China reaffirms pledge to better balance growth

BEIJING, Mar 20 (Reuters) China will continue to rein in fixed-asset investment to help head off serious overcapacity while improving public services to spur consumption, the country's development chief said in remarks published on Monday.

Ma Kai, head of the National Development and Reform Commission, reinforced Beijing's goal of boosting consumption to help tilt economic growth away from investment and exports amid concerns about overcapacity and upward pressure on the yuan.

''First of all, we need to continue our efforts to control rapidly growing investment,'' the official Financial News quoted Ma as telling an economic forum on Sunday.

''Part of our country's massive investment is wasteful and rapid investment expansion in such industries as steel and aluminium has created serious overcapacity,'' Ma said.

Meanwhile, the government needed to tackle some basic problems hampering its attempt to boost consumption, such as education, medical care and pensions, Ma said.

Ma earlier this month set a goal of lowering overall fixed-asset investment growth in 2006 to 18 percent from last year's 25.7 percent through tighter funding and planning.

China's urban investment rose 26.6 percent in January and February, showing how capital spending remained a major driver of growth as the government stepped up spending in bottleneck sectors, including railways and electricity.

The authorities have taken a slew of measures since 2003 to rein in overinvestment in sectors such as steel, cement and aluminium where gluts are driving down profit margins and raising fears of a new crop of bad loans.

REUTERS VJ RAI0658