China Places Fresh Curbs on Investing to Slow Growth
China will clamp down on new investment projects to help keep growth in the world's fourth-largest economy on an even keel, the government said on Wednesday.
The State Council, China's cabinet, instructed ministries and local governments to ensure that all new projects are properly authorized and meet land-use, energy efficiency and environmental protection criteria.
The order, which reaffirms existing investment guidelines, marks the latest effort by the central government to cool investment, the driving force of China's double-digit growth for the past five years.
The need to cool capital spending has taken on added urgency with the acceleration of inflation to a 10-year high of 6.5 percent.
The sums earmarked for new investment projects increased 26.5 percent in the first 10 months of the year compared with the same period last year. The figure has been rising sharply in recent months.
The latest clampdown, approved by the cabinet on Nov. 17, coincides with instructions by the central bank and the banking regulator to commercial banks not to increase their net new lending over the last two months of the year.
Too many projects have been launched in recent years, some of which have failed to comply with government guidelines, the cabinet said in a statement on the central government's Web site, www.gov.cn.
The scale and the pace of capital spending was too great and there was too much duplication. "This has become a striking problem, affecting the smooth performance of the economy," the cabinet said.
The central government ordered local authorities not to interfere in the investment approval process or statistical reporting of capital spending.
Beijing has long struggled to rein in local and provincial officials, who traditionally have viewed maximum growth as the passport to advancing their careers. Local governments also rely extensively on taxes from the sale of land for new projects.
All levels of government need to share information better so that investment can be coordinated, the statement said.
Projects found to be flouting government guidelines must be halted immediately and the costs borne by investors, it added. Serious offenders would be named and shamed.
The government is taking particular aim at industries that guzzle energy and badly pollute the environment.
China's top environmental official said in remarks published on Wednesday that big polluters would be barred from stock listings.
Zhou Shengxian, head of the State Environmental Protection Administration, was quoted by the China Daily as saying that from next year companies "guilty of environmental violations or failing to meet discharge requirements will not be allowed to list their shares".
The threatened ban, which may be hard to enforce in China's disjointed regulatory system, follows vows to choke off polluters by withholding bank loans and export approvals.