http://www.iht.com/articles/2006/08/03/business/sweep.php

The Chinese central government has ordered the provincial authorities and state-owned lenders to review China's industrial projects, stepping up efforts to curb excess investment and cool the economy's growth.

The review covers every project that exceeds 100 million yuan, or $12.5 million, in investment, and steel mills, cement factories, vehicle assembly plants, power stations and aluminum smelters that exceed 30 million yuan in value, according to a statement Tuesday by the National Development and Reform Commission that was posted on its Web site Thursday.

The commission said the scrutiny was aimed at finding "malpractice in projects that are scheduled to start in the first half, which may have hindered the central government's plan" to slow fixed-asset investment.

China's economy grew 11.3 percent in the second quarter, the fastest pace since 1994, raising concern that excess investment might stoke inflation. The government twice raised the deposit reserve for commercial lenders in two months and announced seven sets of measures to cool real estate prices.

China's policies to slow the economy "are positive in the longer term as they help contain the risk of economic overheating," Ma Jun, an economist at Deutsche Bank, said in a report. "Administrative tightening will become more aggressive in curbing fixed-asset investment growth."

Fixed-asset investment in China's towns and cities jumped 31.3 percent in the first half from a year earlier, accelerating from 30.3 percent in the first five months. The increase may slow to a range of 20 percent to 25 percent in the second half, the commission said.

Spending on urban infrastructure and industrial construction may increase 26.9 percent to 11.2 trillion yuan for the full year, compared with 25.7 percent last year, it said in a report published Thursday in The China Securities Journal. The government will order projects to stop or be postponed if they fail to meet standards for loans, safety or environmental protection, according to the rules announced Thursday.

"Assuming half of these projects are cleaned up," said Ma, the Deutsche Bank economist, "this implies that 20 percent of the new projects under review could be suspended or postponed."