Wen Jiabao

Energy sector helps fuel 24pc surge in fixed-asset investment

PUBLISHED : Thursday, 17 March, 2005, 12:00am
UPDATED : Thursday, 17 March, 2005, 12:00am

China's fixed-asset investment grew by a robust 24.5 per cent in the first two months of the year compared to the same period last year, a figure on track to exceed government forecasts.

The country's urban fixed-asset investment in January and February rose to 422.2 billion yuan, according to the National Bureau of Statistics. In the first two months of last year, fixed-asset investment grew 53 per cent year on year.

The figure represents a much faster pace of growth than the 16 per cent target set by Premier Wen Jiabao for this year, although investment figures are usually higher at the start of the year.

Energy and raw materials were the driving forces behind the growth, with investment in coal mining surging 148.7 per cent to 3.1 billion yuan.

Investment in real estate, one of the overheating sectors targeted by the central government last year in a credit clampdown, rose 27 per cent to 120 billion yuan.

Based on the bureau's data, there is cause for concern about mounting local government-backed investment, which shot up a year-on-year 26 per cent during January and February.

Central government-funded investment rose by a relatively modest 13.9 per cent.

Domestic companies invested 353 billion yuan during the first two months, up 25.6 per cent from the same period last year. Investment by companies based in Hong Kong, Macau and Taiwan rose 15.4 per cent to 28.9 billion yuan.

In his work report delivered to the National People's Congress last week, Premier Wen warned of a possible bounce-back in fixed-asset investment in areas such as infrastructure and property. 'Investment growth in fixed assets may pick up again, as coal, electricity, oil and transportation are still in short supply,' Mr Wen said.

The central government would employ both administrative and market-based measures to further scale back investment in fixed assets while at the same time keeping economic growth stable, he said.