Economy in Western China grew 8.5 percent in first half
(08/08/2001) (Agencies)

Development projects and investment in China's Western region have boosted local GDP by 8.5 percent in the first half of this year compared to the same period last year, officials said Wednesday.

The gross domestic product (GDP) growth rate for the region, faster than the 7.9 percent rate for the whole country, is largely due to an increase in infrastructure investment, said Li Zibin, deputy director of the State Development Planning Commission.

In January last year China kickstarted a mass campaign to develop the economically-backward western region, which covers 12 provinces.

Since then it has been pouring money into the area and hoping for private domestic and foreign investment.

In the first half of this year, fixed asset investment -- an indication of government spending on infrastructure -- in the region reached 170 billion yuan (US$20 billion), a 30 percent increase from the same period last year, Li told a news conference.

In addition, 12 new long-term infrastructure projects with a total investment of 300 billion yuan will begin this year, Li said.

In the next few years, the government will continue to focus on investing in infrastructure construction as well as environmental protection projects, Li said.

He said he expected foreign investment to increase this year, especially in the oil and gas industries, hydropower, non-ferrous metals, agriculture and animal husbandry.

"In the next five years, more and more social funds (private domestic investment) and foreign capital will move into the Western region," Li said.

Foreign investment in the region reached US$2.2 billion last year.

But analysts said investors were still shy about putting their money in a region before infrastructure has been built.

"You've got to have infrastructure before foreign investment can come in," said Andy Xie, an economist for Morgan Stanley in Hong Kong.

"Otherwise you have no access to the global market and distribution system."

Investors also worry about the inefficient local governments, corruption and the conservative attitudes of local officials, he said.

It will take at least three years before investors will come in, Xie said.

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