China’s debt audit plan sends stocks tumbling
Investors sold off Chinese stocks today on worries that official spending could be curtailed after a weekend announcement of an audit of government debt - which authorities want to curb even though it has helped fuel growth.
The National Audit Office yesterday said that it had been directed to carry out the check by the powerful State Council, the country's cabinet, and it would begin soon.
The move raised concern in the market that government spending on capital projects could be cut back after driving the economy for years, hitting companies that rely on such expenditure.
Chinese shares ended down 1.72% today, led by falls in infrastructure stocks.
The benchmark Shanghai Composite Index dropped 34.54 points to 1,976.31 on turnover of 65.87 billion yuan (US$10.74 billion).
China's growth model has long been based on taking advantage of the country's cheap and abundant labour to manufacture products for export, alongside credit-fuelled domestic investment to develop infrastructure. - AFP, July 29, 2013