Steadily Increasing Efficiency of Investment in Fixed Assets and Continuously Enhanced Key Effect of Optimization of the Supply Structure

2023-01-11 14:18:15

Steadily Increasing Efficiency of Investment in Fixed Assets and Continuously Enhanced Key Effect of Optimization of the Supply Structure

—Series Report VIII on the Economic and Social Development Achievements since the 18th CPC National Congress


Source: National Bureau of Statistics 

Published on: September 23, 2022 Characters: 3901

 

Since the 18th CPC National Congress, under the strong leadership of the CPC Central Committee with Comrade Xi Jinping at its core, all regions and departments have gained an accurate understanding of the new stage of development, fully applied the new development philosophy, and accelerated the efforts to create a new development pattern to promote high-quality development, steadily advance all work in the field of investment in fixed assets, step up efforts to increase effective investment, continuously expand the scale of investment and improve the investment structure, achieving fruitful results in investment development. More significant progress of investment has been made in stabilizing growth, reinforcing weak links, strengthening areas of weakness, and boosting growth drivers, playing a more crucial role in promoting economic growth and improving the supply structure.

I. Stable Growth of Investment in Fixed Assets to Give a Strong Impetus to High-quality Economic Development

Since the 18th CPC National Congress, China has focused on high-quality development and comprehensive improvement of quality and efficiency in the field of investment in fixed assets, maintained a steady growth in total investment, and continuously expanded the construction scale, effectively playing a key role of investment in expanding domestic demand and stabilizing economic growth.

(I) A steady growth in investment

From 2013 to 2021, the cumulative investment in fixed assets of the whole society [1] reached RMB 409 trillion, with an AAGR of 9.4%; the total investment in fixed assets of the whole society increased from RMB 28.2 trillion in 2012 to RMB 55.3 trillion in 2021. Among them, the cumulative investment in fixed assets (excluding those invested by farmers) from 2013 to 2021 was RMB 399.9 trillion, with an AAGR of 9.7%.

(II) The continuous expansion of construction scale

In 2021, the scale of construction projects nationwide reached RMB 148.9 trillion, 3.5 times that of 2012; the scale of newly started projects reached RMB 37.0 trillion, 2.3 times that of 2012.

(III) Increased investment has effectively supported steady economic growth

In terms of the contribution of investment to economic growth, the national capital formation rate averaged 43.9% annually from 2013 to 2021, featuring a sound interaction between effective investment and consumption upgrading. The gross fixed capital formation (GFCF) in 2021 contributed 1.1 percentage points to GDP growth, and the investment in fixed assets played an effective support role to the stable growth of the economy.

II. Optimization and Upgrading of Industrial investment to Show a More Reasonable Investment Structure

Since the 18th CPC National Congress, China has continued to promote supply-side structural reform in the field of investment in fixed assets, kept consolidating the foundation of agricultural investment, accelerated the transformation and upgrading of industrial investment, maintained a rapid growth of investment in the service sector, and promoted a sustained optimization of the investment structure.

(I) A more solid foundation of agricultural investment

From 2013 to 2021, China's primary industry investment grew at an average annual rate of 13.9%, 4.2 percentage points higher than total investment. Among them, the investment in agriculture and husbandry grew at an average annual rate of 18.0% and 20.7%, respectively. Since 2012, the proportion of investment in primary industry has steadily increased. In 2021, the investment in primary industry accounted for 2.6% of total investment, an increase of 1.0 percentage points over 2012. The increased investment in the primary industry has not only improved the efficiency of agricultural production, but also laid a solid foundation for China's modernization drive.

