Fixed-asset investment likely slowed
(Bloomberg)
Updated: 2006-08-15 08:59 The crackdown is aimed at reining in an expansion Wen has said could
ultimately lead to overcapacity, falling prices and rising bad loans in the
nation's banks. The World Bank says failure to slow investment may lead to a
sharp slowdown in China's economy.
Administrative measures may not be as effective as monetary tightening
because local authorities may find ways to skirt central government commands,
some economists said.
"We wouldn't look for a sharp downturn in spending because of these new
policy announcements," said Jonathan Anderson, chief Asia economist at UBS AG in
Hong Kong. ``Beijing never has much success with this kind of industrial policy
management.''
Industrial output probably rose 18.9 percent in July, slowing from June's
19.5 percent expansion, the Bloomberg Survey showed. Production figures are due
at 10 a.m. local time today.
Semiconductor Plants
Growth in overall fixed-asset investment, which includes spending in rural
areas, will slow to as little as 20 percent in the second half from 30 percent
in the first half, the National Development and Reform Commission said in a
report published in the China Securities Journal on Aug. 3. The economic
planning agency targets 18 percent expansion for the full year.
Investment is still rising at almost triple the pace of the overall economy
as companies including Semiconductor Manufacturing International Corp. build
factories in the nation to meet surging domestic demand. Semiconductor
Manufacturing is spending $1.1 billion this year to expand capacity at its
plants on the mainland.
"Our China business is growing rapidly and steadily so we have to position
ourselves to have enough capacity to service our customers in China and
worldwide," Chief Executive Richard Chang said in a July 31 interview.
(For more biz stories, please visit Industry Updates)
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