China's fixed asset investment, which cooled down a bit last year, has been
growing rapidly so far this year, indicating that the country's macro economy is
entering a "difficult time".
Official figures showed that China's fixed asset investment growth rate in
May this year was 2.1 percentage points higher than that of the first quarter,
and the trade surplus continues increasing.
China's economy will probably grow around 10 percent in the first half of the
year, economists here predicted.
The National Bureau of Statistics said that in the first five months of this
year, the investment of local governments, which made up about 90 percent of
China's urban fixed asset investment, increased by 31.3 percent, up 2.5
percentage points from the same period a year ago.
A State Council meeting in mid-June has urged local governments to focus
efforts on adjusting economic structure, changing growth patterns and deepening
The blind thirst for expanded investment and faster economic growth should be
curbed, the meeting said.
Wang Tongsan, director of the Quantitive Economy Institute of the Chinese
Academy of Social Sciences, told Xinhua that he believed China's current
investment growth rate was "rather moderate" compared to that of 2003.
The macro economic situation is "not bad," he said, there were no
"bottlenecks" in the sectors of coal, electricity, oil and transportation and
the commodity price is "relatively low."
He warned, however, the central government should be on alert in regards of
the rebounced overheated investment and adopt appropriate measures to curb the
trend. Otherwise, this will affect the nation's economy to develop "fast and
sustainably," he said.
China is determined to adjust the investment and consumption structure and
aims to realize a balanced international trade and balance of payments during
the 11th Five-Year (2006-2010) plan period.
The country also plans to upgrade the proportion of tertiary industry in the
country's GDP and the reduce the per unit of GDP energy consumption by 20
percent in the next five years.
In January-May, China's fixed asset investment grew 30 percent, while
consumption grew less than 15 percent. China's trade surplus amounted to 46.8
billion U.S, dollars.
If this trend continues, China's trade surplus this year is expected to
surpass last year's record 101.2 billion dollars, economists said.
Wang said China's macro economic regulation and control should combine the
resolve of short-term problems with the realization of long-term targets so as
to stimulate the transformation of the growth pattern and realize the goal of
sustained and fast development of the nation's economy.
As for the central bank's raise of the benchmark lending rates by 27 basis
points in late April and the recent hike of reserve ratio for commercial banks
by 0.5 percentage points, Wang believed these measures were not enough to curb
the overheated lending.
He suggested a more relaxed and flexible interest rate and exchange rate
policy in a bid to control credit and achieve a balanced foreign trade.
Meanwhile, he noted, the policy of tax rebate, which has been in place since
1998, should be adjusted.
He pointed out the root for China's economy to experience sharp ups and downs
over the past years lies in the country's administrative managing system, which
spurs local officials to seek after higher economic growth to get promoted.
Reforming China's administrative managing system and establishing scientific
system to select officials is the fundamental way to solve China's deep-rooted
economic problems, he said.