Provinces scale back 2014 investment targets

A highway bridge over the Xiangjiang River constructed in Changsha, central China's Hunan province. [By Long Hongtao Xinhua]

Many provincial-level governments have cut their 2014 growth targets for fixed-asset investment, a sign of increasing downward pressure and a shifting emphasis to the quality of growth rather than the scale.

Of the 28 provincial-level governments that have released their growth targets, 19 lowered or even cut their goals for fixed-asset investment. Only Guangdong and Yunnan provinces and the municipality of Tianjin raised their targets.

The largest reductions were in Jilin, Guizhou, Gansu and Xinjiang, which cut their target rates by five percentage points from last year.

Reduced investment targets go hand-in-hand with lower GDP growth targets for this year. Except for Guangdong, all other provincial-level governments that have released GDP growth goals have set lower targets or kept them unchanged from last year.

For years, fixed-asset investment has been the pillar of China's economic growth. The China Academy of Sciences has estimated that the ratio of capital formation to GDP climbed from 47.1 percent in 2012 to 55.2 percent in 2013. That means any slowdown in investment growth cuts into economic expansion.

"You've got to slow. Part of the reason is the already large numbers. You can't sustain a 10 percent growth rate forever. Part of the reason is the rebalancing from exports and production to domestic consumption," said Tim Craighead, director of Asian research at Bloomberg Industries.