China plans to spend $21 billion on its west

China plans to spend $21 billion on its west
By David Lague (International Herald Tribune)
Updated: 2006-07-04 06:47

The new projects approved by the commission include a rail link between Taiyuan, the capital of Shanxi Province in central China, and the city of Zhongwei in the Ningxia Hui Autonomous Region in the northwest, state media reported. Funds have also been allocated for highways and regional airports.

Other projects include new coal mines in Inner Mongolia and Ningxia, an 800,000-ton ethylene plant in Sichuan Province and a 1.2 million-ton Xinjiang Province production site for kainite, which is used in fertilizer. Work would also start on three new hydropower stations and a reservoir.

"Clearly the central authorities don't want to see the emergence of two Chinas, a very prosperous eastern and middle region and a very poor west," von Pfeil said. "They are trying to balance the growth."

Some analysts maintain that Beijing's decision seven years ago to undertake a program to develop the western regions is beginning to pay off.

Some western cities and provinces are now reporting economic growth well in excess of the 10 percent national average, and such gains are expected to continue as transport and infrastructure improve.

Shortage of land and labor in the developed coastal areas could also stimulate investment inland. Inner Mongolia reported economic growth of close to 20 percent in the first quarter of 2005, according to a report from CLSA Asia- Pacific Markets, a Hong Kong-based brokerage firm.

Per capita gross domestic product in Chengdu, the capital of Sichuan, reached almost $2,600 in 2004, according to figures reported recently in the China Economic Quarterly. This exceeded the performance of some of China's wealthiest coastal provinces, including Guangdong, Fujian and Shandong.

Margin trading lifts shares

Just days before China's biggest initial public offering, stocks hit a two- year high Monday after the government announced rules allowing investors to borrow from brokerage firms to buy and sell shares, The Associated Press reported from Shanghai.

The rules, announced over the weekend, will take effect Aug. 1. They are aimed at drawing more of China's $4 trillion in bank deposits into the markets as major share offerings appear, including a 20 billion yuan, or $2.5 billion, initial public offering by Bank of China, the country's biggest ever.

The news lifted the Shanghai composite index 1.5 percent to 1,697.28 points, its highest close since April 13, 2004. The Shenzhen composite rose 1.6 percent to 440.13 points.

Bank of China's stock begins trading Wednesday on the Shanghai Stock Exchange.

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