(II) The accelerated transformation and upgrading of industrial investment

From 2013 to 2021, China's secondary industry investment grew at an average annual rate of 5.9%, of which, industrial investment grew at an average annual rate of 7.2%, and industrial technology reform investment grew at an average annual rate of 8.6%. In 2021, investment in technological transformation accounted for 36.2% of industrial investment, 3.8 percentage points higher than in 2012, and became the main driver of industrial investment growth. Investment in equipment manufacturing industries, which represents advanced productive forces, grew faster than that in traditional raw material manufacturing industries from 2013 to 2021, at an average annual rate of 7.3%, 3.1 percentage points higher than that in raw material manufacturing.

(III) Rapid development driven by investment in the service industry

From 2013 to 2021, China's tertiary industry investment grew at an average annual rate of 8.9%. In 2021, investment in the tertiary industry accounted for 66.6% of all investment categories, 4.9 percentage points higher than that in 2012, and 35.9 percentage points higher than that in the secondary industry. The development and growth of tertiary industry investment has significantly increased its share in the national economy, further demonstrating the important role of service industry investment in economic growth.

III. Collaborative Promotion of Regional Investment to Boost Coordinated Economic Development

Since the 18th CPC National Congress, all regions and departments have earnestly implemented the decisions and plans of the CPC Central Committee and the State Council on economic and social development, constantly expanding and deepening the overall strategy for regional development, which conveys the guideline of "the large-scale development of the western region, the full revitalization of the northeastern region, the rise of the central region, and the trailblazing development of the eastern region", and continuously improving the regional coordination and interaction mechanism.

(I) The advancement of investment in the four regions in tandem

From 2013 to 2021, investment in the eastern region grew at an average annual rate of 7.9%, accounting for 44.4% of national investment in 2021, down 0.7 percentage points from 2012 [2]; investment in the central and western regions respectively grew at an average annual rate of 10.8% and 8.9%, accounting for 26.2% and 26.3% of national investment in 2021, 5.4 and 1.8 percentage points higher than that in 2012; and investment in northeast China has made new progress in recent years, with a growth rate being 1.4 and 0.8 percentage points higher than that of national investment in 2020 and 2021, respectively.

(II) Coordinated progress made in the investment in the Beijing-Tianjin-Hebei Region, the Yangtze River Delta, and the Guangdong-Hong Kong-Macao Greater Bay Area

Since the 18th CPC National Congress, new regional growth has been booming. From 2013 to 2021, the investment in the three provinces and municipalities of Beijing, Tianjin and Hebei grew at an average annual rate of 5.0%, promoting the coordinated development of Beijing, Tianjin and Hebei with orderly industrial upgrading and relocation. In 2021, the investment in high-tech manufacturing in Beijing and Tianjin increased by 99.6% and 22.5%, respectively, compared with the same period last year, and the investment in information transmission, software and information technology services in Hebei increased by 22.8%. From 2013 to 2021, investment in the three provinces and one city in the Yangtze River Delta grew at an average annual rate of 8.6%. The integrated development of the Yangtze River Delta is progressing steadily, with improved infrastructure connectivity and a modern comprehensive transport system basically in place. The Guangdong-Hong Kong-Macao Greater Bay Area is also developing vigorously. From 2016 to 2020, the cumulative investment in fixed assets [3] in the Greater Bay Area has exceeded RMB 2 trillion, with an AAGR of 11.5%. Major infrastructure projects such as the Hong Kong-Zhuhai-Macao Bridge and the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong high-speed railway have been successively completed.

(III) High-quality development promoted by investment in the Yangtze River Economic Belt and the Yellow River Basin

Thanks to the development strategy of the Yangtze River Economic Belt, investment in the 11 provinces and cities along the belt grew at a combined average annual rate of 11.4% from 2013 to 2021, 1.7 percentage points higher than the national growth rate; and in 2021, investment in the Yangtze River Economic Belt accounted for 44.3% of the national investment, 8.0 percentage points higher than 2012 [4]. Ecological protection and high-quality development have been steadily promoted in the Yellow River Basin, with a combined AAGR of 7.8% in investment in the nine provinces and regions of the Yellow River Basin from 2013-2021. In recent years, the Yellow River Basin has optimized and adjusted the distribution of regional economy and productivity, and the investment growth rate in the Yellow River Basin in 2020 and 2021 was 1.1 and 0.7 percentage points higher than the national rate, respectively.

