CHINA / National

Provinces urged to cool down economy
Updated: 2006-08-13 20:46

BEIJING - China's government has issued yet another warning to its 31 provinces to rein in their red-hot economies, state media said Sunday.

In particular, investment in factories, residential buildings and other fixed assets must be cooled down, Vice Premier Zeng Peiyan said, according to the Xinhua news agency.

"The central government has made explicit requirements on economic work in the second half," Zeng said during a recent trip to the southwestern province of Yunnan.

"Fixed-asset investment should be put under tight control and more efforts made to lower energy consumption and improve environmental protection."

China's economy, the world's fourth largest, expanded by an annualised 10.9 percent in the first six months of the year, boosted by massive investment especially in the provinces.

Xinhua said 90 percent of all investment in the first half had been approved by governments at provincial level or below, reflecting different agendas in Beijing and elsewhere in the vast country.

Whereas the central government is concerned about macro-issues such as inflation and other symptoms of overheating, local governments prioritize growth because it means more jobs and less risk of social unrest.

The economies in three quarters of China's provinces expanded at 12 percent or more in the first six months, above the national figure of 10.9 percent, the country's key economic planner said in a report last week.

Prime Minister Wen Jiabao, at a teleconference with senior party and government officials at both the provincial and county level in late July, demanded obedience to Beijing's macroeconomic directives.

"All localities and departments must unify their thinking and bring it in line with the central government's assessment of the current economic trends," Wen said in remarks carried in the People's Daily on July 27.