Robust Growth Strains Rail Transport, Power Supply in Parts of China

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Last updated at: (Beijing Time) Saturday, April 19, 2003

Robust Growth Strains Rail Transport, Power Supply in Parts of China

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Excessively high growth in some areas is putting a strain on railway transport and power supplies,driving up fuel prices and degrading industrial structures in the country, China's top economic management authority said Friday.

The State Development and Reform Commission (SDRC), formerly known as the State Development Planning Commission (SDPC), announced at a press conference that the rapid growth of industrial production produced power shortages and put strain on railway freight transport capacity in the first quarter of the year.

The commission said the shortages will become even more acute in some regions as the peak summer consumption and travel season approaches.

According to statistics released by the China Materials Circulation Information Center, the average prices of capital goods rose 6.6 percent in the first quarter. The prices of oil andoil-related products jumped 29.5 percent, the prices of chemical products surged 8.4 percent and steel prices rose 10.8 percent.

Director of the SDRC Economic Operations Bureau Ma Liqiang attributed the phenomenon to the excessive expansion in certain industries and regions.

SDRC statistics show that investment in the steel industry rocketed over 153.7 percent in the first quarter. Most of the investment was channeled into the construction of new production capacities of such redundant general products as steel rods and wires, further aggravating the structural imbalance of the steel industry.

Ma said that some regions were "blindly" expanding investment in energy-consuming industries such as aluminum.

Nine provinces and autonomous regions in central and west Chinahave made the aluminum industry the pillar of their respective local economies, while another five provinces and autonomous regions are also expanding production capacities. In addition, a number of other localities and enterprises are planning to build new aluminum plants.

Ma said that, since China's steel supply surplus is growing, and a large surplus of aluminum already exists, adding new production capacities will drive up the prices of raw materials and further strain transport and power supplies.

He noted that 23 provinces and municipalities have built auto production lines. Most of the newly-established automobile plants are turning out similar products and have little research and development capacity.

Ma said, in order to curb the excessive expansion in certain localities, the government will adjust relevant industrial policies and use market leverage to guide the development of industries.

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