needed to prevent fixed asset investment bounce backUPDATED: 17:02, June 25, 2007
This year, China's investment growth rate has been continuously increasing. Between January and May, investment grew at a rate of 25.9 percent, which is more than last year's total growth rate of 24 percent. This scenario needs to be taken seriously because if fixed an asset investment bounce back cannot be effectively prevented, and the problem gets worse, economic growth will take the risk of overheating. If this predicament takes place, the country's efforts to regulate and adjust its economic goals, as well as the people's development goals will all be affected in a negative way.
From analyzing the fixed investment values of this year's first five months, it is evident that investment growth is mostly coming from high-cost top priority industries, as well as from the real estate industry. The investments of local governments have surpassed the central government's direct investments. Central government projects have investments of 312.2 billion Yuan, at a growth rate of 14.9 percent; while local project investments reached 2892.3 billion Yuan, growing by 27.3 percent.
This phenomenon reminds us once again, that investment in high pollution and high-cost industries is rapidly gathering momentum. If greater efforts are not made to control the situation, not only will there be greater obstacles in reducing pollution and energy usage in the future, but the situation will also negatively impact the country's large scale regulation policies.
During a recent State Council executive meeting, officials pointed out that among the eight present key projects, one of the tasks is to prevent a fixed assets investment bounce back. Therefore, in the future, relevant bureaus everywhere will need to regulate newly initiated projects, strictly carry out market regulations, manage loans for the construction projects of high pollution and high cost industries, and seriously penalize any illegal property utilization.
Aside from guarding the credit window and carefully regulating the origins of investment funds, in order to slow the current rapid increase in the fixed asset investment growth rate, and to prevent a fixed asset investment bounce back; administrative tactics should also be applied to regulate the approval of new projects. Investment controls on high pollution and high cost projects are especially necessary.
By People's Daily Online
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