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China orders review of investment projects amid efforts to cool off economy

BEIJING - China has ordered an urgent review of investment projects to stop unauthorized work, stepping up efforts to cool off the sizzling economy, a state news agency said Thursday.

The review will target steel, aluminum, charcoal, auto, cement, power, textile and other industries to weed out illegal projects ... (and) slow down investment,” the Xinhua News Agency said.

Chinese leaders are trying to rein in an investment boom that drove economic growth last quarter to 11.3 percent. They want high growth to reduce poverty but worry that runaway investment could ignite inflation or lead to a debt crisis for banks and companies.

The government has tightened bank credit, raised interest rates and imposed curbs on construction. But officials say investment is still expanding at a double-digit annual rate.

Economic planners are meeting this week to plan possible new controls to contain the boom, according to state media.

The review is to affect projects with investment of at least 100 million yuan (US$12.5 million; Ð10 million) and that started in the first six months of the year, Xinhua said.

Investors will also have to prove that they have acquired their land or bank loans in accordance with set rules, and that the feasibility reports and environmental impact assessments have been properly done and approved,” the report said.

It said an earlier survey of major capital projects in some regions revealed that 40 percent of the projects were illegal in some aspect.

Planners complain that lower-level officials who don’t want to hurt their local economies have failed to enforce restrictions and often are the driving force behind new investment projects.