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Govt to banks: Increase investment

Wang Yanfei
Updated: May 5,2016 9:31 AM     China Daily

The nation’s top planning authority pledged on May 4 to adopt more proactive measures to expand investment in order to sustain the economic recovery.

Following the new lending boom in the first quarter, the government will actively encourage commercial banks to issue credit and attract investment from the private sectors in the second and third quarters, when more construction projects are expected to start, according to a statement by the National Development and Reform Commission.

Fixed-asset investment surged 10.7 percent year-on-year during the first quarter, as government-led investment in infrastructure construction “played a vital role”, the statement said.

Official data show that by the end of the first quarter, investment in infrastructure projects reached 1.5 trillion yuan ($230 billion), an increase of 19.6 percent year-on-year.

“Thanks to the government’s pro-growth measures and efforts made in supply-side structural reforms, progress made since last year has paid off,” said Zhao Qinghe, a statistician at the National Bureau of Statistics. “Data for fixed-asset investment in the first quarter indicates a favorable economic outlook.”

“Although the Purchasing Managers’ Index in April dropped slightly to 50.1 from March’s 50.2, it is still within a reasonable range,” Zhao said.

A reading above 50 indicates expansion, while a reading below 50 reflects contraction.

Luo Wenbo, an analyst at Zhongtai Securities, expected that investment in infrastructure projects will continue to grow in the near future, as top leaders have pledged to roll out proactive fiscal policies.

Meanwhile, economists said that more efforts are needed to address some of the key challenges to sustain the good start to the year, as downward pressure still exists.

Chen Daofu, a researcher at the Development Research Center of the State Council, said more measures must be taken to boost investor confidence, noting that private investment growth, which accounts for 62 percent of fixed-asset investment, increased by only 5.7 percent in the first quarter.

“Government-led projects will not play a role to the full extent if private investment does not pick up,” Chen said. “The government should provide the necessary incentives and profitable projects to attract private investment to sustain growth.”

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