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China to promote private investment

China to promote private investment

BEIJING: China will take more steps to boost private investment, the state planner said on Friday, as policymakers seek to keep growth steady while reducing the economy’s reliance on state spending. A sharp slowdown in private investment last year forced Beijing to rely more heavily on fiscal spending and investment by heavily indebted state firms to hit its growth target.

“Expanding private investment and strengthening private economy is an important foundation for ensuring stable, healthy and sustainable development of China’s economy,” Meng Wei, a spokeswomen for the National Development and Reform Commission (NDRC), told a Beijing briefing. The government will simplify investment approval procedures for private firms and ensure ”reasonable returns” in public-private partnership (PPP) projects to lure private investment in infrastructure and public utility projects, she said. Financial institutions will be banned from attaching conditions when they make loans to private firms, while local governments will be encouraged to set up funds to help private firms hedge credit risks, Meng added. The state planner said it approved 165.5 billion yuan (US$24.80bil) of fixed-asset investment projects in July, the highest since December. Data released by the statistical bureau on Monday showed fixed-asset investment grew 8.3% in the first seven months from a year earlier, cooling from 8.6% in the first half.

Annual growth of private investment slowed to 6.9 percent in January-July from 7.2% in the first half. The government kept its budget deficit target at 3 percent of gross domestic product this year – the same as in 2016 – as policymakers look to a recovery in private investment, partly via PPP projects, to drive growth. China’s factory output, investment, retail sales and trade all grew less than expected in July as lending costs rose and the gravity-defying property market cooled, though activity levels generally remained solid, propped up by a year-long construction spree.