BEIJING, April 23 (Reuters) – 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.
(Reporting by Zhou Xin and Nick Edwards; Editing by Paul Tait)
