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Shanghai builds the basics first
( 2003-12-30 01:13) (China Daily)

Shanghai municipal government will give additional funding and support to urban infrastructure and social welfare programmes, while backing away from other more competitive and commercial-orientated ventures, it has been revealed.

The monumental shift not only stops tax-payer's money from being sunk into highly fluctuating markets, but opens the door to a slew of private investment opportunities.

"Next year Shanghai will reduce the number of key construction projects it undertakes and raise criteria to make sure only the most important projects are given priority," Shanghai government's spokeswoman, Jiao Yang, said Tuesday.

High on the agenda will be projects closely related to citizen's lives and the city's sustainable development, such as infrastructure, as well as the strategies being encouraged by the central government.

At the same time, projects with several investment sources -- particularly those that are susceptible to market pressure such as the integrated circuit industry -- will probably not be recognized as key construction projects, said Xi Qunfeng, deputy director of key project construction office under the Shanghai Municipal Construction Commission.

The final list of 2004 key projects will not be decided until next month, he added.

Shanghai's new arrangement has received widespread academic acclaim.

Lu Deming, dean of the economics school at Fudan University, said such a move shows the city government is taking positive steps to better use resources.

Non-government capital is usually reluctantly spent on public projects, which requires a lot of money but produces minimal return.

"But such projects, including infrastructure, are beneficial to the whole society. So the government should bear the responsibility to invest in such projects," he said.

The move is also in line with the central government's decision to steer investment to prevent an overheating of economic growth.

"That's why the government is withdrawing from competitive sectors, leaving them for others,"  Lu said.

This year, a record of 55.3 billion yuan (US$6.66 billion) was spent on the city's key 78 key projects, accounting for 25 per cent of all fix-asset investment.

About 60 per cent of the money has gone into the construction of urban infrastructure, including roadworks, environmental projects, gardens and the energy industry, Xi said. All of the projects have finished on time or are preceding in accordance to timetables.

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