Technological upgrades within industrial enterprises in South China's Guangdong Province will be boosted with more money earmarked for the sector.

Statistics show the province's investment totalled 51.4 billion yuan (US$6.2 billion) last year. The amount is expected to increase by about 400 million yuan (US$49 million) this year, said Luo Jiansheng, deputy director of the province's Economic and Trade Commission.

The decision was made to curb the provincial trend of reducing investment in the sector.

According to the Guangdong Provincial Statistics Bureau, investment in technological upgrades has reduced each year since 2000.

Investment in the sector made up 18.1 per cent of the province's total industrial fixed assets investment in 2000, 11.4 per cent in 2001 and only 6.2 per cent last year.

Investment in technology upgrading totalled 9.91 billion yuan (US$1.19 billion) in the first four months this year, down 10.5 per cent from the same period in 2002.

But in May, the situation was reversed. About 3.3 billion yuan (US$4 billion) was poured into the sector during the month, taking the total investment for the first five months up to about the same level as 2002.

To increase investment this year, Vice-Governor You Ningfeng called on enterprises to broaden investment channels to increase funds from overseas and private businesses, or by issuing shares.

The reduction over the past few years was partially caused by a large amount of money being used to build telecommunication facilities.

"With major telecommunication projects completed in the province, more funds will switch to other areas including the technological upgrades in the industrial sector,'' Luo said.

Last year, 53 per cent of investment in technical upgrades came from enterprises, 14.8 per cent was from bank loans and 10.2 per cent came from overseas capital. The rest was from other channels including private businesses and domestic enterprises.

Luo said technological advancement needs to be supported by more loans.

At present, bank loans are mainly used for the construction of infrastructure and the purchasing of housing and consumer goods.

However, banks are generally concerned about whether or not enterprises can pay off their loans on time.

"It's difficult for us to test enterprises' credit, especially the credit of private firms,'' said a bank representative.

Loans used for technological upgrading are much higher in some Yangtze River Delta cities compared with Guangdong Province.

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