Investments continue in China despite warning of the government
In
China,
investments in steel, electrolytic aluminum and cement sectors are reportedly still continuing despite the government's warning. As previously reported by SteelOrbis, Chinese government warned the authorities to slow down
investments in the aforementioned sectors.
The
investments are reported to have increased by 172.6% in the first two months of 2004 against the corresponding period of previous year.
The government states that although the demand is fairly high in these sectors, over-investment may cause problems in the long run.
According to the statement made by State Development and Reform Commission (SDRC),
China may produce 330 million tons of steel per annum in 2005, on the condition that the steel mills under
construction are completed, however this time demand may be insufficient. SDRC does not expect demand to reach 330 million tons in
China annually even by 2010.
Analysts claim that the strong demand and the support given by the local governments are the two major factors behind the skyrocketing
investments in the three sectors. The
investments of central government increased by 12.1% in the first two months of 2004, while the
investments of local government surged by 64.9% in the aforementioned period.
It is stated that, despite intervention of the government and the emergence of negative results for the economy of the country in the long run, the
investments will continue in
China.