Wasteful investments drain China’s economy, undermine government credibility: state media
Economic Daily commentary warns local authorities to avoid inefficient projects with little payoff as Beijing tries to boost domestic demand
That was the message state-owned Economic Daily delivered in a commentary on Sunday, as it put its weight behind national efforts to stimulate domestic demand.
Written under the pen name Jin Guanping, the commentary said the incremental capital output ratio had risen from 2.84 in 2008 to 9.44 in 2023. The ratio is a key measure of investment efficiency where a lower value indicates higher efficiency.
“These projects require enormous investments but yield minimal economic and social benefits,” the commentary said.
“Not only do they drain substantial fiscal resources and squeeze out funding for essential public services, but they also undermine government credibility.”
To ensure sustainable growth and China’s climb up the economic value chain, authorities had to avoid inefficient and ineffective investments, make investments more targeted, refine industrial structures, and foster the development of “new quality productive forces”, it said.