China state-run businesses to invest 350 billion yuan in Chongqing

Sun May 20, 2012 4:25am EDT
 
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BEIJING (Reuters) - Thirty of China's biggest state-owned businesses have signed contracts worth about 350 billion yuan ($55.3 billion) with the southwestern municipality Chongqing, Chinese media reported on Sunday, in a sign of Beijing's determination to bolster confidence in the city formerly run by ousted leader Bo Xilai.

Since the fall of the once high-flying Chinese official, media reports and some investors have questioned whether Chongqing's debt-laden economy is also headed for trouble.

A senior government official led a delegation of state-owned enterprise heads, including those from Sinopec Group, China National Petroleum Corp. and China Mobile 0941.HK, to the city last week, The Economic Observer reported on Sunday.

"The central enterprises should firmly grasp new development opportunities in Chongqing," the newspaper quoted Wang Yong, the head of the State-owned Assets Supervision and Administration Commission, as saying. "Central enterprises" are the businesses directly managed by Beijing.

The companies signed agreements for a total of 72 projects, the paper reported. The article provided no details on the individual investments.

Bo's removal as Chongqing's Communist Party boss in March, amid police suspicions that his wife had murdered an expatriate British businessman last year, has triggered a party review of his leadership, including Chongqing's financial affairs.

That, plus fears of a purge of Bo's business allies, have created concerns over the debt accumulated by the vast municipality of some 30 million people.

Chongqing, China's biggest municipality, has approached Hong Kong investors with the aim of selling distressed property assets and bolstering its finances, Reuters reported earlier this month.

China Development Bank, a policy bank that lends at Beijing's behest, signed a memorandum with Chongqing in May to provide more capital for roads and social housing.

(Reporting by Sabrina Mao and Don Durfee; Editing by Daniel Magnowski)