Fixed-asset investment for the first two months of this year has reportedly soared to its highest level in three years. Reuters reported yesterday that China's January-February investments in fixed assets, primarily by state-owned enterprises, rose 24.5 per cent year on year to 140.8 billion yuan (about HK$131.9 billion), citing a National Bureau of Statistics monthly newsletter. However, National Bureau of Statistics official Li Xiaochao said the fixed-asset investment figures would be officially released in the next few days and had no idea where Reuters got the figures. If the figures are accurate, China's fixed-asset investment would have risen to its highest level since the first two months of 1999, when it surged 28.3 per cent year on year. 'I think this is one of the reasons why Premier Zhu [Rongji] last week was so confident in saying that the Chinese economy could grow at least 7.5 per cent in the first quarter when the growth target is only 7 per cent,' DBS Bank senior economist Chris Leung said. The surge in fixed-asset investment was helped by a relatively low base of comparison. China's fixed-asset investment grew 15.1 per cent in the first three months of last year. However, economists said the main factor in the surge was the central Government's fiscal policy. 'This is largely the result of the Government's campaign to boost infrastructure spending by means of fiscal spending,' Mr Leung said. In autumn, the Ministry of Finance announced it had issued 150 billion yuan in special bonds to fund infrastructure projects, particularly in China's poorer western region. Generally, there was a time lag of one to two quarters between when the Government announced it would issue the bonds and when that was reflected in the economic figures, Mr Leung said. China has been spending heavily since 1998, when the Asian financial crisis hit the region, at the cost of a record 309.8 billion yuan budget deficit. China's leaders have said they intend to continue spending on infrastructure projects to keep the mainland's economic growth at 7 per cent as many Chinese are reluctant to spend. Reuters also reported yesterday that the retail price index fell 1.1 per cent year on year last month, citing an official newsletter. The index is used by economists to gauge the rate of deflation.
