Provinces must act in national interest

Sichuan, Guizhou and Yunan provinces are, reportedly, investing in heavy production industries.

This will aggravate the country's excessive production capacity and credit crisis, says an article in 21st Century Business Herald (excerpts below).

Some local governments use administrative measures to build up an enclosed market allowing a monopoly for local products.

Although some industries, like cement and steel, already have excessive production capacity on a national scale, that may not apply in certain provinces. So investors can make money, at least temporarily, from these industries in an artificially protected market.

Such action is obviously against the overall trend of reform and the battle to weed out backward production capacity.

Local governments should have foresight and promote innovation and industrial upgrading, even if backward industries remain profitable for a certain period of time.

The central government should do more to coordinate actions of their local counterparts to better ensure the transforming of the economic structure.

It is almost impossible to accomplish the transformation without the active support of local governments.