China Warns of Excessive Industrial Investment

Home>>Business

Last updated at: (Beijing Time) Tuesday, August 12, 2003

China Warns of Excessive Industrial Investment

DISCUSSION

CHINESE

SEND TO FRIEND

China has sounded a warning about excessive investment in the steel, building materials, nonferrous metals, and automobile sectors, and vowed to curb the wasteful duplication in construction using market, legal and technological measures.

A leading official with the State Development and Reform Commission said that duplication in construction in those sectors had accelerated with outstanding structural problems since early last year, the official People's Daily newspaper reported on Tuesday.

The official noted that the new round of excessive investment, which was triggered partly by a growing market demand, was "worth attention from various sectors".

Ma Gai, minister in charge of the commission, has called for resolute measures to curb the excessive investment and duplicationin construction.

The warning first emerged at a meeting convened by the Political Bureau of the Communist Party of China (CPC) Central Committee on July 21.

During the first six months of this year, production and investment in the steel and iron sectors grew by 21 percent and 130 percent respectively, following last year's rapid growth, according to the report.

Small iron and steel works, which were closed by local governments because of pollution and inefficiency, had resumed production, but their products were in poor quality, while products such as cold rolling steel sheet and galvanized sheet were in short supply, noted Ma.

Cement plants using outdated production technological processesaccounted for 60 percent of China's total, yet some new plants under construction chose the same technologies, reported the newspaper.

The supply of electrolytic aluminum exceeded demand in China, and electrolytic aluminum projects with a combined capacity of nearly 4 million tons were under construction, but new plants werestill being planned in some areas.

Meanwhile, in the automobile sector, noted Ma, small scale and weak independent development capabilities were some of the problems, and only some 70 of the 123 plants capable of producing whole vehicles manufactured less than 10,000 units each per year.

He warned that duplication in construction was still an issue that would have serious consequences if it is left unchecked.

Ma explained that it would aggravate oversupply in the processing sectors, affecting China's economic restructuring and industrial upgrading and resulting in a waste of both capital and resources.

Serious oversupply would also plunge the sectors and plants involved into difficulty, causing more bad loans in the banking sector, and unemployment, Ma said.

In a bid to curb excessive investment, the central government would make public information on supply and demand concerning those sectors, and projects under construction, improve the marketentry system, and closed down illegal plants and those producing inferior products and causing serious pollution.

The commission also planned to cooperate with banking sectors to restrict loans to firms deemed to have high energy consumption and pollution, and backward in technology and industrial safety.

Questions?Comments? Click here

China's Industrial Production up 16.5 Percent in July

DPRK's Kim Jong Il Elected Member of Parliament ( 2 Messages)

Main Party of China's First Euthanasia Lawsuit Dies ( 2 Messages)

For Whom Does Jackie Chan Feel Pity and Shed Tears? ( 5 Messages)

News Analysis: Bush's Political Fortune to Rise or Fall? ( 4 Messages)

Japan to Be Restored as China's Biggest Tourism Source ( 3 Messages)