14:04
societynews[dot] org
BEIJING (Reuters)-China can rein in plans to invest heavily in seven new strategic industries, including power rail and high-speed wind projects back at the forefront of the industries that suffer from problems of old-fashioned, as corruption and overcapacity, said sources of resizing.
Beijing originally planned to invest up to $ 1.5 billion over the next five years in seven sectors, hoping it would grow into a pillar of economic growth and help to shift the second largest economy in the world away from a focus on producing cheap goods.
The pullback on spending stems in part from worries about corruption in high speed rail project in the country and concerns of overcapacity in wind power sector, said two sources with ties to the Chinese Communist Party leadership and knowledge of the plan.
"The Government is now reviewing the new floor of the seven strategic areas," a source told Reuters, requesting anonymity because he was not allowed to speak to reporters.
"The scale (size) is still under deliberation," added the source.
Beijing has long used infrastructure spending to create jobs and economic activity, most recently, tapping into the coffers of the Government to stave off the effects of the global financial crisis.
While high rates of fixed asset investment have helped to maintain strong growth, some economists, such as Nouriel Roubini, have argued that China's current levels of investment are unsustainable.
These days, China is most concerned about taming inflation and maintaining a mountain of debt accumulated by local governments, and provincial estimates of auditor of State of the country to 10.7 billion yuan ($ 1.65 billion).
Strategic industries cover alternative energy, production of high-end equipment, biotechnology, information technology of new generation, alternative fuel cars and energy-saving technologies and environmental protection.
Analysts welcomed the news, which could mean fewer loans by local governments and faster consolidation of sectors like wind power.
"A lot of these projects is already in issue on account of their liability (debt) and safety standards," said Kevin Lai, an economist with Daiwa in Hong Kong.
"Is the question that must be asked: is (expansion of investment-driven) the kind of growth that China really wants?"
TROUBLE IN HIGH SPEED TRAIN
Lower spending on high-speed rail is directly related to the departure of the railway Minister, sacked this year under a cloud of corruption, the sources said.
The former Minister, Liu Zhijun, drove high-speed rail expansion in China, until it was removed in March for "violations of discipline," a charge commonly used to denote the corruption. There were no further details.
Premier Wen Jiabao in April warned against corruption linked to major projects, saying "cadres, their families and staff as well as heads of State-owned enterprises, financial institutions and academic institutions of the State not to intervene or manipulate tenders in any form."
The Ministry has denied any plans to cancel or downgrade railway lines. But the new Minister Sheng Guangzu put investment in railway infrastructure in 2011 to 600 billion yuan (92 billion dollars), compared to the pledge of Liu's 700 billion yuan.
Mandate of Liu saw the rapid development of high-speed railway network of China pushing the bullet train Japan's plans to become, at 8,400 km (5,000 miles), the longest in the world. Liu had planned to Boost the network of 50,000 kilometers (30,000 miles) by 2015. Sheng said the official people's daily that it would build a slightly more modest 45,000 miles.
The Ministry, already deep in debt, expects to spend another 2.8 billion yuan between now and 2015. But some analysts believe that the surge of investment has left with an unsustainable debt burden.
Even so, China is unlikely to dispense with high-speed rail.
"The Central Government is of the opinion that building high-speed rail will still (but) investment will be uniformly distributed, the pace of construction will be slightly slower and more thorough research will be," said Yan Dong, a researcher at the State-linked Institute of comprehensive transportation.
PULLBACK ON WIND ENERGY
Also to be flayed back are plans for wind energy. Shao Bingren, vice President of the Commission for a top advisory body, warned that the wind energy industry is already suffering from overcapacity. The State of design national development and Reform Commission and the national energy Administration to build seven wind power plants in Western China, with a generating capacity of at least 10 million kilowatts each, according to the plans of the country's five-year XII. But critics say that these projects could be recommended-requiring heavy expenditure in power grids, because the wind and solar power plants are located mainly in Western regions, inland, while the production bases are concentrated in remote coastal provinces. "Many investors and local governments are not mentally prepared and new energy thinks is all-purpose, clean, conforms with the requirements of the country and very profitable" Shao wrote.
A pullback on investments in the field of wind would be positive for the major turbine makers, said Peter Yao BOCI, research analyst in Hong Kong.
"If you raise the bar and consolidate the industry actually is positive for the protagonists as Goldwind (2208.HK) and the China high speed transmission (0658.HK)," he said.
"But for Longyuan (0916.HK) is of course negative, as developers of wind farm will face the higher costs to develop new business."
Longyuan actions fell more than 5 percent on Thursday while Goldwind shed 2.2 per cent and the CHST fell 1 percent. Currently, the value-added output of seven strategic sectors together account for about 2 percent of gross domestic product. The Government has said it wants them to build the 8 percent of GDP in 2015 and 15 percent by 2020.
This percentage can fall under plans scaled back.
($ 1 = 6,465 yuan)
(Additional reporting by Xin Zhou, Jenny On Master, Farah and Gui Qing Koh; Brian Rhoads and Editing by Lincoln feast)
Posted in: 
0 comments:
Post a Comment