Fears over impact of Beijing "stimulus" When the mayor of Zhanjiang walked out of China's powerful economic planning ministry a few days ago, he was so elated with the $11bn steel mill approval in his hand that he kissed the piece of paper. The smooch, which was captured by a local news crew and went viral online, highlighted the flurry of projects that have received approval from Beijing in the two weeks since Premier Wen Jiabao called for measures to boost growth. IN Chinese Economy While Beijing has stopped short of declaring an official "stimulus" as it did in 2008, there has been a decisive shift of mood in the Chinese capital. In the past two weeks, the government appears to be fast-tracking infrastructure projects in an effort to buoy China's economy and has announced a range of programmes - from subsidies to tax reforms - designed to boost growth. Even before Mr Wen's speech, the National Development and Reform Commission, a powerful central planning agency, had been quietly speeding up infrastructure approvals. Beijing has for years been trying to boost household consumption and rebalance the economy towards consumer-driven growth, but the current push, which seems likely to benefit industrial sectors, could potentially reverse that. Approvals such as those won by the happy mayor of Zhanjiang doubled in the first four months of this year compared with the same period last year, building on a rush of approvals in the closing months of 2011. Beijing has been quietly opening its purse-strings too: central government spending was up 27 per cent in the first four months of this year from the previous year, expanding almost twice as fast as revenue growth. Solar, hydropower, water, railways, steel, nuclear power and clean energy have all been mentioned in recent official announcements as sectors that should be encouraged in the push. While the dynamics in each sector are slightly different, economists worry that an influx of new cash will exacerbate some of the market distortions in areas that are already heavily state-dominated. Steel is the clearest example. After the stimulus of 2008, China saw steel demand skyrocket - along with iron ore prices and demand for other raw materials - but that burst of demand has left the sector with excess capacity. In the first quarter of this year China's state-owned steel companies saw profits fall 68 per cent from a year earlier, and many state-owned mills were operating at a loss as they sought to tread water. Despite these dire conditions, the past two weeks have seen one announcement after another about multibillion-dollar investments in new mills. "Some people are quite concerned," says a steel trader based in Shandong. All these projects might boost demand a little in the short term but will make things worse in the long term. The increase in approvals this year is partly attributable to the low base. At the beginning of 2011 Beijing's bureaucracy slowed to a crawl as ministries waited for the new five-year plan to be passed. Most of the recently approved projects had been in the pipeline for years, but needed a formal stamp from Beijing before they could proceed. In Zhanjiang, ground was broken at the site of the new Baosteel mill just seven days after the infamous kiss, even though the mill itself had been in planning for at least a decade. There are signs that Beijing is trying to avoid the excesses of the 2008 stimulus. The new policies include an extension of subsidies for home appliances and a car purchase subsidy, both efforts to encourage consumption. Policy makers are also trying to open more avenues for private investment in the energy and banking sectors, areas that are typically dominated by state-owned enterprises. The recent NDRC approvals also include many projects - such as airports or municipal heating schemes - that were already scheduled as part of the current five-year plan. Those working in sectors such as steel say that, like the 2008 stimulus, state-owned companies are likely to benefit the most from the policy shift. Zhang Lin, analyst at Lange steel, says the policy direction is clear: "The state advances and the private sector retreats." Additional reporting by Gwen Chen in Beijing