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Chinese provinces line up for stimulus projects
2008-11-23
BEIJING - China's provinces have drawn up long wish lists for roads and other projects since Beijing unveiled its economic stimulus plan, state TV said Sunday, indicating local leaders are rushing to take advantage of a new willingness to spend amid the global economic crisis. Provincial officials had been under orders the past three years to curb building in an effort to cool an investment boom that regulators worried might ignite a surge in inflation or cause a debt crisis. Spending proposals announced over the past week by provincial governments totaled 10 trillion yuan, or about $1.4 trillion, China Central Television reported. It provided few details and gave no indication how much the central government might approve. Beijing's stimulus plan, announced Nov. 9, aims to boost consumer spending to reduce China's reliance on the cooling global export market. The program is valued by the government at 4 trillion yuan and calls for higher spending on highways and other construction, social programs and tax cuts. The Nov. 9 announcement electrified Chinese investors and briefly boosted global stock markets ahead of a meeting of leaders last weekend in Washington to discuss a response to the financial crisis. But as details were released, it became clear the plan included less new spending than initially thought. The key to the national package's success will be its ability to reassure consumers, which makes its emotional impact as important as its actual size and gives Communist leaders an incentive to embellish figures for a dramatic price tag Although much of spending was already planned before the global slump, provincial leaders are getting in their bids. "Within a week, the governments of various provinces announced massive-scale investment blueprints," CCTV said. "Based on a rough calculation, the current total investment by all the provinces and cities has already exceeded 10 trillion yuan." Local leaders apparently hope to resurrect at least some previously canceled or stalled projects. But a newspaper, 21st Century Business Herald, said many of the projects listed already are under construction or have been under discussion for some time. The biggest proposal came from Yunnan province in the southwest, which wants to spend 3 trillion yuan over the next five years, the report said. The booming southeastern province of Guangdong proposed 2.3 trillion yuan in spending. CCTV didn't say if the local governments were proposing to finance the projects on their own or whether they needed money from Beijing. On Sunday, Premier Wen Jiabao, China's top economic official, called for companies to boost confidence and adapt to market changes to weather the global crisis, the official Xinhua News Agency reported. "Enterprises must have confidence for them to stabilize market expectations. Confidence is what they need to tide over the difficult times," Wen was quoted as saying during a tour of businesses in Shanghai and the eastern province of Zhejiang. Also Sunday, central bank Gov. Zhou Xiaochuan called for stepped-up efforts to carry out the government's pledge of more financial support to small- and medium-size companies and to improve environmental protection and rural development, Xinhua said. China's economic growth slowed in the latest quarter to an annual rate of 9 percent, down from last year's 11.9 percent. That would still be the highest of any major economy, but Communist leaders are alarmed at the rapid drop in growth and worry that layoffs could trigger unrest. Exporters say a sharp drop in new overseas orders already has led to factory closures and layoffs. Analysts say Beijing's stimulus package includes projects already covered by its five-year plan that runs through 2010. But Frank F.X. Gong, chief regional economist for JP Morgan & Co., says it does call for some 1.6 trillion yuan in new spending. The central government says it will provide 1.8 trillion yuan of the 4 trillion yuan stimulus spending, while local governments and state companies supply the rest. China's government ran a surplus of 1.2 trillion yuan in the first half of the year, which could help finance some of the extra spending. In the TV report, Zhang Liqun, a researcher at a think tank attached to the Cabinet's planning agency, said the provinces' proposed spending was mainly for railways, roads, ports and low-income housing. "It will have quite an obvious effect on the country's medium- and long-term economic development," Zhang told CCTV, but he cautioned that China must watch out for signs of overheating in the economy.
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