- China Business Blog - http://www.chinabusinessservices.com -

Scrutiny for Domestic Investment Too

In a potentially fair-minded piece of economic policy-making from the National Development and Reform Commission, big domestic projects – not just foreign take-overs [1]– are to get some central government scrutiny, according to a report in the International Herald Tribune. The motivation is to curb fixed-asset spending, and to further try and cool the economy.

The policy is reported to impact projects over US$12.5 million, as well as those in oversupplied sectors such as “steel mills, cement factories, vehicle assembly plants, power stations and aluminum smelters that exceed 30 million yuan in value”.

A Deutsche Bank economist is quoted as saying:

As previously noted, getting local firms to pay dividends (see here [2]), and controlling bank lending, would also reduce the amount available for fixed-asset investment, and could have a significant impact on the economy and the investment environment. If companies are unable to borrow cheaply and invest freely, and if so many sectors continue to be over-supplied and painfully competitive, perhaps more will consider the dividend option.

See news source: