Fixed-investment growth to pick up more pace
Mainland fixed-asset investment, a key indicator of state spending, is expected to pick up speed even after continuing to grow at a strong pace last month, driven by heavy government outlays.
Fixed-asset investment, including construction and equipment capital by the government and state enterprises, jumped 17.6 per cent year on year to 619.9 billion yuan (about HK$580.8 billion) in the first five months of this year, Xinhua reported, citing State Statistical Bureau figures. In May, fixed-asset investment soared 20.3 per cent year on year to 196.3 billion yuan, surpassing most expectations.
Investment by collectives and individuals are excluded from the measure.
Analysts said the strong growth was mainly due to investments the government made with money from issuing treasury bonds. Since the government-investment projects have so far been funded mainly with proceeds from earlier treasury bonds issues last year, the bureau predicted that investment would pick up speed in the second half as this year's treasury bond money was in the pipeline. The government has announced it would issue 150 billion yuan worth of treasury bonds this year and a matching level next year.
BNP Paribas Peregrine chief economist for China Chen Xingdong said the latest growth was 'very strong' and had exceeded his expectations, but he believed the growth would moderate in the third quarter.
BNP expects a 13-14 per cent growth in fixed-asset investment, dominated by the state for the full year, and overall fixed-asset investment of 10.5 per cent.
Standard Chartered Bank senior economist Liao Qun expects full-year fixed-asset investment growth to reach 12 per cent. For China to achieve a targeted 7 per cent GDP growth, fixed-asset investment growth needs to be 10 per cent.