China has begun using environmental regulations to put the brakes on some projects and help cool its overheating economy, an environmental protection official was quoted as saying on Tuesday.

Authorities recently ordered the builders of 30 infrastructure projects, most of them in the power sector, to stop work because they had flouted a law requiring environmental impact assessments.

But as well as ensuring environmental regulations were enforced, the order to stop work was also partly motivated by broad economic considerations, the official said.

"The environment has become a new way, in addition to things like interest rates, to cool down the economy if it is too hot," Hu Tao of the State Environmental Protection Administration was quoted as saying in the China Daily.

China's environment has suffered considerable damage in recent years as economic growth has accelerated. Leaders have been aware of the environmental costs of rapid growth but their main priority has been ensuring a strong economy.

But recently, the government has adopted a raft of measures to cool overheating in the world's seventh largest economy, which statistics on Tuesday showed grew at a sizzling 9.5 percent last year, exceeding forecasts.

The Environmental Protection Administration ordered the 30 infrastructure projects to halt operations because they had not undertaken environmental impact assessments before starting construction, China Daily said.

"Most of the projects, involving billions of U.S. dollars and in 13 provinces and municipalities, are related to electricity generation," the newspaper said.

Among the projects were 23 power stations, including the 12,600-megawatt Xiluodu station on the upper Yangtze River and the 4,200-megawatt underground power station at the Three Gorges Dam, with a total capacity of nearly 32,000 megawatts, the environmental protection office said previously.

The China Daily said work had stopped on 22 of the projects but the builders of eight had defied the order.

Builders of the 22 projects that complied with the order had paid maximum fines of 200,000 yuan ($24,000) each but the other eight had "shown no sign of accepting the administration's punishment," the newspaper said.

"The number of environmental laws in China matches that in other countries, but the enforcement of laws is far from satisfactory," Hu was quoted as saying.

There was no information about what would happen to the eight projects that had defied authorities, or when work on the projects would resume.



Source: Reuters

China's highly fragmented software-outsourcing industry will prevent it from matching neighboring India's success in the global information technology services market for many years, McKinsey & Co. said Thursday.

"For starters, the Chinese must consolidate their highly fragmented industry to gain the size and expertise needed to capture large international projects," the global consulting firm said in the McKinsey Quarterly journal. "Currently, there is little movement in this direction."

China and India, two of the world's largest and fastest growing economies, have pursued different models of development, with China having emerged as the world's manufacturing hub and India as a global provider of IT services.

In the article, McKinsey said China's IT industry is certainly showing signs of "healthy expansion." The number of engineering graduates and software professionals has grown considerably and the ranks of English-speaking graduates in the workforce have doubled to 24 million over the past four years. Furthermore, annual revenue in software and IT services have risen 42% on average since 1997, reaching $6.8 billion in 2003.

But that's still barely half of India's revenue of $12.7 billion a year from the sector, said McKinsey. And foreign outsourcing business accounts for just 10% of the global industry's revenue compared with around 70% for India.

"Growth (in China) is driven by domestic demand - most customers are small and midsize Chinese enterprises that want their software customized to their own needs," it said, adding that many projects are below optimal scale, suppliers compete on price and collecting payments can be problematic.

Noting that the top 10 IT services companies in China have just a 20% share of the domestic market compared with a 45% stake commanded by India's top 10, McKinsey said that to "compete effectively in global outsourcing, China's software industry must consolidate."

Without adequate scale, Chinese players won't likely be able to attract top international clients that Indian firms such as Tata Consultancy Services Ltd. ( 532540.BY), Infosys Technologies Ltd. (INFY) and Wipro Ltd. (WIT) have been successful at doing, it said.

Smaller companies are "riskier and less reliable partners," said McKinsey. They are more vulnerable to the loss of key personnel and may not have the financial muscle to survive for the duration of a project.

Yet only 12% of Chinese software service providers see mergers, acquisitions and alliances as a priority, said McKinsey, citing a survey it conducted of 32 Chinese firms. In contrast, several Indian firms are considering takeovers of Chinese firms to expand operations.

McKinsey recommended that Chinese software firms should "manage their talent better" and do more to develop their employees to reduce the annual employee turnover rate that it estimates at about 20%. Even in the U.S., where the IT labor market is very fluid, the turnover rate averages 14%, it said. "With greater size and an improved talent base, Chinese software-services companies will be in a better position to address other issues, such as building credible brands in international markets and developing knowledge of specific industries, including finance and pharmaceuticals," the consulting firm said.

 
Source: Dow Jones Newswires

China provides important help to the US on international security issues, he acknowledged, and the two countries are achieving productive cooperation through Sino-US Joint Commission on Commerce and Trade (JCCT).

China and the U.S. reached accord on difficult issues like the WAPI wireless network standard, he said.

"All of us can be encouraged by the deepening relationship between our two countries and China's engagement with the world," Evans said, adding that China and the United States have been the two engines of growth during a global economic downturn.

He said most of the people in the United States believe the US-China relations will continue to promote peace, prosperity and stability in the world.

Evans also mentioned some trade friction existing between the two nations, expressing his hope that these problems would be resolved appropriately.

"We look forward to developing a higher standard of economic cooperation with China that can level the playing field," he said.

Evans arrived in Beijing Tuesday afternoon for a visit as guest of US ambassador to China Clark T. Randt.

He will attend a Sino-US roundtable conference on intellectual property rights (IPR) scheduled for Thursday.

Meanwhile, Evans will meet Chinese leaders and confer with the relevant Chinese ministries and commissions on Sino-US trade and economic relations and other related issues.

  
Sources: Xinhua