Screening of Fixed Asset Investment Projects Circular

(Issued by the State Council General Office on April 27 2004.)

Guo Ban Fa [2004] No.38

To the people's government of each province, autonomous region and municipality directly under the central government, and each ministry, commission and directly subordinate organization of the State Council:

At present our economy continues to develop relatively rapidly. Economic returns have been further increased and the overall economic situation is good. However some prominent contradictions in and problems with economic development have not been effectively resolved, and some have become worse. This is manifested mainly by an over-rapid growth in and excessive scale of fixed asset investment, and the concurrent prominent contradictions due to tight supply and demand of coal, electricity, oil, transport and major natural resources. At present, efforts shall be made to resolve the problems of the investment boom, to promote relatively rapid and stable economic development, and to prevent large fluctuations. In order to further strengthen macro-economic adjustment and control, the State Council has decided to launch the screening work on fixed asset investment projects.

1. Guiding ideology and principles for screening work

(1) Screening work shall adopt and follow through with a scientific development view. All parties involved must be united in their thinking on the central government's decisions and planning. They must understand fully the existing problems of the investment boom in current economic development and the adverse effects brought forth. Through this screening exercise, each region and department shall fully shift the focus of its work on to raising the quality and returns of economic growth and must be determined to overcome the phenomenon of mutual rivalry, the irrational undertaking of projects, and disordered situations.

(2) Screening work shall be carried out in accordance with current laws, administrative regulations, and state policy. The work shall mainly be conducted in accordance with state policy and industrial planning and with regulations and policies on land administration, environmental protection, bank credit and the examination and approval of projects, etc., and also with the requirements in State Council circulars on the control of steel, electrolytic aluminium and concrete, and the construction of party and government authorities office buildings and training centres, urban express transit railways and golf courses, etc. Measures shall be adopted if projects do not comply with the requirements: construction shall be stopped where necessary, or rectified within the time limit where necessary.

(3) Screening work shall be firmly focused on the key points and shall be guided and treated according to their respective categories. At the same time as restraining the trend of over-rapid growth in investment, attention shall be paid to structural adjustment. Projects with a low technology content, that are plainly in excess of the market demand, and those that do not comply with the requirements of structural adjustment - particularly projects of irrational investment and low quality duplicate construction, that involve high levels of energy, water or resource consumption, or that involve serious pollution shall be firmly suppressed. More screening efforts shall be exercised on such construction projects that receive government promotion. Projects with a high technology content, which comply with the requirements of structural adjustment, and those involving weak areas such as water conservancy of agriculture and forestry, ecological construction, environmental infrastructure, and social services that need to be strengthened, shall continue to be supported.

(4) Screening work shall be carried out according to the subordinate relations of the project. National Development and Reform Commission shall be responsible for the organization work of screening, and shall strengthen guidance and inspection in accordance with the division of the respective responsibilities among departments such as the Ministry of Supervision, the Ministry of Land and Resources, the Ministry of Construction, the People's Bank of China, the State Administration of Auditing, the State Environmental Protection Administration and the China Banking Regulatory Commission.

2. The scope of screening work

Each district and department and the relevant work unit shall implement comprehensive screening, examination and verification of projects under construction and projects planned for construction. Projects under construction shall refer to projects on which work has already started. Projects planned for construction shall refer to projects for which the project work unit has filed an application and are currently being handled by government departments, but on which work has not yet started.

The focus of screening shall be: (1) steel, electrolytic aluminium, concrete, and projects such as party and government authorities office buildings and training centres, urban express transit railways, golf courses, exhibition and convention centres, logistic parks and large-scale shopping centres, etc.; and (2) all projects that newly started construction from 2004.

Water conservancy of agriculture and forestry (including the rural "six small" projects), ecological construction, education (not including university towns), hygiene and science (not including science and technology parks) projects shall not be within the scope of screening.

3. The content of screening

During screening, examination and verification shall be carried out for projects under construction and projects planned for construction. The content of screening is as follows:

(1) Whether or not the project complies with state policy and industrial planning.

(2) Whether or not the project complies with the overall planning on land use and has been incorporated into the annual land use plan.

(3) Whether or not the project complies with the relevant provisions on state environmental protection and has passed an environmental impact assessment.

(4) Whether or not the project complies with the overall urban planning.

(5) Whether or not the project complies with all the procedures for construction such as project examination and approval.

(6) Whether or not the project complies with credit policy and with the relevant provisions on fixed asset loans.

(7) Whether or not the project complies with the requirements in the State Council General Office, Transmission of Several Opinions on Preventing Irrational Investment in the Steel, Electrolytic Aluminium and Concrete Industries Circular of departments such as National Development and Reform Commission (Guo Ban Fa [2003] No. 103), the Central Committee of the Communist Party of China General Office and the State Council General Office, Continuation of Strict Control over the Construction Projects of Party and Government Authorities Office Buildings and Training Centres Circular (Zhong Ban Fa [2003] No. 3), State Council General Office, Strengthening of Construction Administration of Urban Express Transit Railways Circular (Guo Ban Fa [2003] No. 81) and State Council General Office, Suspension on the Construction of New Golf Courses Circular (Guo Ban Fa [2004] No. 1).

