By staff reporter Wang Changyong

(Caijing.com.cm)National Development and Reform Commission Director Zhang Ping has taken the wraps off a reshaped economic stimulus package that keeps the investment cache at 4 trillion yuan but rebalances spending.

Speaking at an NPC conference, Zhang said the changes include a 300 billion yuan cut from an initial 1.8 trillion yuan for infrastructure investments, such as low-income housing, and a 140 billion yuan reduction in spending on projects that focus on energy conservation and sustainability.

But technology projects would get an additional 210 billion yuan, Zhang said, while spending earmarked for certain rural public works projects and social welfare programs would rise 120 billion and 110 billion yuan, respectively.

Zhang Ping

The government’s giant investment package, unveiled last year in hopes of revitalizing China’s cooling economy, will be allocated to seven investment areas ranging from infrastructure to education to earthquake recovery in Sichuan Province, which was rocked by a major temblor last year.

Earthquake-related projects would receive a total 1 trillion yuan, while the rest of the investment targets would split the remaining 3 trillion yuan.

A total 400 billion yuan would go toward civil works, including low-income housing and renovation. Spending on rural infrastructure, including improvements to the power grid, roads and substandard housing, would receive 370 billion yuan. Education, health care, cultural projects and birth control initiatives would share 150 billion yuan.

Investments in energy-saving projects would fall to 210 billion yuan, but technology initiatives would get an additional 370 billion yuan.

Zhang said the changes to the original stimulus plan, which was announced by the State Council four months ago, includes slight adjustments to investment targets and a major reshaping of investment allocations. The changes were made based on varying opinions from the public, he said.

“The make-up of 4 trillion yuan is actually a process of give and take,” Zhang said. “Many projects, perhaps, will see changes in practice as situations are not unchanged.

“Investment may increase in some areas, while others will be cut short,” he added.

In addition, Zhang said, 10 recently announced industry stimulus plans approved by the State Council will require government interest rate subsidies for bank loans targeting investments in advancing technologies.

Central and local governments will shoulder the investment responsibility, said Zhang.

“This money is not coming from the central government, but also needs local governments to take a share,” he said. “Even private sector funding” is included in the mix.

According to a 1 to 3 plan for sharing costs between Beijing and local governments, including provinces and municipalities, the central government would issue bonds totaling 1.18 trillion yuan for the two years.

Both the total spending plan and the bond proposal were expected to be approved by the National People’s Congress at its March meeting in Beijing.

According to Zhang, local governments would support the stimulus with 3 trillion yuan raised by bonds issued by the Ministry of Finance on behalf of local government.

Policy loans would be issued to facilitate the financing. In addition, private companies would be allowed to issue corporate bonds for projects with promising yields for the near future, such as road construction and power renovation projects.

Between the fourth quarter 2008 and March, 45 corporate bonds were issued, raising 130 billion yuan. Another 50 companies have asked authorities to approve plans to raise an additional 100 billion yuan.

Zhang stressed that the stimulus package would not be undergo repeated reconstruction. He also said no ordinary manufacturing projects would get money, but instead the government’s focus would be to reshape the country’s economic growth pattern.

1 yuan = 14 U.S. cents

Full Article in Chinese: http://www.caijing.com.cn/2009-03-06/110114155.html