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Govt investment begins to benefit economy

By Ding Qi (chinadaily.com.cn)
Updated: 2009-05-07 17:40

China's economy is beginning to benefit from the government's huge investment plans in the 4 trillion-yuan stimulus package in the first quarter, a top economic official told Shanghai Securities News in a recent interview.

Related readings:  Stimulus package has started bearing fruits  Official urges proper implementation of stimulus packages  No new stimulus  Indicators point to China recovery

Since the fourth quarter of last year, the central government has allocated 300 billion yuan of investments in three batches to stimulate the economy, according to Mu Hong, vice minister of the National Development and Reform Commission (NDRC), China's top economic planning agency.

Based on observations in the first quarter of this year, the expanding investments have taken a positive effect on the economy by propelling more social investments into key industries, he said.

Although China's economic growth slowed to its weakest in recent years in the first quarter to 6.1 percent, growth in fixed-asset investment rose 28.8 percent year-on-year. Industrial output growth also rebounded to 8.3 percent in March from a record low of 3.8 percent in the first two months.

Meanwhile, total investments in newly constructed projects increased 87.7 percent year-on-year in the quarter. Industries highly related to these investments such as machinery, building material, and electrical equipment saw substantial recovery, the official said.

In addition, China's purchasing manager's index (PMI), usually seen as a leading indicator of economic performance, rallied for five consecutive months to 53.5 percent in April.

These figures prove that the central government's expanding investment policies are effective in boosting China’s economy amid the global downturn, according to Mu. He also expects the stimulus moves will bring along increasing social participation, as more projects will start construction in the second quarter.

Mu's remark also revealed that the third batch central government investment amounts to 70 billion yuan, according to the paper. Previously, the NDRC had announced the first two batch of investment plans amounted to 100 billion yuan and 130 billion yuan respectively.