Monday, November 24, 2008

Yuan Watch : Capital chasing projects

By Cheng Yunjie and Wang Yaguang 2008-11-25

For years, officials in China's lesser-developed areas felt Beijing had been stingy in financing local projects. But the need to boost China's economy in the global crisis means there's a lot money to be had and a boom is expected.Everyone is lining up with projects, but the government' isn't just handing out cash and doesn't want a reckless rush to invest. Industrial restructuring and targeted investment are essential.All projects nationwide are being strictly scrutinized. High-polluting and high resource-consuming projects are unlikely to get the go-ahead. Capital-strained projects already underway and those that can give a quick forceful boost to the economy are high on the list. That points to infrastructure and real estate.
"The situation reversed completely in less than two weeks. It used to be projects waiting for capital, now it's the other way around," said Qiu Yunyang, chief of the Development and Reform Bureau of Hubei Province's Zaoyang City.Qiu .
Economist Fan Gang, a member of the central bank's monetary policy committee, said the economy faces "an unprecedented slowdown," and estimated next year's growth below 8 percent.As consumption takes longer to grow, China's government has turned to the same tool it employed in the 1997 Asia financial crisis: enhancing investment.But today it's not okay to invest in polluting, excessive energy- and resource-consuming industries, and greater emphasis is placed on human welfare, said Qu Qiwen, an official with the Wuhan Commerce Bureau.

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