China cancels $17.6bn construction projects ‘to protect the environment’
China has rejected 17 construction projects with a total investment of $17.6 billion, attempting to bolster environmental protection strategies and fight corruption.
The projects were among 92 examined by the Ministry of Environmental Protection (MEP), involving a total of more than 700 billion yuan ($112.6 billion) in investment, the Xinhua news agency reported on Friday.
The projects’ rejection was said to improve the environmental impact assessment system and fix loopholes that allow corruption. The protection ministry has ordered all the environmental impact assessment agencies cut their links to government at all levels by the end of 2016. It has also launched random inspections of agencies and disqualified dozens of agencies and engineers, according to Xinhua.
MEP has speeded up approval of major projects such as railways and irrigation.
Construction of major projects in China has been the main tool for boosting investment and sustaining growth since the beginning of 2015. Investment in the railways rose 22.6 percent year on year by the end of April.
Beijing said in the next two years it would boost investment to foster technological progress in six manufacturing industries, including railway equipment, new-energy vehicles and medical equipment. The country is trying to upgrade its manufacturing sector and stimulate sluggish economic growth. China’s real economy cooling and a 30-percent stock market slump since the middle of June make it a tough task for Beijing to reach the aimed seven-percent growth in 2015.
Another key factor behind the project’s cancelation may be the real estate market, which has to stay healthy for the country’s targeted growth level.
The Chinese government has engineered a property boom during the financial crisis to compensate for the weakness in overseas demand. Later it implemented tightening measures to cool the heated property market.
Even with last year’s 4.5-percent drop in housing prices, more than 60 million apartments in China remain empty. While the real estate sector accounts for about 25-30 percent of China’s GDP, it’s impossible for the country to prop up the economy without reviving this vital industry.