China to review major capital projects



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China has ordered an urgent nationwide review of major capital projects, in a bid to weed out illegal projects to slow down investment and avoid an overheating economy.
A document jointly issued by the National Development and Reform Commission, the Ministry of Land and Resources and three other central departments has ordered cross-checks on all capital projects with an investment of over 100 million yuan (12.5 million U.S. dollars) that were started in the first half of this year.
The projects will be examined to see whether they are in compliance with government's industrial policy, or have been duly approved by authorities.
Investors will also have to prove that they have acquired their land or bank loans in accordance with set rules, and that the feasibility reports and environmental impact assessments have been properly done and approved.
Figures from the National Bureau of Statistics (NBS) show China's urban fixed asset investment surged 31.3 percent in the first half year, the highest for such a period in three years. Planned investments in new projects soared by over 50 percent in eight provinces.
A survey of major capital projects in some regions revealed that 40 percent of the projects were illegal in some aspect.
Determined to prevent the economy from overheating, the government is cracking down on investors and local governments acting illegally.
The new document names steel, electrolyte aluminum, charcoal, automobiles, cement, electricity, textile and other industries as the main targets of the nationwide review.
It will be coordinated by local reform and development commissions, and involve authorities in land supervision, environmental protection, industrial safety, and banking.
Projects with problems would be stopped and allowed to resume only after the problems had been rectified, the document said.


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Hi Lane,
In a bid to curb overheated investment, the State Council has given local governments one month to report new industrial projects that have been approved against national rules.
The ultimatum aims to halt some projects that fail to meet industry policies, land and credit approval procedures and environmental regulations, said Zhang Zhiqiang, a senior official in charge of fixed-assets investment with the National Development and Reform Commission (NDRC),the top economic planner.
The commission on Friday unveiled the central government circular, which ordered local authorities to self-examine projects launched between January and June. Local authorities should report their final results by the end of August.
"We are going to punish those involved in malpractices," said Zhang, deputy director of the commission's Department of Fixed Assets Investment.
Zhang said that projects with overseas investment should also be examined as domestic ones.
According to the circular, the review covers every project with an investment of more than 100 million yuan (US$12.5 million). For steel mills, cement factories, vehicle assembly plants, power stations and aluminum smelters, the benchmark is 30 million yuan (US$3.7 million).
NDRC spokesman Han Yongwen said excessive investment in fixed assets remains a large problem for the economy.
Nearly 100,000 new projects began in the first six months of this year, 20,000 more than during the same period last year. The investment spree pushed China's economy to grow by 10.9 per cent during the period, the highest rate since 1995.
The sizzling investment rise has resulted in excessive use of land and credit loans. Government figures showed that loans reached 2.14 trillion yuan (US$268 billion) in the first half, accounting for 85.7 per cent of the government's whole-year budget.
A sample survey by the commission also found 40 per cent of the new projects have violated regulations on land use, environmental impact assessment or approval procedures.
In the meantime, although the government planned to cut energy consumption per unit of GDP by 4 per cent from that of 2005, the actual figure rose by 0.8 per cent in the first half of the year.
The central government is worried about the fast growth and rising energy use, with Premier Wen Jiabao recently urging all local governments and officials to "unify thinking and action" in curbing the trend.
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