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by Daily Commercial News last update:Jul 17, 2006



China’s investments in construction, factory equipment and other fixed assets surged 28 per cent in May from the same period a year ago, on strong growth in power generation and property development, the government reported last week.

The data suggest government efforts to slow investment growth may be fading, although spending growth remains well below the peak of 53 per cent seen in early 2004.

Authorities have tightened credit and imposed limits on land use for construction, hoping to curb investments in redundant or ill-advised projects they say are straining energy and other resources and could trigger inflation.

So-called fixed asset investments in factory equipment, property development and other projects — China’s main barometer for such spending — rose 26.5 per cent in April from the same month a year earlier and 26 per cent in March.

HSBC Holdings PLC China economist Qu Hongbin said the stronger investment numbers for May reflected a low base in May of 2004, after the government tightened policies on land use and bank lending.

They also were balanced by a moderate 1.8-per-cent rise in May in the consumer price index, the country’s main gauge for inflation.

Growth in real estate investments from January to May rose 24.3 per cent over the same period in 2004, as the government raised taxes on real estate transactions and ordered local authorities to act to stem soaring property prices.

The Associated Press

last update:Jul 17, 2006

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