FavorChina Will Reduce Investment in Seven Emerging Strategic Industries
Date:2011-07-11
Sources revealed that China would impose strict controls on its large-scale investment plans for seven emerging strategic industries including high-speed railway and wind power, in a bid to reduce the possibilities of corruption and overcapacity in high-end projects.
China previously planned to invest at most USD 1.5 trillion in these seven industries during the 12th Five-Year Plan period to establish them as pillar industries to drive economic growth, so as to change China's tradition of focusing on manufacturing cheap and low-end products.
The Chinese Government always invests in infrastructure construction to create jobs and promote economic activities. It used financial capital to curb the impact of the latest global financial crisis. Although China has successfully pulled through the financial crisis, the central government recently began to worry about the huge debts of local governments and has been trying to tame inflation. Some foreign economists believed there was a possibility that the Chinese economy might have a hard landing.
Two sources familiar with the situation said that the plan to decrease investment in high-speed railway was an outcome of the corruption scandal of the previous railway minister.
The Chinese Government has not yet published data on its future investment after deductions.
The above-mentioned strategic emerging industries include the manufacturing of high-end equipment, new energy, bio-technology, advanced information technology, new energy vehicles, energy conservation and environmental protection techniques.
China's former railway minister Liu Zhijun, a leader in the country's high-speed railway expansion, was removed from office this March for corruption.
According to China's new railway minister Sheng Guangzu, the country will invest RMB 600 billion in railway infrastructure construction this year. The figure was RMB 700 billion while Liu was in his post.
The new railway minister reduced the maximum speed limit for high-speed railway to 300 kilometers from 380 kilometers per hour planned by Liu. China's investment in railway infrastructure dropped by 16.9% year-on-year to RMB 42.4 billion in May.
Despite the above-mentioned adjustments, it is almost impossible for China to shelve its investment plan for high-speed railway.
"According to the central government, the construction of high-speed railway will continue, but maybe slowed down a bit and requires more adequate research," said an analyst at the Institute of Comprehensive Transportation of the National Development and Reform Commission.
National investment in wind power will also be reduced. The wind power industry is facing overcapacity, said Shao Bingren, Deputy Director of the CPPCC Committee of Population, Resources and Environment.
China will build seven ten-million-kilowatt wind power bases in the west, according to its 12th Five-Year Plan. However, some critics said the country should make more investment in power grid construction because most of its wind power and solar energy plants are located in the west and inland areas, while manufacturing is mainly carried out in Southeast China.
The seven emerging strategic industries account for 2% of China's GDP. The Chinese government had expected to raise the figure to 8% by 2015 and 15% by 2020. If the investment plans are restricted, such targets may be lowered.
China previously planned to invest at most USD 1.5 trillion in these seven industries during the 12th Five-Year Plan period to establish them as pillar industries to drive economic growth, so as to change China's tradition of focusing on manufacturing cheap and low-end products.
The Chinese Government always invests in infrastructure construction to create jobs and promote economic activities. It used financial capital to curb the impact of the latest global financial crisis. Although China has successfully pulled through the financial crisis, the central government recently began to worry about the huge debts of local governments and has been trying to tame inflation. Some foreign economists believed there was a possibility that the Chinese economy might have a hard landing.
Two sources familiar with the situation said that the plan to decrease investment in high-speed railway was an outcome of the corruption scandal of the previous railway minister.
The Chinese Government has not yet published data on its future investment after deductions.
The above-mentioned strategic emerging industries include the manufacturing of high-end equipment, new energy, bio-technology, advanced information technology, new energy vehicles, energy conservation and environmental protection techniques.
China's former railway minister Liu Zhijun, a leader in the country's high-speed railway expansion, was removed from office this March for corruption.
According to China's new railway minister Sheng Guangzu, the country will invest RMB 600 billion in railway infrastructure construction this year. The figure was RMB 700 billion while Liu was in his post.
The new railway minister reduced the maximum speed limit for high-speed railway to 300 kilometers from 380 kilometers per hour planned by Liu. China's investment in railway infrastructure dropped by 16.9% year-on-year to RMB 42.4 billion in May.
Despite the above-mentioned adjustments, it is almost impossible for China to shelve its investment plan for high-speed railway.
"According to the central government, the construction of high-speed railway will continue, but maybe slowed down a bit and requires more adequate research," said an analyst at the Institute of Comprehensive Transportation of the National Development and Reform Commission.
National investment in wind power will also be reduced. The wind power industry is facing overcapacity, said Shao Bingren, Deputy Director of the CPPCC Committee of Population, Resources and Environment.
China will build seven ten-million-kilowatt wind power bases in the west, according to its 12th Five-Year Plan. However, some critics said the country should make more investment in power grid construction because most of its wind power and solar energy plants are located in the west and inland areas, while manufacturing is mainly carried out in Southeast China.
The seven emerging strategic industries account for 2% of China's GDP. The Chinese government had expected to raise the figure to 8% by 2015 and 15% by 2020. If the investment plans are restricted, such targets may be lowered.
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