The Chinese government will fund just a fifth of the estimated Rmb3,000bn cost of reconstruction and development in earthquake-affected Sichuan, leaving businesses and state-owned banks to pay for the rest, provincial officials said on Friday.
Even as economic officials issue warnings that China’s economy is cooling much faster than expected as a result of the global crisis, Sichuan officials said they were optimistic that state-owned companies and the private sector would invest in the disaster zone.
“The government’s investment will encourage all kinds of investment from society to help us rebuild Sichuan after the quake,” said Wei Hong, executive vice-governor of Sichuan Province, at a press conference.
“We will seek loans from domestic banks, financing from capital markets and donations from the public to make up the rest of the needed investment.”
The government appears to be ordering state-owned banks to shoulder much of the burden of a giant fiscal stimulus package announced last week at a time when they face slowing profits and rising bad loans.
China’s benchmark stock index has fallen by nearly 70 per cent from the peak it reached last October and regulators have effectively suspended approvals for new listings.
Mr Wei said Sichuan needed around Rmb3,000bn ($439bn, €350bn, £297bn) of investment by the end of 2010 to rebuild and meet economic growth targets, but the government would provide only about 20 per cent of that amount.
The comments came in a week in which thousands of disgruntled citizens rioted in neighbouring Gansu Province in an area badly hit by the May 12 earthquake.
On Monday and Tuesday a protest over forced relocations in Longnan City descended into a full-blown riot, with protesters attacking Communist party offices and fighting police with iron bars stones and axes, according to government reports on the incident.
More than 60 police officers and citizens were badly injured in the riot, which led to 30 arrests, according to Chinese state media.
Official government reports on the incident linked it with the earthquake in nearby Sichuan, saying post-earthquake reconstruction work in Longnan was “very onerous” and a number of key projects were only just beginning.
Asked whether the Sichuan government had made any preparations for protests or riots over the slow pace of reconstruction or unpaid government compensation, Mr Wei said people in the disaster area were fully satisfied by government efforts to restore homes and living conditions.
“Our cadres at various levels have the confidence and capacity to help the general public resolve their problems and difficulties,” he said.
With winter fast approaching Sichuan officials acknowledged quake-afflicted areas were reporting shortages of basic necessities, including clothing, bedding and even food as well as adequate shelter for some of the 5.16m households whose homes were destroyed or damaged.