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English>>China Business

More Investment, More Woes?

By Lan Xinzhen (Beijing Review)

08:13, October 09, 2012

UNDERGROUND CONNECTION:The Hangzhou subway under construction on April 10, 2012 (Beijing Review/XU YU)

The city of Shijiazhuang, a three-hour drive from Beijing, received some long-awaited news on September 5. The city, capital of north China's Hebei Province, got the go-ahead to build its first subway from the National Development and Reform Commission (NDRC), China's top economic planning agency.

"Subway construction has far-reaching significance for Shijiazhuang," said Jiang Deguo, the city's mayor. "It will help complete the city's transportation system."

Shijiazhuang residents have long desired a subway system because rush-hour congestion has made life miserable. Alongside the expansion of Chinese cities and urban population growth, transportation infrastructure has been deteriorating in a number of cities, and subway construction is widely perceived as a panacea.

Shijiazhuang was not the only city to welcome news from the NDRC. On September 5, the agency announced on its website the approval of plans and feasibility reports for 25 urban rail projects in cities including Taiyuan, Lanzhou, Guangzhou and Xiamen. The projects will cost more than 800 billion yuan ($126.88 billion).

The announcement marks the second round of government-driven investment fever this year. In August, the NDRC approved a batch of investment projects mainly focused on cement, iron and steel, construction, communications and equipment manufacturing sectors.

For Zhou Li, a professor at Tsinghua University School of Economics and Management, investment in urban rail projects is worthwhile since it boosts the economy and improves residents' well-being.

"On the one hand, it has a leverage effect, which will benefit downstream enterprises related to subway construction and hence help sustain economic growth. On the other hand, it will improve urban transportation conditions, which is quite an urgent need for many cities," said Zhou.

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