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NDRC to curb new projects that pollute
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China will limit unwanted investments by possibly requiring more paid-in capital for new projects to contain inflation and prevent overheating, the country's top economic planner said at a national development and reform meeting yesterday.

New projects, especially those with high energy consumption and pollutant discharges, will be strictly restricted to control the country's fixed-asset investments, said Ma Kai, director of the National Development and Reform Commission(NDRC).

Paid-in capital will be raised for unwanted investments while support for weak sectors and key industries will be enhanced, Ma said at a conference in Beijing.

The country will map out and revise mandatory standards on energy consumption and improve the appraisal system on energy-saving, the commission quoted Ma as saying on its Website.

Renovation of traditional industries will accelerate and China will also prompt steel, cement, paper makers and machinery manufacturers to merge and restructure, he said.

In 2004, the State Council raised the paid-in capital to 40 percent from 25 percent for steel projects and to 35 percent from 20 percent for cement, electrolytic aluminum and real estate projects to reduce their dependence on banks and cut random investments.

Fixed-asset investment in China's urban areas rose 26.9 percent to 8.9 trillion yuan (US$1.2 trillion) in the first 10 months of 2007 from a year earlier, according to the National Bureau of Statistics.

Ma stressed that the country will adopt stable financial policies and tight monetary policies to prevent widespread inflation and an overheating economy.

The Central Economic Work Conference said on Wednesday that the country will shift its monetary policy from "prudent" to "tight" next year.

Ma also said the country will introduce a price-alert system and boost agricultural production next year to curb inflation.

China's consumer price index, the main gauge of inflation, rose 6.5 percent in October from a year earlier, a record high in more than a decade.

"We will curb excess increases in overall price levels, better coordinate production, supply and sales of major agricultural products and ensure non-stop supply of daily necessities," Ma said.

The central bank has raised the one-year benchmark deposit rate five times this year to 3.87 percent to curb rapid price increases.

It also increased the reserve ratio - the amount of money a bank must deposit with the central bank - nine times this year to 13.5 percent on yuan deposits to rein in investments.

Ma urged more spending on communication, leisure, culture, and body-building sectors as well as guidance for rational consumption on real estate and automobile deals.

According to Ma, China's Central Government will increase its overall investment budget and continue to adjust investment structure.

Ma Kai said that after "continuous and rapid" increase in fiscal revenue in recent years, China will mainly use its fiscal expenditure to improve people's livelihood and boost economic and social development in weak and backward areas.

He didn't disclose the specific figures for 2008, noting a relevant ministry is working at the budget.

The fiscal budget for 2007 reached 2.687 trillion yuan (US$358.2 billion), up 14.4 percent year on year.

Ma said the larger investment will be mainly used in construction of rural regions and the western areas, energy-saving and emission reduction projects, innovation, social welfare and on major infrastructure projects.

Ma said that the central government planned to issue smaller amounts of long-term construction debts next year.

(Shanghai Daily, Xinhua News Agency December 8, 2007)

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