Big business is drooling at the 1.5 trillion yuan (US$181 billion) of investment prospects leading up to the 2008 Beijing Olympic Games, while the city government is trying to route more private and overseas funds onto rural areas.

The Beijing municipal government will plunge 4.6 billion yuan (US$556 million) this year into infrastructure construction on the outskirts of the city, doubling last year's figure, said Lu Yingchuan, spokesman for the Beijing Development and Reform Commission.

At the same time, the government's investment in education and public health on the outskirts will be 1 billion (US$120 million) this year, rising 61 percent from last year, said Lu at a news conference Monday.

"Only 20 percent of the city's social investment flowed into the suburbs last year, but the number will increase to 40 percent this year," said Lu. "The municipal government will encourage domestic and foreign investors to net opportunities and profits at the outskirts through preferential policies and investment instruction."

Famous schools and hospitals in the urban areas will also be encouraged to set up branches in the suburbs, Lu added.

Noting that real estate investment took up more than half of the fixed asset investment last year, Lu said the municipal government will try to introduce more funds to high-tech, manufacture and service industries so as to set up multiple supporting points to keep the economy humming.

He estimated that the ratio would slip one percentage point this year.

Fixed asset investment topped 210 billion yuan (US$25 billion) last year, and Lu said the figure was expected to climb 10 percent this year.

The spokesman said the investment market in Beijing would reach 1.5 trillion (US$181 billion) in the next four years, among which 280 billion yuan (US$34 billion) is connected to the Olympic Games.

However, he acknowledged that the shortage of water and other resources would limit the rapid economic development of Beijing.

The government will invest 1.1 billion yuan (US$133 million) in water-saving and environment protection projects. According to Lu, the sum is 37.5 percent higher than last year.

He also said Beijing is considering working with neighboring Hebei Province in water diversion projects as a major part of the regional cooperation among Beijing, Hebei and Tianjin.

Turning to the issue of investment and financing reform, Lu said construction and management of Beijing's infrastructure would open wider to overseas or domestic private companies.

Lu estimated that direct private and social investment would reach 10 billion yuan (US$1.2 billion) on water, gas, heat and waste treatment projects. All would be built, operated and transferred.

"As to the urban railway projects, domestic and overseas investors can bid for the operation of railways this year, including No 4, No 10, No 5 and No 9 lines," said Lu. "We expect to attract 14.5 billion yuan (US$1.8 billion) from private and overseas funds on the urban railway projects."

(China Daily March 2, 2004)