Very soon, China will have our problems too..
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China toughens checks on projects to slow investments
Under new rules, work could be halted if standards are not up to
par
Aug 04, 2006
The Straits Times
SHANGHAI - CHINA'S central government has ordered the provincial
authorities and state-owned lenders to sweep through the country's
industrial projects, stepping up its move to curb excess
investments and cool the economy's growth.
The government will order work to stop or be postponed if they fail
to meet standards for loans, safety or environmental protection,
according to the rules announced yesterday.
'Assuming half of these projects are cleaned up, this implies that
20 per cent of the new projects under review could be suspended or
postponed,' said Deutsche Bank economist Ma Jun.
The last time China carried out a similar review, between April and
September 2004, the government stopped construction of 427 projects
with total investment of 43 billion yuan (S$8.64 billion) and
suspended 2,882 projects with investment of 674 billion yuan,
according to the National Development and Reform Commission
(NDRC).
The latest month-long inspection covers every project that exceeds
100 million yuan in investments and steel mills, cement factories,
vehicle assemblies, power plants and aluminium smelters that exceed
30 million yuan in value, according to an Aug 1 statement by the
NDRC, placed on its website yesterday.
The crackdown is aimed at finding 'malpractice in projects that are
scheduled to start in the first half, which may have hindered the
central government's plan' to curb fixed-asset investments and cool
the expanding economy, according to the statement by China's top
planning agency.
China's economy, the world's fourth largest, grew 11.3 per cent in
the second quarter, the fastest pace since 1994, raising concerns
that excess funds may stoke inflation.
Fixed-asset investment in China's towns and cities jumped 31.3 per
cent in the first half from a year earlier, accelerating from 30.3
per cent in the first five months.
The increase may slow to between 20 per cent and 25 per cent in the
second half, according to the NDRC.