2016 is the first year of the 13th Five-year Plan period. In terms of consumption, investment and export, the so-called “three-horse troika” pulling the economic ahead, investment growth rate cannot be underestimated. Statistics show that the country's fixed-asset investment (excluding rural households) grew by 8.3 percent year-on-year in nominal to 53,854.8 billion yuan during January and November, with growth keeping flat with that during January and October. It hiked by 0.54 percent in November.
Innovate participating means of private investment
Give full play to social capitals
According to data released by National Development and Reform Commission (NDRC), the NDRC approved 26 fixed-asset investment projects with investment amount of 264.2 billion yuan in November. The projects are mainly related to transportation, energy and water conservancy fields. Meanwhile, as of late October, 12 categories of major project package saw orderly promotion and had finished investment with amount of 7.4 trillion yuan. 48 special projects and 476 projects have started construction.
Zhao Chenxin, spokesman of the NDRC, indicated that guided by new development theory, a series of measures such as persisting in expanding total demand moderately, focusing on supply-side structural reform, making more efforts in shoring up weakness in key fields and weak links, promoting investment and financing system reform, advancing reform of streamlining administration and delegating powers, fair supervision and high-efficient service, drawing up rules on approval and filling of enterprises’ investment projects, optimizing budgetary investment arrangement, and strengthening project reserves and major project management are taking effect.
It is noticeable that in order to facilitate healthy development of private investment, the NDRC issued Several Policy Measures on Promoting Sound Development of Private Investment this year. It put forward 26 detailed measures from 6 aspects including boosting investment growth, improving financial services, implementing and perfecting relevant fiscal and taxation policy, reducing enterprises’ costs, improving comprehensive management service measures and formulating and revising relevant laws and regulations.
Hu Zucai, deputy director of NDRC, remarked that it needs to push forward work of reducing review and transactional cost and change governmental function from reviewing to providing supervision on fair competition of the market and good service so as to create a good environment for private investment. It should create a market environment with fair competition and especially offer indiscriminate investment environment to private investment. It should innovate the participating means of private investment to give full play to social capitals.
PPP with Chinese characteristics to see rapid growth
PPP projects to be implemented in 2017 may be worth RMB3.8 trln
As public-private partnership (PPP) is increasingly expanding, the promotion is reinforced and project contract signing rate hikes steadily. According to the third quarterly report on PPP released by the Ministry of Finance, by the end of late September 2016, there were 26 and 206 PPP demonstration projects in 2014 and 2015 respectively. A total of 232 PPP projects saw investment amount of 786.63 billion yuan; and there are 516 PPP demonstration projects in this year with investment amount of 117 million yuan.
By now, the NDRC has introduced 3 batches of PPP projects with investment amount of 6.37 trillion yuan. Relevant experts indicated that both the number of total projects and projects with contract signing keep rising under the background that many policies were introduced in October. By the end of October, 10,685 projects with investment amount of 12.73 trillion yuan were recorded in national PPP comprehensive information platform. PPP with Chinese characteristics embraces great-leap-forward development. It can be known from the data that China has become the world’s largest PPP market in less than 3 years. It is expected that investment amount of PPP projects to be implemented in 2017 may be 3.8 trillion yuan, which will reach a peak.
Fixed-asset investment amount to hike in 2017
Social security projects to see huge potential
The Central Economic Work Conference requires that China’s economic development should make improvement in stability next year. Wu Weihai, researcher and executive director of International Cooperation Center of the NDRC said to a journalist of Securities Daily that adhering to content of the Central Economic Work Conference, governmental investment may focus on social security projects which are closed with national economy and the people's livelihood, such as social insurance, medical treatment, education, ecological environmental governance, and public infrastructure projects like urban railway system and energy resource supply.
Wu expressed that fixed-asset investment might be made in infrastructure and major transportation projects in urban and rural areas and significant projects or pillar industries based on supply-side structural reform, such as transformation of traditional manufacturing, technical reform, development of new energy, new material and other strategic emerging industries, R&D of advanced technologies in aerospace and intelligent robot fields and environmental governance projects including air quality and soil remediation.
“In terms of fixed-asset investment in central and regional governments, due to direct and indirect influence from the state’s monetary policy and fiscal policy in 2017, fixed-asset investment scale in many places will keep necessary and moderate growth and total investment amount in 2017 will move up.” Wu told the journalist.
Curb real estate bubble
Investment growth in real estate expected to reach 5 percent in 2017
Xu Guangrui, director of the Institute of Industry Research under China Fortune Land Development Co., Ltd., remarked during his interview with the Securities Daily that on the whole, fixed-asset investment growth in China will not see large decline and is expected to reach an annual growth around 8 percent in 2017.
Xu indicated that considering that the state will strive to achieve substantial progress in “cutting overcapacity and excess inventory, deleveraging, reducing costs, and strengthening points of weakness”, curb real estate bubble, and prevent big rise and fall of housing price in 2017, investment growth in the real estate industry and manufacturing industry is expected to reach around 5 percent and 4.5 percent, respectively. In the meantime, infrastructure will continue to play a main role in stabilizing investment and growth. According to documents released in 2016, investment growth in infrastructure will be maintained at around 20 percent and the total scale is expected to record around 16 trillion yuan in 2017.
“Generally speaking, efforts must be made from four aspects to boost investment and transition of China’s industries. Firstly, give full scope to the demonstration and leverage role of governmental investment, and improve the government’s guiding ability. Secondly, create a sound investment environment, strengthen the protection over property right, and enhance the confidence of private capital in investment. Thirdly, reinforce supervision over investment capital, and improve investment efficiency. Fourthly, make full use of financial means, effectively supply investment capital in key areas through multiple ways with bonds and stocks included, and boost the development and expansion of strategic emerging industries”, says Xu.
By Jennifer Lu & Vanessa Chen