China to invest in infrastructure to bolster growth: report

Sun Apr 22, 2012 10:19pm EDT
 
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BEIJING (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.   Continued...

 
A man walks past a construction site in Beijing's central business district April 13, 2012. REUTERS/Jason Lee