A top banker said more financial support will be given to China's western region to spur its key economic sectors.
Additional loans granted to the region are expected to bolster industries such as hydraulic power, natural gas and electrical generation, helping to provide low cost energy, reduce pollution and increase economic output, said Wu Xiaoling, deputy governor of the People's Bank of China.
Wu was speaking at the Western Forum of China 2004 in Nanning, the capital of Guangxi Zhuang Autonomous Region.
Construction of energy, communications and water conservancy projects will be prioritized, Vice Premier Zeng Peiyan announced at the opening of the forum.
Zeng said such projects would lay solid foundations for the further development of the region, which accounts for over 70 percent of the country's land and is inhabited by 367 million people.
Its fragile ecosystem will be greatly improved by that time thanks to efforts to increase grain production and a host of environmental projects, said Zeng.
"A sound infrastructure and environment are not just in the interests of our generation but also of generations to come," Zeng told the forum, which brings together over 300 representatives from China and abroad, including top government officials, foreign diplomats, regional business people, overseas investors and economists.
"We are convinced that loan growth and favorable policies will help solve its financing difficulties," Wu Xiaoling said.
But favorable policies for western enterprises do not mean banks must provide them low interest rates, Wu said, noting that market-oriented approaches should be used as financial reforms deepen.
Instead, banks should set interest rates through normal risk-estimating mechanisms, while government can offer fiscal allowances to those enterprises that are engaged in high-risk but profitable sectors.
Wu said western China has received considerable support from the government since the "Go West" campaign was launched in 1999.
A total of 850 billion yuan (US$100 billion), of which 400 billion yuan (US$49 billion) came from central government, was earmarked for water conservation, communications, environmental protection, compulsory education and healthcare over the past five years.
According to People's Bank of China, the region has obtained loans totaling 2.86 trillion yuan (US$344.6 billion) through to the end of September.
The balance of long and medium term loans in western China stood at 1.4 trillion yuan (US$168.7 billion), accounting for 19.3 percent of the country's total.
Yao Zhongmin, China Development Bank's deputy president, echoed Wu by saying the bank will further increase loans to projects in infrastructure and natural resources exploitation.
Meanwhile more private funds will come to the west as project bonds are encouraged in public projects and energy industries.
"Some infrastructure proposals will be chosen as pilot projects to attract more investment," Wu said.
However some enterprises, particularly small and medium-sized enterprises in the region, still encounter difficulties in receiving loans from local banks.
Zhong Dingxu, general manager of Sichuan's Deyue High-tech Seed Company, said: "I prefer to seek investments from business partners rather than applying for loans from banks because the procedure is very complicated."
Experts suggest that the region should learn from foreign countries' experiences so as to simplify procedures for obtaining loans.
(China Daily November 19, 2004)