IV. Orderly Promotion of Investment in Infrastructure, with Remarkable Results in the Investment in Livelihood-related Industries

Since the 18th CPC National Congress, all regions and departments have continued to advance the main task of supply-side structural reform and increased investment in infrastructure, making significant achievements in major transportation, water conservancy, and communications projects, as well as in real estate development and social sectors.

(I) Investment in transportation and water conservancy projects has been vigorously promoted

From 2013 to 2021, China's infrastructure investment grew at an average annual rate of 12.0%, 2.3 percentage points higher than that of all investment categories; accounting for 20.5% of total investment in 2021, 5.7 percentage points higher than that in 2012. From 2013 to 2021, investment in road transport and air transport grew at an average annual rate of 13.4% and 8.4% respectively; and investment in the water conservancy management grew at an average annual rate of 9.3%, with the Wudongde and Baihetan hydropower stations being connected to the grid for power generation, the investment in the governance of major rivers and construction of weak links in flood control increasing year by year, and the capacity to ensure water security in key river basins being significantly enhanced.

(II) A significant increase in investment in information and communications and public facilities

From 2013 to 2021, investment in China's information transmission industry grew at an average annual rate of 13.7%, deepening the "Broadband China" strategy, and achieving new progress in major projects of next-generation information infrastructure. By the end of 2021, the number of 5G base stations in China reached 1.425 million, with 5G networks covering all prefecture-level cities, gigabit optical networks covering 300 million households, and broadband being available in 512,000 administrative villages across the country. From 2013 to 2021, investment in public facilities management grew at an average annual rate of 11.4%, making steady progress of the new-type urbanization. As of 2021, a total of 23,000 urban renewal projects have been implemented in 411 cities, with a total investment of RMB 5.3 trillion [5]. Weaknesses in urban functions have been shored up rapidly, and urban safety resilience has been further improved.

(III) Higher-quality people's life promoted by investment in real estate and social sectors

From 2013 to 2021, China's investment in real estate development totaled RMB 103 trillion, with an AAGR of 9.2%. In 2021, investment in real estate development accounted for 27.1% of total investment, 0.7 percentage points higher than in 2012; the floor space of buildings under construction was 9.75 billion square meters, an increase of 70.1% over 2012; the per capita living space for urban and rural residents reached 41.0 square meters and 50.2 square meters in 2021, an increase of 8.1 square meters and 13.1 square meters over 2012, respectively. At the same time, China's investment in the social sector has maintained double-digit growth, weak areas such as public health and people's wellbeing have been strengthened, facilities in education and health have been significantly improved, and the quality of people's lives has been constantly improved. From 2018 to 2021, investment in social sectors grew at an average annual rate of 11.9%, 7.1 percentage points higher than that of all investment categories. Among which, investment in education grew at an average annual rate of 12.1%, laying a solid foundation for universal access to compulsory education and higher education; and investment in health increased by an average of 17.4% annually, significantly improving the quality of urban and rural medical services and medical security. In particular, since the outbreak of COVID-19, investment in health has increased by more than 20% for two consecutive years, laying a solid foundation for consolidating the results of pandemic prevention and control.

V. Growing Endogenous Momentum, with Further Development of Investment in Accumulated New Growth Drivers

Since the 18th CPC National Congress, all regions and departments have continued to promote green and low-carbon investment, strengthened innovation-driven development, deepened the reform of "streamlining administration, delegating power, strengthening regulation, and improving services" , improved the business environment, and actively fostered new growth drivers to drive investment development.

