China will lower the minimum amount of capital required to launch investment projects in certain sectors it hopes to encourage, and raise it in others it wants to discourage, the country's cabinet said on Wednesday.
The State Council said it planned to cut the capital requirement ratio for investment in urban railways, coal, airports, ports, residential property, postal services, information technology and some other sectors.
Conversely, it will raise the capital requirement for polluting and energy-intensive sectors including aluminium, coking coal and processing corn for ethanol. The cabinet did not give details on how big the changes would be or when they would take effect, but said it hoped to enhance the role of private investment in driving the economy.
"To confront the global financial crisis, we must seek to intensify investment by the private sector and firms, expand investment demand and adjust and improve the structure of investment," the cabinet said in the summary of a regular meeting posted on the central government's website (www.gov.cn).
Such orders by the State Council typically lay out the broad direction of policy and need to be fleshed out with specific implementing regulations by various ministries. The cabinet also said that it intended to speed up reform of monopoly industries and state-owned firms, support the development of the service sector and press ahead with pricing reform for natural resource products.
It added that it intended to speed up reforms to the employment system, and to accelerate changes to the country's distribution of income. It did not give details on its plans for those reforms. China has been undertaking a range of measures to counter the impact of the global economic slowdown, from launching a 4 trillion yuan ($585 billion) stimulus package to raising export tax rebates.
The boost in public spending helped annual fixed-asset investment growth accelerate to 28.6 percent in the first three months of the year, offsetting some of the impact of falling exports. But economists say the government needs to do more in the long run to let private investment, particularly in services and other consumer-orientated sectors, to flourish.