Liaoning fears lack of cash due to squeeze
THE northeastern province of Liaoning is having difficulty raising the money it needs to reform old enterprises and improve infrastructure because of the credit crunch and is turning to overseas investors to fill the gap, according to a provincial official.
One result was that Hongkong-listed company China Strategic Investment was talking with the Northeast Medicine Manufacturing Plant in Shenyang about setting up joint-venture production lines to make vitamin C.
Jiang Delong of the Liaoning Provincial Commission of Foreign Economic Relations and Trade said in Hongkong yesterday that 100 billion yuan (about HK$135 billion at the official rate) was needed for the planned industrial and infrastructure programmes.
Liaoning, one of China's industrial bases, has 26,000 industrial enterprises, 1,062 of which are large and medium-sized state-owned enterprises.
Last year, the province's industrial output was worth 233.4 billion yuan, he said.
''Many unplanned loans were granted by the banking system. Small enterprises could easily borrow the money they wanted if they had connections with bank officials, while large and medium-sized enterprises could not carry out their planned reforms becauseof shortage of funds,'' he said.
Mr Jiang said he hoped the economic control measures adopted by Beijing would be effective so that funds could be channelled into industrial and infrastructure programmes as planned.
But he said that even if the amount earmarked for large and medium-sized enterprises was injected as planned under the reforms, the money would still not be enough.
As a result, Liaoning was turning to overseas investors for funds to rejuvenate its industrial enterprises, including those in the iron and steel industry.
The province produced 12.63 million tonnes of iron and 13.39 million tonnes of steel last year, and hosts the country's largest iron and steel group, Anshan Iron and Steel Co.