Preferential policies in the pipeline to boost infrastructure construction

China is betting on its western development program to lead a new round of economic growth as the government is mulling "differentiated" policies for the region that will feature huge spending on infrastructure, Premier Li Keqiang said on Monday.

"We will roll out more preferential policies tailored for the western region concerning infrastructure projects, to accelerate the construction and upgrading of rail and road networks," he said.

He made the remark during a meeting with heads of the western provinces in Lanzhou, capital of Gansu province.

His comments coincide with a policy announced by the State Council on Monday to prioritize railway construction in the country's central and western areas as well as economically underdeveloped regions.

Li was on a three-day inspection tour in Gansu, which started on Saturday.

China will try to maintain sustainable economic growth and improve people's livelihoods in the next decade, and the central and western areas provide adequate room for further growth, Li said, adding that healthy economic development in the western region holds the key to the country's overall economic health.

"Differentiated policies" should be drafted for the western region, he said.

China's economic expansion has decelerated in recent years, with GDP rising 7.5 percent in the second quarter, down from 7.7 percent in the first.

Despite the economic slowdown, China has pledged to keep growth within a "reasonable range" without a stimulus.

The government has also vowed to push forward with reforms, as the nation faces problems including unbalanced growth in eastern and western areas, a wealth gap between rural and urban areas, industrial overcapacity and pollution.

Li said the central government is considering measures to bring growth potential in the west into full play.

Li cited measures to guide the transfer of labor-intensive and environmentally friendly industries from the coastal region to the west, as well as supportive policies to develop new energies that include wind, solar and hydro power.

Due to rising labor costs and a saturated market, the coastal areas are losing growth momentum. And experts believe the western region, which boasts a huge market and big pool of labor, is bound to become the country's new growth engine.

Wang Jun, a senior economist at China Center for International Economic Exchanges, a top government think tank, said western development is key to China's economic restructuring and the transformation of its growth pattern.

The region's economic performance would help the country achieve this year's growth target of 7.5 percent, he added.

Some western cities have grown faster than their rich counterparts in the east.

In the first half of this year, three western cities — Guiyang in Guizhou province, Xining in Qinghai province and Kunming in Yunnan province — topped the national list in terms of year-on-year growth.

The nation launched its western development program in 2000 to help the west catch up with the east in economic growth. The program covers more than half of the country's land and almost one-third of its population. Many western provinces and regions have benefited from the program in the past decade.

Gansu's economy has expanded an average 11.2 percent during the past 13 years, with fixed-asset investment gaining 24.3 percent each year.

But the western provinces hope the central government will issue more preferential policies and spend more to improve infrastructure there.

Wei Hong, governor of Sichuan province, said the central government should prioritize investment expansion in the west by extending specific support to key projects.

Wang Jun said the premier has sent a clear signal to boost western development, and "more specific measures are expected in the coming months" that will cover railway construction, urban renovation and improvement in the medical system.