China putting brake on auto investment
(AP)
Updated: 2006-04-27 13:44
China is moving to slow investments in the auto industry, officials said
Thursday, one of several steps being taken to cool growth in sectors whose
growth is outstripping demand.
A model promotes a car
brand at Haikou auto show in Hainan province in this March 1, 2006 photo.
China is to slow down investment in auto industry to tackle the
overcapacity problem. [newsphoto] | Senior
officials at China's main economic planning agency said measures to prevent
excess investments in the auto industry would be implemented soon.
Those
steps follow control measures for other industries such as ferrous alloy,
aluminum, coke and cement, He Yanli, vice director of the National Development
and Reform Commission's industry department told Dow Jones Newswires while
attending a conference in Beijing.
Both foreign and domestic auto
companies have been pouring billions of dollars in new investments into new
vehicle factories. In March, China's Cabinet warned against overcapacity
problems and said the government would limit its approvals for new auto
companies.
Robust investments, sometimes in redundant capacity, are
helping to keep economic growth at unsustainable levels, the government has
warned. In the first quarter of this year the economy grew 10.2 percent
year-on-year, the fastest pace in more than a year and well above government
targets for bringing growth down to 8 percent or below.
First quarter
investment in construction and factory equipment, known as fixed asset
investment, rose 29.8 percent over the same period in 2005, also well above
expectations.
China's car sales in the first three months this year rose
74 percent from the same period a year earlier to 890,000 units, the official
Xinhua News Agency reported in early April, citing data from the China
Association of Automobile Manufacturers.
The local auto industry began to
pick up last year after slowing significantly since mid-2004 when the government
took measures to curb bank lending to various sectors that it viewed as being in
danger of overheating, including the auto industry.
Meanwhile, the government said it will shut small coke
production facilities by the end of 2009 to help reduce overcapacity in that
industry.
The move follows the setting of lower output capacity targets
for the ferro-alloy, cement and aluminum industries earlier this week.
Domestic prices for coking coal, used to make steel, have been falling
as demand lags behind supply, causing losses.
Coke producers must close
coking units with a height of less than 4.3 meters (14 feet) in eastern China by
2007 and in the west by 2009, the National Development and Reform Commission
said in a statement posted on its Web site Thursday.
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