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(China Daily)
Updated: 2007-11-23 09:12

The Chinese government's new effort to contain investment growth is not so novel in substance. But it clearly symbolizes a fresh attempt to prevent the country's economic growth from overheating.

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The State Council issued a document on Wednesday to tighten supervision over new construction to check runaway investment growth.

Investment in construction, factories and other urban fixed assets rose 26.9 percent year-on-year to 8.9 trillion yuan ($1.2 trillion) in the first 10 months of this year. Meanwhile, the country saw ground-breaking on 191,086 new projects, up 22,518 from a year earlier.

Such breakneck investment growth has added tremendously to the country's difficulties of macroeconomic control.

The Chinese economy soared 11.5 percent in the first three quarters. And it is sure now that this year will mark the fifth year in a row of double-digit growth for the world's fourth largest economy.

To ensure that the national economy can develop in a stable and healthy manner, policymakers are keenly aware of the urgency to tame capital spending.

The new document found that violation of laws, shortcomings in law enforcement and the loose supervision of new construction projects caused over-investment and repeated construction in recent years.

It is always necessary to plug the holes in supervision to ensure earnest implementation of related policies.

But by stressing the procedure of approval for new construction projects, the government aims to drive home such a message that the country cannot afford extensive investment growth any more.

The State Council has rejected almost 32 percent of the urban construction applications for 2007 amid efforts to curb the growth of energy-intensive, polluting industries.

In comparison with consumption and export, the country's other two growth engines, investment not only has a bigger bearing on the country's gross domestic product growth but also poses a more serious test for the country's energy and resource supply as well as environmental protection.

Hence, putting the brakes on new construction projects can help achieve the short-term goal of macroeconomic control while facilitating the long-term transformation of the country's growth pattern toward a sustainable one.