The ultimatum aims to halt some projects that fail to meet industry policies, land and credit approval procedures and environmental regulations, said Zhang Zhiqiang, a senior official in charge of fixed-assets investment with the National Development and Reform Commission (NDRC), the top economic planner.

The commission on Friday unveiled the central government circular, which ordered local authorities to self-examine projects launched between January and June. Local authorities should report their final results by the end of August.

"We are going to punish those involved in malpractices," said Zhang, deputy director of the commission's Department of Fixed Assets Investment.

Zhang said that projects with overseas investment should also be examined as domestic ones.

According to the circular, the review covers every project with an investment of more than 100 million yuan (US$12.5 million). For steel mills, cement factories, vehicle assembly plants, power stations and aluminum smelters, the benchmark is 30 million yuan (US$3.7 million).

NDRC spokesman Han Yongwen said excessive investment in fixed assets remains a large problem for the economy.

Nearly 100,000 new projects began in the first six months of this year, 20,000 more than during the same period last year. The investment spree pushed China's economy to grow by 10.9 per cent during the period, the highest rate since 1995.

The sizzling investment rise has resulted in excessive use of land and credit loans. Government figures showed that loans reached 2.14 trillion yuan (US$268 billion) in the first half, accounting for 85.7 per cent of the government's whole-year budget.

A sample survey by the commission also found 40 per cent of the new projects have violated regulations on land use, environmental impact assessment or approval procedures.

In the meantime, although the government planned to cut energy consumption per unit of GDP by 4 per cent from that of 2005, the actual figure rose by 0.8 per cent in the first half of the year.

The central government is worried about the fast growth and rising energy use, with Premier Wen Jiabao recently urging all local governments and officials to "unify thinking and action" in curbing the trend.

(China Daily 08/05/2006 page1)