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.