China's top economic planning agency may have approved investment projects worth CNY 7 trillion ($1.11 trillion) in the May to September period, to prevent the deepening of the economic slowdown, a Tsinghua University scholar said.

 

The National Development and Reform Commission restarted approving large projects in the last five months, said Wei Jie, a professor with the Economic and Management School of Tsinghua University.

 

The huge stimulus package may lead to excess production capacity and add inflation pressure, which would be similar to the consequences of the gigantic money injection from 2009 to 2010, Wei said.

 

The sharp decrease of investments from Oct 2011 to March this year was one of the most important reasons behind the slowing economic growth, Wei said.

 

In 2009, investments contributed 67 percent of the country's GDP, while in the first quarter of this year, the proportion declined to 17 percent, according to Wei.

 

"In the next decade, Chinese economic development will still depend on the growth of investment," Wei said, but the contribution of the investment to the total GDP should be between 20 percent and 30 percent.
 

 

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