China warns of over-investment

The Chinese government has reiterated warnings about the risks of overinvestment in steel, aluminum and cement industries and ordered local authorities to report ongoing construction projects to the State Council, the country’s cabinet.  The warning, this time by Zeng Peiyan, a vice-premier and former head of the National Development & Reform Commission, formerly the State Planning Commission, marks the latest expression of government concern about the rapid growth in new investment in steel, aluminum and cement which it fears could result in overheating and subsequent chaos in these sectors.

"Investment (in these sectors) is growing too quickly and production capacity has exceeded market demand, with unreasonable industrial structure, high energy consumption, high pollution discharge and low efficiency," Zeng was quoted by Xinhua news agency as saying.  Although the government has control over large investment projects, which have to be approved by the NDRC centrally, smaller projects only need approval from local authorities who are eager to attract investment and create jobs, and worry less about the consequences.

French cement maker Lafarge SA said last month that it will invest US$40m in a second production line to double output at its Chongqing cement plant in southwest China