State Council: perfecting the Capital system of Investment projects in fixed assets
Xinhua News Agency, Beijing, 14 Nov (Reporter Ban Juanjuan) on 14 November, the Economic Information Daily published a report entitled "the State Council: perfecting the Capital system for fixed assets Investment projects." The article said that Premier Li Keqiang presided over the executive meeting of the State Council on November 13. To listen to the report on the investigation of the "March 21" special major explosion accident and the briefing on the investigation and investigation of responsibility in Jiangsu Xiangshui Tianjiayi Chemical Co., Ltd., To deploy and carry out special rectification of production safety, especially the production management of hazardous chemicals; It is decided to improve the capital management of investment projects in fixed assets and promote effective investment and strengthen risk prevention.
In accordance with the requirements of the CPC Central Committee and the State Council on doing a good job in the "six stable" work and deepening the reform of the investment and financing system, the meeting decided to improve the capital system for investment projects in fixed assets, so as to maintain and control them and treat them differently. Organic combination of promoting effective investment and strengthening risk prevention. The first is to reduce the minimum capital ratio for some infrastructure projects. Reduce the minimum share of capital for port, coastal and inland shipping projects from 25 per cent to 20 per cent. For infrastructure projects in the areas of highway, railway, urban construction, logistics, ecological and environmental protection, social and people's livelihood, on the premise of a clear mechanism of return on investment, reliable returns and controllable risks, the minimum proportion of capital can be appropriately reduced. The rate of reduction shall not exceed 5 percentage points. Second, industrial projects in the field of infrastructure and other countries that encourage development may raise capital through the issuance of equity-based and equity-based financial instruments, but shall not exceed 50% of the total capital of the project. Local governments may co-ordinate the use of financial funds to raise project capital. Third, we should strictly standardize management and strengthen risk prevention. Project loan funds, non-compliant shareholder loans and "real debts of famous shares" shall not be used as project capital, the raising of capital shall not illegally increase the hidden debts of local governments, and shall not violate the relevant requirements for the asset-liability ratio of state-owned enterprises. No arrears of project payment shall be allowed.
Lin Zhiyuan, deputy director of the Macroeconomic Research Center of Xiamen University, told the Economic Information News that increasing infrastructure investment is an important support for stable investment and stable growth. For local governments, the capital of infrastructure projects mainly comes from the financial allocation within the general public budget and the financial resources of local institutions outside the general public budget. The amount of capital that local governments can use to expand infrastructure investment is relatively limited. Reducing the minimum capital ratio for some infrastructure projects will help encourage local governments to increase infrastructure investment that meets the policy requirements.
"Project capital orientation optimization measures can effectively improve the policy effect of counter-cyclical adjustment and enhance the resilience of China's economic development. By reducing the capital ratio of some infrastructure projects and broadening the capital raising methods for encouraging development projects, we can not only improve the efficiency of the use of financial funds, but also have pressure to give priority to the allocation of funds to the key areas of the state to make up for weaknesses. We will better achieve the overall goal of supply-side structural reform in the country. " Guotai Junan Securities Chief Macro analyst Gao Ruidong told the Economic reference News.
Lin Zhiyuan also pointed out that in addition to the fact that government special debts can serve as project capital, this meeting allows capital to be raised through the issuance of equity and equity financial instruments in the field of infrastructure and in industry projects encouraged by other countries. It further broadens the sources of capital for infrastructure projects and is expected to stimulate the enthusiasm of social capital to intervene in the field of infrastructure and specific industries, and to improve the capital structure and governance structure of these areas and industries. "however, in the process of innovation in the fixed asset investment system, it is also important to guard against government debt risks and financial risks."
Xu Hongcai, deputy director of the Economic Policy Committee of the China Association for Policy and Scientific Research, said in an interview with the Economic Information News that reducing the minimum capital ratio will help expand investment and give better play to the key role of investment in stable growth. But at the same time, it also requires project stakeholders to strengthen risk prevention and control, which puts forward higher requirements for project management. In order to improve the effectiveness of investment, we must reduce operating costs and improve project income.