Beijing hits brakes on subway boom

SHANGHAI: China has hit the brakes on subway projects in at least three cities and Beijing is asking others to slow down their plans, local governments and media have reported, indicating concerns over high debt from city-level infrastructure spending.

China has been in the grips of a metro-building binge with more than 50 cities working on over 1 trillion yuan ($150.8 billion) worth of projects, after population restrictions were loosened last year to allow more cities to have metro systems.

Such infrastructure spending has helped to shore up economic growth but is now being scrutinised more closely after the government pledged to clamp down on financial risks.

Policymakers have warned about the risk of asset bubbles due to high levels of corporate and household debt in the economy.  China´s overall debt has jumped to more than 250 percent of GDP from 150 percent at the end of 2006.Financial magazine Caixin, citing unnamed sources close to the matter, reported that authorities in Inner Mongolia´s Hohhot and Baotou cities have scrapped approved projects worth billions of dollars in recent months due to concerns over finances.

Xianyang city which wants to build six lines to link up to central Shaanxi province´s capital of Xi´an, said in a statement this month some of its plans had not yet been approved by the state planner, the National Development and Reform Commission.