China’s Entrepreneurs Reluctant to Invest in Restructuring Economy
China is expected boost public investment to offset the effect of very cautions private capital investment, which has been discouraged by uncertainty during the ongoing economic restructuring.
“Given the slowdown, the government should begin to invest more, partly through special construction funds, to stimulate investment and stabilize the economy,” Zhang Yong, deputy head of the National Development and Reform Commission, China’s top economic planner, said during a press conference Monday.
China’s government investment will continue to focus on infrastructure construction and projects that affect quality of life, he said.
Zhang’s remarks came as Chinese entrepreneurs continue to be reluctant to invest during the continuing economic downturn.
Private investment increased only 2.8% in 1-H of this year, down from 3.9% growth in the 1st 5 months and 5.7% in Q-1, official data showed.
In the past decade, private investment saw strong Y-Y growth of over 20%.
“As private capital is concentrated in traditional industries, it needs more time for investors to find new bright spots in the economy during the current economic transformation,” Zhang said.
In response, China has channeled more money into infrastructure improvement, with growth of investment in the sector accelerating to 20.9% in 1-H of this year.
In addition, the government will establish a 3-year investment plan and a project reserve pool to improve public investment management, according to a central document released last week.
Stay tuned…
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Paul Ebeling
