Bloomberg quoted a senior Chinese economic planning official said China is building more subways, highways and sewage plants to counter a growth slowdown.

Mr Xu Lin head of the planning department at the National Development and Reform Commission told reporters in Beijing newly approved projects, including roads and subways in 18 Chinese cities were only a part of a pipeline of infrastructure projects being developed in the nation.

He said that “In an economic slowdown, the government has to take some counter cyclical measures it’s absolutely normal and it’s part of macro-economic control. China still has large demand for infrastructure projects.”

Premier Wen Jiabao who pledged last week to employ monetary and fiscal policies to spur growth has increased infrastructure spending and refrained from introducing another stimulus package with fiscal support limited to tax cuts and accelerated project approval. The economy grew 7.6% in the second quarter from a year earlier the smallest increase since March 2009.

Mr Xu’s comments come after the NDRC this month published approvals for building as much as 2,018 kilometers of roads and subway projects across the country. Nomura Holdings Inc estimated the total value of projects approved at about CNY 1 trillion. The NDRC has also green lighted a slew of railroads, sewage treatment plants, ports and warehouses.

Mr Xu said the accelerated project approval did not mean the government is rolling out more stimulus. A CNY 4-trillion package of state spending and tax cuts announced in 2008 stoked inflation and sparked concern local governments took on more debt than they can afford.

He said that “These projects are already in our plan. Infrastructure is the backbone system for national economy and a society. In the long term, if infrastructure is good, it’s helpful for overall efficiency.”

Source - Bloomberg

(www.steelguru.com)