The Chinese government has blamed the Q1/2006 high GDP growth of 10.2% year-over-year to higher investment. The government said that the government would make efforts to cool down the fixed asset investment growth, which is mainly responsible for the high economic growth. During the first quarter, fixed-asset investment in urban areas increased 29.8% y/y, which substantially above the government's target of 8% y/y growth.
In March 2006, fixed-asset investment increased 32.7% y/y. In March, the National Development and Reform Commission said that it aims to slow investment growth to rougly 18% in this year. The National Bureau of Statistics' Spokesman Zheng Jingping said that the rapid growth of investment in fixed assets and of bank loans needs attention.
This month, Premier Wen Jiabao said that manufacturing investment needed to be curbed, as it produces an oversupply of goods and strains infrastructure and supplies of resources. The government is also trying to avoid a sudden slowdown by shifting its focus to increasing incomes and consumer spending.