(I) A new trend - green and low-carbon investment

From 2013 to 2021, investment in ecological protection and environmental management grew at an average annual rate of 22.7%, with intensified efforts in ecological governance, increasing investment in environmental infrastructure, and effective achievements in controlling control pollution sources. In 2021, China's investment in hydroelectric power generation and solar power generation grew at a growth rate of 22.5% and 48.7%, 17.3 and 43.4 percentage points higher than that of the total investment in power production, respectively; the installed power generation capacity of renewable energy reached 1.063 billion kW, accounting for 44.8% of the total installed capacity; and the utilization of wind power and photovoltaic power generation reached 96.9% and 98%, respectively, making new progress in clean energy accommodation.

(II) Many highlights of investment in new growth drivers and industries

From 2013 to 2021, China has always placed scientific and technological innovation at the core of national development. Investment in scientific research and technology services maintained rapid growth, with an AAGR of 12.1%. Investment in high-tech industries grew at an average annual rate of 16.3%. Among which, investment in high-tech manufacturing industry grew at an average annual rate of 15.7%, 8.7 percentage points higher than total manufacturing investment; and investment in high-tech services grew at an average annual rate of 17.3%, 8.4 percentage points higher than investment in all service sectors.

(III) The accelerated formation of a diversified investment landscape with private capital

From 2013 to 2021, China's private investment grew at an average annual rate of 8.9%, accounting for more than half of investment in all categories, with the proportion reaching 56.5% in 2021, becoming an important driving force for investment growth. During this period, as the reform of the investment and financing systems deepened, the "Negative List" system was implemented, the business environment continued to improve, featuring a pattern of "a hundred flowers blossoming" in investment under different forms of ownership. In 2021, investment by enterprises in Hong Kong, Macao and Taiwan increased by 16.4% year on year, while investment by foreign enterprises increased by 5.0%, both growing faster than all investments in fixed assets. At the same time, with the deepening of the reform of the commercial system, new industries, new business forms and new business models have been developing vigorously, resulting in the emergence of a large number of small and micro enterprises, and promoting the growth of investment in small and micro enterprises. From 2016 to 2021, the investment in small and micro enterprises [6] grew at an average annual rate of 7.5%.

Since the 18th CPC National Congress, China has undergone many positive changes and made brilliant achievements in the field of investment in fixed assets. In the face of the current complex and severe situation at home and abroad, we must rally more closely around the CPC Central Committee with Comrade Xi Jinping at its core, adhere to the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully, accurately and comprehensively implement the new development philosophy, accelerate the creation of a new development pattern, unswervingly implement the strategy of expanding domestic demand, properly deal with various risks and challenges, give full play to the key role of investment in optimizing the supply structure, actively expand effective investment, continue to optimize the investment structure, and constantly improve the quality of investment, so as to provide strong support for high-quality economic and social development.

Note:

[1] Except for China's fixed asset investment, the following investment statistical data in this paper are of "investment in fixed assets (excluding those invested by farmers)".

[2] The proportion of regional investment in eastern, central, western and northeastern regions in the national investment is calculated by taking the total investment in fixed assets (excluding those invested by farmers) of 31 provinces (autonomous regions and municipalities directly under the central government) as 100.

[3] The investment in fixed assets of the Greater Bay Area are the sum of that of the Pearl River Delta, Hong Kong and Macao, with the nine PRD municipalities counting in "investment in fixed assets", and Hong Kong and Macao counting in "gross fixed capital formation".

[4] The proportion of regional investment in the Yangtze River Economic Belt in the national investment is calculated by the total investment in fixed assets (excluding those invested by farmers) of 31 provinces (autonomous regions and municipalities directly under the Central Government) as 100.

[5] Data from the Ministry of Housing and Urban-Rural Development of the People’s Republic of China.

[6] The survey includes the investment sample survey in four fields, namely industries below designated size, non-qualified construction industry, wholesale and retail, accommodation and catering industries below designated size, and service industry below designated size, as well as the separate investment sample survey of newly registered small and micro enterprises.