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Sichuan invests US$582b to lead local spending
By Wang Yanlin |
September 25, 2012, Tuesday
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Print Edition
Print Edition
Sichuan Province will invest 3.67 trillion yuan (US$582 billion) in 2,242 projects by 2013, becoming the biggest investor among regions in the country under a new wave of local stimulus packages.
The provincial government has passed a bill to allocate 1.48 trillion yuan in 639 infrastructure projects, 1.8 trillion yuan in 1,253 industrial projects, and the balance will be spent on projects related to people's livelihood and environment protection.
Tang Limin, director of the Sichuan Development and Reform Commission, said the province will encourage private capital to fund these projects. He also said it will supervise the use of the funds stringently in response to worries about the financing of the projects as some economists have challenged their feasibility amid sluggish fiscal income.
Ma Jun, a Deutsche Bank economist, said it would be difficult for some local governments to fund these projects in the near term.
"Given the land revenue (accounting for 20 to 30 percent of local revenue) fell 28 percent year on year in the first half of this year, banks are reluctant to fund local government financing vehicle projects, and foreign direct investment is falling year on year," Ma said in a note.
Besides Sichuan, other regions and cities have also unveiled major stimulus packages totalling nearly 8 trillion yuan in the past few months.
Tianjin has a 1.5 trillion yuan program to build 10 industrial sites before 2016 while Chongqing will invest a similar amount in large projects through 2015. Guangzhou, Changsha, Ningbo and Nanjing have also similar programs.
China's gross domestic product expanded 7.6 percent in the second quarter from the same period a year earlier, the slowest pace in three years.
The provincial government has passed a bill to allocate 1.48 trillion yuan in 639 infrastructure projects, 1.8 trillion yuan in 1,253 industrial projects, and the balance will be spent on projects related to people's livelihood and environment protection.
Tang Limin, director of the Sichuan Development and Reform Commission, said the province will encourage private capital to fund these projects. He also said it will supervise the use of the funds stringently in response to worries about the financing of the projects as some economists have challenged their feasibility amid sluggish fiscal income.
Ma Jun, a Deutsche Bank economist, said it would be difficult for some local governments to fund these projects in the near term.
"Given the land revenue (accounting for 20 to 30 percent of local revenue) fell 28 percent year on year in the first half of this year, banks are reluctant to fund local government financing vehicle projects, and foreign direct investment is falling year on year," Ma said in a note.
Besides Sichuan, other regions and cities have also unveiled major stimulus packages totalling nearly 8 trillion yuan in the past few months.
Tianjin has a 1.5 trillion yuan program to build 10 industrial sites before 2016 while Chongqing will invest a similar amount in large projects through 2015. Guangzhou, Changsha, Ningbo and Nanjing have also similar programs.
China's gross domestic product expanded 7.6 percent in the second quarter from the same period a year earlier, the slowest pace in three years.
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