Beijing plans to develop infrastructure and attract
                 more foreign investment seen by analysts as
                 efforts to curb ethnic strife in impoverished west

                 BEIJING -- China pledged yesterday to pour more
                 government money into its impoverished inland areas as
                 part of efforts to maintain its economic growth.

                 It has also brought forward the construction of the first,
                 large natural-gas pipeline from the north-west by at least
                 two years to accelerate development.

                 Mr Zeng Peiyan, chief of the Cabinet's powerful State
                 Development Planning Commission, said the government
                 would build highways, railway, airports, dams and
                 environmental projects in the 10 landlocked provinces of
                 western China.

                 "We will formulate even more preferential policies to
                 attract foreign investment in the western region," he said.

                 In 1998, a measly 3 per cent of foreign direct investment
                 (FDI) went to western provinces, compared with 87 per
                 cent to eastern coastal provinces and 10 to central
                 regions, according to the official Outlook magazine.

                 That year, China attracted a record US$45.6 billion
                 (S$75.3 billion) in FDI.

                 "The state is also prepared to strengthen investment to
                 support development of basic infrastructure in the west
                 in the next five-year plan", to be announced later this
                 year, he said.

                 Beijing's approval for the 953-km gas pipeline, which
                 will run from western Qinghai province east to Lanzhou
                 city, was speeded up after a visit to Lanzhou by Premier
                 Zhu Rongji last October.

                 He was appalled at the bad air in Lanzhou, rated the
                 world's most polluted city by the World Resources
                 Institute in Washington.

                 The pipeline, estimated to cost 4.4 billion yuan (S$823
                 million), will begin construction in April and is expected
                 to be completed by October next year.

                 Mr Zeng said that coastal provinces would not be hurt
                 by the "strategic decision" to develop the arid western
                 region left behind in the rush to get rich since China
                 began reforming its state-run economy 20 years ago.

                 Mr Chen Yuan, governor of the China Development
                 Bank, one of three state-policy banks, said recently 60
                 per cent of the bank's lending would go to the central
                 and western parts of China.

                 Half of China's poorest counties are in western
                 provinces.

                 Mr Zeng said the Cabinet would set up a special office
                 to coordinate development of the hinterland along the
                 lines of China's special economic zones -- set up in the
                 1980s, offering tax breaks and other incentives to attract
                 foreign investment.

                 Analysts say China is eager to narrow the wealth gap
                 between its eastern and western regions to curb ethnic
                 strife in the hinterland. -- Reuters, Financial Times

                       Adapted from The Straits Times, 5 Jan 2000.