The government should refrain from revelling in the current industrial growth that is primarily fueled by state-funded infrastructure construction, since the real engine of economic growth lies in private investment, an editorial in the
Beijing News said on Tuesday.
The National Bureau of Statistics has reported an increase of 31.5 percent in January and February in the total profits of above-scale industrial enterprises (those with an annual revenue of 20 million yuan – US$2.9 million – or more), 29 percentage points higher than the growth recorded in December last year.
The growth is, however, primarily attained by industrial enterprises in fields closely related to raw materials, such as coal and ferrous metals, and these enterprises are mainly State-owned, the editorial said.
The editorial said the growth is fundamentally driven by a massive round of infrastructure construction that started nationwide last year. While private investment has slowed, local governments have come to rely on infrastructure projects for a steady flow of investments, the editorial said.
Many local governments have announced major plans to speed up infrastructure construction in 2017, with investment proposals for some key projects as high as a trillion yuan (US$145 billion), according to the editorial. It cited experts as predicting that infrastructure investment will maintain growth of 20 percent this year to reach 16 trillion yuan (US$2.3 trillion) in total.
But past experiences have proven that healthy economic growth can hardly be achieved through enlarging infrastructure investments, the editorial said. Instead it should be primarily driven by private investment, which has seen limited growth recently, despite a recovery, the editorial said.
The government should thus refrain from savoring these recent successes and think up measures to revitalize private investment, the editorial said.
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