China's economic watchdog is moving to slow
economic growth after recording a rise in fixed assets investment of almost 30
percent in the first quarter.
The National Development and Reform Commission (NDRC) has urged local
governments to tighten controls on land use and lending to prevent investment
rising too rapidly.
National Bureau of Statistics figures show investment in roads, factory
equipment and other fixed assets grew 27.7 percent, an increase of 4.9
percentage points year on year.
Investment in urban areas climbed 29.8 percent to 1.16 trillionyuan, while
that in rural areas came to 230 billion yuan, up 18.1 percent.
The government has launching the "socialist new countryside" campaign to
boost rural development, which was left behind in the reform and opening-up
drive of the past two decades.
However, more than half of China's provinces recorded alarming growth rates
or more than 35 percent in investment, and 16 manufacturing industries reported
more than 40 percent.
Fan Jianping, an expert with the State Information Center, saidlocal
governments had planned too many projects this year, the start of the new 11th
five-year blueprint, risking overheating thenational economy.
Zhang Liqun, a research fellow with the Development Research Center of the
State Council, said the soaring investment was tied into recent elections of
local officials, who encouraged investment to demonstrate their political
performance.
The State Council had outlined a decision, made at an executivemeeting
chaired by Premier Wen Jiabao this month, to avert an overheating economy by
tightening controls on fixed asset investment and money supply.
The high rate of investment in some regions and industries had resulted
over-production in many sectors, he said.
Steel, aluminum, calcium carbide, cement, coal, automobiles and textiles are
among the main over-producing industries.
The NDRC said domestic demand for cement in 2005 was less than 1.05 billion
tons, while production capacity was 1.3 billion tons, of which about 60 percent
was low-grade.
The NDRC was in the process of publishing policies to halt over-production in
key industries, said a spokesman.
The Chinese Academy of Social Science (CASS) on Monday issued are port
predicting gross domestic product (GDP) is to grow by 9.6 percent this year,
while fixed assets investment will exceed 10 trillion yuan, accounting for 52.7
percent of GDP.
Experts with the CASS said the government should adjust the policy to
encourage domestic consumption, so as to ease the burden of over-investment.