The Shanghai government will sell 7.6 billion yuan (US$1.1 billion) worth of bonds to help stimulate the economy, with a big chunk of the money going to environmental cleanup.

The local-government bonds, with a maturity of three years, will be used to support Shanghai's economic growth this year as the city strives to weather the global recession.

The Standing Committee of Shanghai People's Congress, the city's top legislative body, approved the bond plan proposed by the city government as it closed a two-day session on Thursday.

Green spending

About 5.64 billion yuan, or 74 percent of the capital, will be used for environmental protection projects such as water treatment upgrades.

The social welfare sector, including education and health care, will receive 925 million yuan, and 460 million yuan will be directed to rural concerns. The remaining 580 million yuan will be used for road construction.

Ge Ailing, director of the Shanghai Finance Bureau, said Thursday that the agency will cooperate with other local departments to make sure the bond capital is spent properly.

The central government in March authorized the Ministry of Finance to sell 200 billion yuan of bonds on behalf of local governments, the first such bonds in a decade since the Asian financial crisis.

The local bonds fall under provincial budget supervision, as Chinese law prohibits local governments from incurring debt directly.

Late last year, the central government unveiled a 4-trillion-yuan (US$586 billion) stimulus package to help turn around the declining growth rate of the economy and boost employment rolls.

Like other cities in China, Shanghai is feeling the effects of the global downturn and is experiencing layoffs as companies cut back or shut down.

During the first quarter this year, net new employment amounted to only 17,300 workers, down 82 percent from the same period last year.

At the end of last month, Shanghai's registered unemployed increased to 270,600, up 4.7 percent from March 2008.

The city's unemployment rate was held below 4.3 percent throughout last year, and the target for this year is below 4.5 percent.

Because registration is not mandatory, the actual unemployment rate is probably much higher, experts said. Many farm workers, for instance, are leaving Shanghai as jobs become harder to find.

In an attempt to address increasing unemployment, the city government announced at the beginning of the year that it would create 500,000 new job positions.

The People's Congress team supervising Shanghai's labor market said Thursday that the current employment situation is better than expected though the future remains challenging.

(Shanghai Daily April 24, 2009)