China Pledges More More Curbs on Surging Investment, Warns About Excess Spending
SHANGHAI, China (AP) — China’s top leaders have pledged more curbs on surging investment, warning that excess spending on steel factories and surging prices for iron ore threaten the economy.
The moves were announced by the government following a meeting of the State Council, China’s Cabinet, the official Xinhua News Agency reported.
Investment in construction, factories and other “fixed assets,” China’s benchmark measure of capital spending, rose 24.5 percent in January-February compared with the same period a year earlier.
Although the pace of growth has been cut about in half from its peak a year ago, it was above the 21.3 percent on-year increase for December and far exceeded the government’s target of 16 percent growth in such investments for all of 2005.
Officials have repeatedly said they fear a rebound.
The State Council said it would further tighten controls on steel investment and strictly control steel exports by eliminating tax rebates for exporters, Xinhua reported.
The government also plans steps to deal with a surge in iron ore prices on the international market by strengthening coordination of imports and iron ore operations, it said.
Chinese steel makers are among many in the industry facing a 71.5 percent price increase for low-grade iron ore from Brazil-based Companhia Vale do Rio Doce SA, the world’s largest ore producer.