Business / Economy

Local govts return to investment-driven growth model

By Zheng Yangpeng (China Daily) Updated: 2014-04-22 07:23

Once again, China's local governments are reportedly tilting toward investment-driven programs to avert an economic slowdown.

Local govts return to investment-driven growth model
Top 10 regions with highest GDP in China 
Local govts return to investment-driven growth model
China's top 10 richest cities 
Domestic media outlets have reported that governments in five provincial-level regions - Guangdong, Hainan, Tianjin, Jiangxi and Guizhou - have launched stimulus packages with a combined value of 7.13 trillion yuan ($1.15 trillion).

But a closer look at these packages indicates that the figures aren't necessarily as impressive as they seem.

Local governments routinely announce "key investment project catalogs", often featuring projects that will take years to complete.

For example, in Guangdong, 285 key investment projects with a total value of 3.67 trillion yuan have been announced. But only 450 billion yuan is expected to be spent this year. Still, these plans reflect local governments' eagerness to prop up the economy through big-ticket projects.

In Guangdong, the promised 450 billion yuan investment for this year exceeds last year's 420 billion yuan plan. Highways, liquefied natural gas facilities and petrochemical factories are categorized as "infrastructure" and account for more than half of the plan.

"Guangdong's fixed-asset investment to GDP ratio had been on the low end among provinces. The ratio began to climb starting from this year," said Chen Hongyu, an economics professor with the Guangdong provincial Party School. "And a majority of the investment poured into backward western and northern Guangdong."

Although many projects listed in the various packages were in the works well before the nation's economy began to slow, analysts said provincial leaders ordered work brought forward.

Previous Page 1 2 Next Page

Hot Topics

Editor's Picks