Local governments in China are spending trillions to boost specific industries such as electronic communications, new energy cars and aerospace industries, chemical industry as well as advanced manufacturing.
Chongqing and Tianjin have both announced investment plans of 1.5 trillion Yuan ($237 Billion USD) each to boost specific industries such as electronic communications, new energy cars and aerospace industries, chemical industry as well as advanced manufacturing.
These two cities are among a long list of Chinese cities that have announced major spending plans to ensure the country’s economy has a soft landing and also build up domestic consumption. Wuhan, Ningbo and Guizhou are among the other cities that have already unveiled their spending plans.
ELMAT: Let me check the Five year plan here to see what it says...
Chinese cities embark on major investment drive to boost economy Source: The Information Daily
Published Wednesday, August 22, 2012 - 06:32
Local governments in China are spending trillions of Yuan on infrastructure and industry to boost economic growth in the world’s second largest economy.
Chongqing and Tianjin have both announced investment plans of 1.5 trillion Yuan ($237 Billion USD) each to boost specific industries such as electronic communications, new energy cars and aerospace industries, chemical industry as well as advanced manufacturing.
These two cities are among a long list of Chinese cities that have announced major spending plans to ensure the country’s economy has a soft landing and also build up domestic consumption. Wuhan, Ningbo and Guizhou are among the other cities that have already unveiled their spending plans.
Last month, Changsha, the capital city of the southern province of Hunan, unveiled 829 billion Yuan investment to stimulate local economy but stakeholders are not convinced about the details of the plan.
Chongqing, now famous for the Bo Xialai and family scandal, announced 250 billion Yuan in the manufacturing of advanced equipment and 150 billion Yuan in the chemical industry earlier this week. The city also allocated 300 billion Yuan for supporting the electronic communications industry.
Tianjin, a city next to Beijing, said it has "preliminarily" decided to move forward with a plan calling for investment of 1.5 trillion yuan over four years in 10 industrial sectors which include new energy cars, advanced manufacturing as well as aerospace industries.
However, none of the cities have yet laid out how they would pay for these investments. There are concerns that the stimulus plans could repeat the 2008-2009 experience when local governments borrowed heavily from state run banks which caused major problems for local balance sheets.
In addition, the local government revenues are unsustainable as they are often dependent upon land sales and some analysts fear these investments would increase bad debts and exacerbate China’s already over dependence on investment for growth |
