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China planning agency plays down stimulus speculation

[BEIJING] China is not planning to sharply boost spending to stimulate the slowing economy, the country's top planning agency said on Thursday, playing down speculation that the government was planning to embark on a splurge.

The government aims to spur investment in key areas but it will encourage private sector rather than relay on state entities, said Luo Guosan, deputy head of the investment department at the National Development and Reform Commission (NDRC).

"There won't be a strong stimulus by sharply increasing fiscal spending, but we want active participation of social capital," Mr Luo told a news conference.

The central government hopes to reduce routine spending to channel more funds into major projects, he said without elaborating.

Bloomberg news agency reported earlier this week that China is accelerating 300 infrastructure projects valued at 7 trillion yuan (US$1.13 trillion) this year as policymakers seek to shore up growth.

In December, the NDRC said China plans to speed up investment projects in several key sectors, including water conservation, environmental protection, power grids and health care, to support the slowing economy.

The NDRC approved infrastructure projects with a total investment value of 1.77 trillion yuan in 2014, with the bulk approved in the fourth quarter, according to Reuters's estimates based on the commission's announcements.

Chinese leaders have ruled out big stimulus measures as China is still struggling to deal with a mountain of local government debt, the hangover from 4 trillion yuan in spending rolled out in 2008/09 to cushion the impact of the global crisis.

A Reuters' poll showed annual economic growth was likely to have slowed to 7.2 per cent in the fourth quarter, the weakest since the depths of the global crisis, which would keep pressure on policymakers to head off a sharper slowdown this year.