Recent statistics on the growth of fixed-asset investment point to worsening market conditions for many Chinese firms, suggesting that one of the main props supporting GDP growth may now be weakening.
Figures from the National Bureau of Statistics indicate that completed fixed-asset investment (excluding investment in collective and individually-owned enterprises) reached Yn2,120bn in the period January- November 2001. This represents a rise of 16.3 per cent over the same period in 2000, a growth rate that was itself 4.6 percentage points higher than the previous period’s growth over January-November 1999. Investment growth rates have been rising since the beginning of 2000, following a sharp deceleration of growth in 1999.
The investment recovery in 2000 more or less coincides with the launch of the Great Western Development Programme, aimed at boosting infrastructure spending in the central and western provinces. The most recent figures do show a slight westward bias in the pattern of investment growth, although the east continues to receive by far the largest share of investment in absolute terms.
The sectors experiencing the fastest growth have generally been those likely to benefit most from China’s WTO accession (for example, light industry and textiles were up 27 per cent) or those already demonstrating strong growth in private-sector demand (post and telecoms up 27.5 per cent; real estate development up 28.6 per cent).
However, the investment boom now appears to be slowing. Year-on-year growth for the months of September, October and November came in at 14.6 per cent, 13.0 per cent and 9.4 per cent respectively, suggesting a sharp deceleration at the end of the year. This may reflect weakness in the property sector after a couple of years of strong price appreciation: the bureau’s index of real estate market has been softening since April 2001.