China's Central Bank Warns of Possible Rebound in Fixed Investment and Inflation

China's central bank has sounded a warning about a potential rebound in fixed investment and continued inflationary pressures, while pledging to maintain a prudent monetary policy in 2023. The People's Bank of China (PBOC) cited rapid growth in fixed investment as a major symptom of economic overheating, with a surge of 25.8% last year to 7 trillion yuan ($840 billion). Despite efforts to contain the growth, the bank notes that there is still strong investment impetus, and pressure for an investment rebound persists.

Key Takeaways:

• The People's Bank of China (PBOC) warned of a possible rebound in fixed investment, citing rapid growth of 25.8% last year to 7 trillion yuan ($840 billion).
• Fixed investment remains a major symptom of economic overheating, with a strong investment impetus still present.
• Inflationary pressures persist, with China's consumer price index (CPI) expected to grow by 4% in 2023.
• Property prices rose by 9.7% last year, with nine cities reporting increases of over 10% for the year.
• The PBOC has taken macro economic measures since 2003 to contain the rapid increases in fixed investment and harness accelerating prices.
• Initial achievements have been claimed, with the growth in real estate investment slowing down to 28.1% last year, from a staggering 50.2% a year earlier.

Statistics:

• China's fixed investment surged by 25.8% last year on a year-on-year basis to 7 trillion yuan ($840 billion).
• The growth in real estate investment slowed down to 28.1% last year, from a staggering 50.2% a year earlier.
• Property prices rose by 9.7% last year, while nine cities reported increases of over 10% for the year.
• China's consumer price index (CPI) rose by 3.9% last year and is expected to grow by 4% this year.

Sources:

• Asia Pulse, Beijing, Feb 25
• People's Bank of China (PBOC) annual monetary policy report (date not specified)