(8) Whether or not the project falls within the provisions of State Council General Office, Strict Banning on the Construction of Fossil Fuel Power Stations of 1350 MW or below in Violation of the Regulations Circular (Guo Ban Fa Ming Dian [2002] No. 6) and the former State Economic and Trade Commission, Disuse of Obsolete and Backward Production Capacities, Processes and Products Catalogue (First, Second and Third Batches) (Guo Jia Jing Mao Wei Ling No. 6, 16, 32)

(9) Whether or not the project complies with other laws, administrative regulations and state policy related to project construction.

4. Post-screening Handling

(1) Construction of projects under construction that are explicitly banned by the state, or that contravene state policy or the related laws or administrative regulations such as the Land Administration Law shall be stopped.

(2) Construction of projects under construction that do not comply with the requirements of construction procedures such as environmental protection provisions, urban planning or project examination and approval, or that do not comply with requirements such as credit policies, shall be suspended and rectified within the time limit.

(3) Projects under construction that comply with the requirements of laws, administrative regulations and state policy shall, on the basis of implementing the conditions of project construction, organize the progress of construction appropriately.

(4) Initiation of project proposals for projects planned for construction that do not comply with the requirements of laws, administrative regulations and state policy shall all be cancelled, and the projects are strictly banned from starting construction without authorization.

(5) In principle no new steel, electrolytic aluminium or concrete projects shall be started within the year. Reporting to the state for approval is necessary for major individual projects concerning adjusting and optimizing structure that truly are required to be started within the year.

5. Working methods

(1) Provincial-level people's governments shall be responsible for the screening of regional projects. The relevant departments and work units of the State Council shall be responsible for the screening of central government projects. If construction projects are a joint investment between the central government and a local authority, the relevant departments and the relevant work units of the State Council shall be responsible for screening if the project is mainly invested by the central government; the provincial-level people's government shall be responsible if the project is mainly invested by a local authority.

(2) The National Development and Reform Commission shall be responsible for the concrete organization and supervision of the implementation of screening work, and shall exercise guidance and random checks on such work with respect to various areas such as the state industrial policy, industrial planning, and the project examination and approval procedure.

(3) The Ministry of Land and Resources, the Ministry of Construction and the State Environmental Protection Administration shall separately exercise guidance and random checks on areas such as land administration, urban planning and environmental protection. The China Banking Regulatory Commission shall exercise guidance and random checks on areas of credit policy and provisions on fixed asset loans, and shall be responsible for the implementation of random checking on bundled project loans for urban construction.

(4) Led by the National Development and Reform Commission, and with the participation of departments such as the Ministry of Supervision, the Ministry of Land and Resources, the Ministry of Construction, the People's Bank of China, the State Administration of Auditing, the State Environmental Protection Administration and the China Banking Regulatory Commission, a working team shall be formed to be responsible for the concrete implementation of screening work.

6. Work Progress

(1) Each region, department and the relevant work unit shall pay heed to the screening work and strengthen the leadership. Comrades who are mainly responsible shall personally assume leadership. They shall transfer personnel to form a provisional body with clearly defined responsibilities, and shall formulate a comprehensive work plan, while organizing and launching screening work on projects expeditiously.

(2) Screening work by each region, department and the relevant work unit shall be completed within one and a half months from the date of issue of the Circular. The screening results and the handling measures shall be reported to the National Development and Reform Commission. (1) The screening results and the handling measures for all projects under construction and projects planned for construction within the scope of screening; (2) Stopping construction, suspension on construction and rectification within time limits, cancelling initiation of project proposals or other handling opinions in compliance with requirements shall be raised on key screening projects with total investment of Rmb10 million or above, or other screening projects with total investment of Rmb30 million or above, depending upon the situation of each project.

(3) Once screening work has been completed by each region, department and the relevant work unit, random checks shall be conducted on the conditions of screening by the National Development and Reform Commission, the Ministry of Supervision, the Ministry of Land and Resources, the Ministry of Construction, the People's Bank of China, the State Administration of Auditing, the State Environmental Protection Administration and the China Banking Regulatory Commission. Once random checks have been completed, the National Development and Reform Commission shall, in conjunction with the other relevant departments, compile a report to be submitted to the State Council.

(4) Each region, department and the relevant work unit shall take the whole situation into account, fully implement the screening work, report the facts of screening results, and prevent the rise of regional or industrial protectionism. In particular they must handle properly problems that may arise from stopping or suspension of construction projects, formulate plans in advance, and deal with the aftermath properly. If there is falsification or deliberate covering up, or new ill effects created after a project has been stopped or suspended for reasons related to work, once investigated and verified, the liability of the relevant leaders shall be pursued.

(5) Screening of fixed asset investment projects has a strong policy nature and touches on a broad area. All State Council departments must be conscientious in performing their duties, co-ordinate closely with each other, strengthen communication among themselves, discover in a timely way prominent problems arising from screening work, and resolve the problems via coordination. Major problems shall be reported to the State Council.

State Council General Office

April 27 2004