G.F. 326
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7.
In respect of fixed capital investment by state
enterprises, the latest figures show a year-on-year
increase of 26.2% in money terms in the first quarter of
1987, to Rmb 17.09 billion (US$4.6 billion). This rate of
increase outpaced the growth in total industrial
production and was substantially higher than the corresponding growth of 15.3% recorded in 1986. The
problem of excessive investment is believed to be even
more serious with collective enterprises and some local
authorities. Despite repeated emphasis by the state on
the need to clamp down on new investment projects this
year, there were more than 2,400 new investment projects in the first quarter of 1987. Many of these were small
scale and not too productive projects undertaken by local
authorities. It appears that the campaign of "three
guarantees and three curtails" (guaranteering those
investments inside the plan, those which are productive,
and those in the key areas and curtailing investment in
projects outside the plan, as well as those which are
non-productive and in non-key areas) is having only
limited success.
8.
In the absence of market discipline to
rationalize the investment pattern, the Chinese
authorities seem to have resorted to more stringent
administrative means. In March, the State Council issued a set of temporary regulations on the control of bond
issues by enterprises with a view to restricting the
raising of funds for spending in areas which had not been accorded high official priority ratings. According to
these regulations, the People's Bank of China (PBOC) will
be responsible for setting an annual nationwide total for
bond issues. Enterprises which wish to float bonds must
first obtain approval from the PBOC and if the funds
raised by this means are used for investment project, the
project itself must be approved by the relevant
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