China Cuts Capital Minimums for Some Projects to Spur Growth
[2009-06-01]
China said it was cutting capital requirements for some fixed-asset investment projects to spur growth in the world's third-biggest economy.
"The government will appropriately lower the minimum capital requirement ratio for important state projects," the State Council said in a statement dated May 25 and posted on a government Web site today.
The council, China's cabinet, said requirements were being "adjusted" across industries, then specified levels without saying whether they were increases or decreases. Projects involving coal, air or sea ports, property and railways had previously been tagged by the government for reductions.
China's economic growth cooled to 6.1 percent in the first quarter, the slowest pace in almost a decade, hampered by a deepening global slowdown. The government's 4 trillion yuan ($586 billion) stimulus package is intended to bolster growth, partly by driving up investment.
The minimum capital requirement for coal, air and sea port projects is 30 percent, today's statement said. For railway investments, it's 25 percent. For low-cost housing developments the requirement is 20 percent.
Minimum capital requirements include funds from the government and retained profits and exclude bank loans and debt.
For steel projects, the minimum is 40 percent, the statement said, compared with 35 percent for cement.
The State Council also urged banks to guard against financial risks when extending loans.
"The government will appropriately lower the minimum capital requirement ratio for important state projects," the State Council said in a statement dated May 25 and posted on a government Web site today.
The council, China's cabinet, said requirements were being "adjusted" across industries, then specified levels without saying whether they were increases or decreases. Projects involving coal, air or sea ports, property and railways had previously been tagged by the government for reductions.
China's economic growth cooled to 6.1 percent in the first quarter, the slowest pace in almost a decade, hampered by a deepening global slowdown. The government's 4 trillion yuan ($586 billion) stimulus package is intended to bolster growth, partly by driving up investment.
The minimum capital requirement for coal, air and sea port projects is 30 percent, today's statement said. For railway investments, it's 25 percent. For low-cost housing developments the requirement is 20 percent.
Minimum capital requirements include funds from the government and retained profits and exclude bank loans and debt.
For steel projects, the minimum is 40 percent, the statement said, compared with 35 percent for cement.
The State Council also urged banks to guard against financial risks when extending loans.
Source: China Daily
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