State Council decreases projects' equity ratio

China's State Council has decided to lower the proportion of equity required for investment in some fixed-asset investment projects. In dirty or energy-intensive industries the equity requirement will increase.

According to part of the draft Opinions on Deepening the Work of Economic System Reform in 2009 (关于2009年深化经济体制改革工作的意见), investors can now rely on debt for a higher proportion of investment in transport infrastructure, commercial real estate, postal services and telecommunications projects. But analysts said this will not necessarily make banks more willing to lend money.

“Reducing the minimum equity requirement does not necessarily mean that banks will be willing to advance more loans for infrastructure projects,” said Betty Tam, a Shanghai-based corporate partner of Herbert Smith.