Governments lower 2014 targets for investment

By Chen Yang Source:Global Times Published: 2014-1-28 0:33:01

Many local governments in China have set lower targets for fixed-assets investment in 2014, signaling their efforts to adjust the economic structure and curb debt growth, experts said Monday.

A total 28 provinces, municipalities and autonomous regions on the Chinese mainland (except Anhui, Hainan and Hunan provinces) had published their government work reports as of Monday, among which only three raised this year's growth target for fixed-assets investment.

South China's Guangdong Province, No.1 in terms of GDP value among all provincial-level regions last year, set its growth target for fixed-assets investment at 18 percent in 2014, higher than the 15 percent it set for 2013. However, the export hub lowered its foreign trade growth target to 1 percent this year from 5 percent a year earlier.

"For provinces like Guangdong, the export-oriented growth model is not sustainable as external demand is still weak and China's manufacturing sector is facing increasing competition from neighboring economies," Zhou Jingtong, a senior analyst at the Bank of China, told the Global Times on Monday.

Tianjin Municipality raised its fixed-assets investment growth target by two percentage points and Yunnan Province by one percentage point.

Five provincial-level regions including Beijing, Shanghai and Zhejiang did not specify this year's growth goals for fixed-assets investment. The rest either lowered the growth target by up to five percentage points or maintained the target at the same level as last year.

"The overall trend is in accordance with the central government's efforts to curb debt growth and pursue sustainable economic growth without sacrificing the environment," Zhou said.

Hebei Province, one of the country's largest steel production areas, lowered its target for fixed-assets investment by three percentage points this year, as the province faces unprecedented pressure from air pollution controls, according to its government work report.

"Curbing debt growth" has been listed as a major task of this year's economic work in many local government work reports after a nationwide audit found China's local government debt increased to 17.9 trillion yuan ($2.96 trillion) by the end of June 2013, up 67 percent from 2010.

Zhou said many local governments are facing pressure to repay their debts, which to some extent will curb their spending activity.

"Industrial overcapacity has weighed on the profits of China's enterprises and their ability to expand investment," the State Information Center said in a research note published in December.

The center estimated the annual growth of China's fixed-assets investment will slow to 19 percent in 2014 from 19.6 percent last year.

Western regions including Guizhou and Gansu provinces are also targeting slower investment expansion.

"Demand from resource-rich western regions is expected to be weighed down by China's overall economic slowdown," Zhang Baotong, a research fellow with the Shaanxi Academy of Social Sciences, told the Global Times on Monday.

"Despite downgrading expectations, most western regions' growth targets are still at double-digit rates and higher than their eastern counterparts," Zhang said, citing central authorities' efforts to support development of western regions. This includes establishing a Silk Road economic belt and approving four national-level development zones in western regions.

The central government is expected to release its annual government work report during this year's annual sessions of the National People's Congress and the Chinese People's Political Consultative Conference, which will be held in March.

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