Local spending raises concern

For the central government, it is time for cautious mini-stimulus. But in reality, some local governments may be making mini-stimulus into, once again, a campaign for building huge public projects on huge investment and huge borrowing.


Just this past Sunday, Chongqing municipality approved the construction of a 51-kilometer urban rail line. The line is scheduled for completion by 2018, with total investment of 31.4 billion yuan ($5.13 billion).
Another local rail line costing 4.1 billion yuan also passed preliminary evaluations.
A few days earlier, Northwest China's Gansu province approved a feasibility study for the first subway line in the capital city, Lanzhou. The project would cost 18.9 billion yuan.
Citing Zhu Maokun, former chief engineer of the Ministry of Railways, which is now named China Railway Corp, the 21st Century Business Herald reported that 36 cities have approved the construction of urban rail projects.
By 2020, there will be nearly 6,000 km of urban rail systems in China, and total investment could hit 4 trillion yuan.
While domestic media were quick to characterize the urban rail construction boom as a localized version of a "stimulus program", experts said projects should be weighed on a case-by-case basis.
"These cities, such as Chongqing, Lanzhou and Kunming are large by Western standards. The concentration of population makes it viable to build an urban rail transit," said Shi Hongxiu, a public finance professor with the Chinese Academy of Governance.
He said as China's urbanization proceeds, urban rail projects, as well as flood control and sewage systems, will be in great demand. Grouping all of these under the umbrella of "stimulus" spending might be misleading, he said.


Source: China Daily
Time: 2013-08-15