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SCMP Reporter

CHINA'S regions were again urged by the Communist Party mouthpiece, the People's Daily, yesterday to remain in unison with the central Government.

  The newspaper published a commentary days after the central Government sent 10 ministerial-level investigation teams to re-establish control over regional ''warlords''.

  Entitled ''Guaranteeing the Construction of Major National Projects'', the commentary was the latest of a blitz of propaganda campaigns launched by the top echelon emphasising the importance of loyalty among the rank and file.

  But it also revealed the problem of ''desertion'' among regional cadres, who siphoned allocations from Beijing into local construction projects leaving the central Government to foot the bills of large-scale national projects.

  ''Some localities and units have paid attention only to those projects that benefit themselves and produce quick profits and been interested only in speculating in stocks and real estate or illegally raising funds, leaving a deficit in allocations for major national construction projects.

  ''Although such cases are rare, they cannot be neglected,'' the paper warned.

  It hinted that projects which were not in line with the Government's industrial policy would be axed and the cadres responsible could face legal punishment.

  ''It is necessary to halt or suspend construction of those projects . . . so as to save funds for construction of the major national projects,'' it said.

  More importantly, the commentary highlighted that regional governments must submit to the control of the central authorities and that projects approved by Beijing would be given priority over those financed and approved by the regional governments.

  ''Whenever there are conflicts, [local governments] must make sure that major projects will have priority over minor projects and projects managed by the central supercede regional projects,'' it said.

  Regional governments should co-operate with Beijing by ensuring the supply of funds, energy, raw materials and transport facilities for major projects approved by the central Government, the commentary stressed.

  Sources said economic adjustment launched by Beijing had hit a number of provinces.

  For example, the China News Service (CNS) yesterday reported that the property market in Hainan province had already suffered a ''dramatic decline'' since the beginning of last month.

  According to the CNS, bank deposits in Hainan dropped significantly and property prices plummeted since the launching of the adjustment programme.

  It was reported earlier that under orders from Beijing, regional banks in other provinces such as Jiangxi and Guizhou had withdrawn their deposits from Hainan and suspended their investment there.

  The sluggish property market in Hainan was exacerbated by rising consumer prices. Exports dropped 5.5 per cent in the first six months and inflation averaged 20 per cent in the same period, CNS said.

  But a reformist provincial leader hinted that there would be difficulties for regional governments to heed the demands of Beijing without hurting the local economy.

  Guangxi Vice-Governor Lei Yu told CNS that Guangxi would need a staggering 160 billion yuan (HK$215.84 billion) of investment in the next seven years for its construction.

  Instead of suspending all construction projects, the Vice-Governor indicated that it might be necessary to look for new sources of finance.

  To solve the financial crunch, Mr Lei said Beijing should allow the establishment of ''para-banking facilities'' in Guangxi so the Government could absorb surplus capital in the domestic market.

  The issuing of bonds and stocks and foreign investment provided additional channels of funds, Mr Lei said.

  Moreover, the Vice-Governor, who was transferred from Guangzhou to Guangxi last year, said it was important for the province to strengthen its links with both Guangdong and its foreign neighbours.

      in developing its economy.



Beijing in loyalty call to regions