Worries about capital flight


CHINESE experts and officials warned that the growing power shortages across the nation may cause foreign investors to reconsider doing business in China.  

While most believe investors will not be put off by the looming crisis, investors could choose to move plants to provinces such as Sichuan and Hubei where power demands are more easily met.  

“Provinces rich in energy supply will be investment magnets,” Zhang Jianyu, a visiting scholar with Tsinghua University told China Daily.  

Recently, multinationals such as Coca-Cola and General Motors in Shanghai, Hangzhou and Guangdong have had to suspend production during peak hours because of power shortages.  

But Zhang told investors the country would have a power surplus after 2006 as the government was busy building power plants to overcome the shortfall. 

An official with the National Development and Reform Commission dismissed concerns that power shortages might curtail foreign funds. 

“I've seen no sign of an investment slowdown,” said the official. “Investors are still attracted by the country's investment environment.”  

Zhang said some foreign energy companies such as British Petroleum might use the opportunity to sell more energy to China. 

He said effective management would minimise problems arising from the shortfall. 

The rapid pace of development, growing urbanisation and low energy efficiency accounted for much of the energy use. – China Daily  

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