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  • lawstuff22 lawstuff22 Apr 22, 2012 10:50 PM Flag

    China to inMainland China to invest in infrastructure to bolster growth:

    China is set to speed up spending on roads, railways and utilities to boost economic growth, the official China Securities Journal said on Monday, citing government economists.

    The increased fiscal spending on infrastructure, which has already started, will fall within Beijing's framework of policy "fine-tuning" instead of another massive stimulus like the one Beijing launched at the end of 2008.

    Zhang Hanya, the head of China's investment association, a think tank affiliated with China's economic planning agency, was quoted as saying that boosting investment is the only choice for Beijing to bolster growth since consumption is always stable and exports are meeting overseas demands.

    Spending on roads, bridges, subways and airports will boom as investments in industrial facilities will worsen overcapacity and more property investments are discouraged by Beijing, Zhang said.

    "China has to rely on infrastructure investment to manage economic slowdown," Zhang was quoted as saying.

    China's economy grew at its weakest pace in nearly three years in the first quarter of 2012, with the annual rate of expansion slowing to 8.1 percent from 8.9 percent in the last quarter of 2011.

    Investment, usually the chief engine for the world's No.2 economy, contributed only 2.7 percentage points of GDP growth in the first quarter.

    The slowdown in capital spending has caused pain for some sectors. China's steel industry made combined losses in the first quarter -- the first time in the new century.

    Fan Jianping, a researcher with the State Information Centre, was quoted as saying infrastructure investment would become the focus for Beijing in the second quarter to keep the economy from cooling too much.

    China's National Development and Reform Commission has speeded up its approval process for local infrastructure projects, the newspaper reported.

    The Ministry of Finance has accelerated fiscal spending. In March alone, fiscal expenditures jumped 34.7 percent from a year ago to 1.02 trillion yuan, exceeding the month's revenues of 905.8 billion yuan.

    Zhou Xiaochuan, the People's Bank of China governor, said in a statement at the weekend China would try to maintain "robust, sustainable and balanced growth".

    The investment association's Zhang said the central bank has to cut the required reserve ratio by another 5.5 percentage points to keep sufficient liquidity for investment and economic activities.

    "A level of 15 percent of (required reserve ratio) will be ideal," Zhang said. The level is currently at 20.5 percent for major lenders.

 
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