NDRC approves new projects

The country's top economic planner has approved investment projects worth nearly 700 billion yuan ($114.3 billion) in the last month, a media report said on Tuesday, which analysts said will help stabilize the economy even though a large-scale economic stimulus plan is unlikely.

From October 16 to November 5, the National Development and Reform Commission (NDRC) approved 16 railway projects and five airport projects, with a total investment of nearly 700 billion yuan, Shanghai Securities News reported.

Meanwhile, on November 4, construction began on three ultra-high voltage projects that the NDRC had approved earlier this year, with total investment of 68.3 billion yuan.

The report came after the National Bureau of Statistics (NBS) released data Monday showing the producer price index (PPI), a key measure of inflation at the wholesale level, fell by 2.2 percent in October from a year earlier, lingering in negative territory for the 32nd consecutive month and reinforcing signs of a slowing economy. It also prompted speculation about whether more aggressive stimulus measures would be rolled out.

Investment projects approved by the NDRC will help to ease the problem of incomplete infrastructure in China's western regions, Zhang Yansheng, secretary-general of the Academic Committee at the NDRC, told the Global Times on Tuesday.

However, the extensive investment does not mean the government will start a new round of major economic stimulus, Zhang noted.

The central government launched a 4 trillion yuan stimulus package in 2008 to finance investment programs and shore up the economy amid the global financial crisis. But critics said the move also created overcapacity and increased the problem of local government debt.

China's GDP grew by 7.3 percent year-on-year in the third quarter, the slowest growth in nearly six years, data from the NBS showed.

Major stimulus will not be launched now, as the situation of overcapacity has not changed, Liu Xuezhi, an analyst at the Bank of Communications, told the Global Times on Tuesday. The new investment projects are mainly intended to ease the downward pressure on investment growth, Liu said.

China's fixed-assets investment increased by 16.1 percent year-on-year in the first three quarters, compared with a reading of 20.2 percent in the same period last year.

The slow investment growth may continue in the rest of the year, Liu said, making it hard for the country to achieve its annual target of 17.5 percent.

In the three months to October 23, 11 provinces and municipalities had announced investment projects worth more than 3 trillion yuan, Shanghai-based newspaper China Business News reported in October.

The Ministry of Finance issued new guidelines on October 28 encouraging local governments to use the Public-Private-Partnership (PPP) investment model, under which private capital is introduced, to finance new projects.

The PPP model means that new investment projects will not necessarily increase local government debt, Liu said. Local governments had accumulated debt totaling 17.9 trillion yuan by the end of June 2013, up 67 percent from the end of 2010, according to data released by the National Audit Office in June 2013.

With the fresh round of investment approved by the NDRC, China's economy will see slight improvement in the fourth quarter, with GDP expected to grow by around 7.3-7.4 percent year-on-year, Liu said.

It is unlikely that economic growth will increase more significantly in the fourth quarter, but that will not prevent China from achieving its full-year GDP growth target of slightly over or below 7.5 percent, Liu noted.