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Chinese govt moves to cool economic growth
Latest Updated by 2006-04-28 10:21:43
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China's economic watchdog is moving to slow economic growth after recording a rise in fixed assets investment of almost 30 percent in the first quarter.

The National Development and Reform Commission (NDRC) has urged local governments to tighten controls on land use and lending to prevent investment rising too rapidly.

National Bureau of Statistics figures show investment in roads, factory equipment and other fixed assets grew 27.7 percent, an increase of 4.9 percentage points year on year.

Investment in urban areas climbed 29.8 percent to 1.16 trillion yuan, while that in rural areas came to 230 billion yuan, up 18.1 percent.

The government has launching the "socialist new countryside" campaign to boost rural development, which was left behind in the reform and opening-up drive of the past two decades.

However, more than half of China's provinces recorded alarming growth rates or more than 35 percent in investment, and 16 manufacturing industries reported more than 40 percent.

Fan Jianping, an expert with the State Information Center, said local governments had planned too many projects this year, the start of the new 11th five-year blueprint, risking overheating the national economy.

Zhang Liqun, a research fellow with the Development Research Center of the State Council, said the soaring investment was tied into recent elections of local officials, who encouraged investment to demonstrate their political performance.

The State Council had outlined a decision, made at an executivemeeting chaired by Premier Wen Jiabao this month, to avert an overheating economy by tightening controls on fixed asset investment and money supply.

The high rate of investment in some regions and industries had resulted over-production in many sectors, he said.

Steel, aluminum, calcium carbide, cement, coal, automobiles and textiles are among the main over-producing industries.

The NDRC said domestic demand for cement in 2005 was less than 1.05 billion tons, while production capacity was 1.3 billion tons, of which about 60 percent was low-grade.

The NDRC was in the process of publishing policies to halt over-production in key industries, said a spokesman.

The Chinese Academy of Social Science (CASS) on Monday issued are port predicting gross domestic product (GDP) is to grow by 9.6 percent this year, while fixed assets investment will exceed 10 trillion yuan, accounting for 52.7 percent of GDP.

Experts with the CASS said the government should adjust the policy to encourage domestic consumption, so as to ease the burden of over-investment.

Editor: Yan

By: Source: China View website
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