THE government will stop cities with under-utilized urban rail systems from increasing capacity and will urge local authorities to improve guidance to stop “blind investment,” in a move to curb debt risks wrought from city-level infrastructure spending.

The instructions came from the country’s top economic regulator, the National Development and Reform Commission (NDRC), which issued a statement late Tuesday asking provincial-level governments to strictly control the increase of new vehicles for urban rail projects.

Cities with a vehicle capacity utilization rate below 80 percent on average will not be allowed to increase capacity, the NDRC said.

Such infrastructure spending has helped to shore up economic growth but is now being scrutinized more closely after the government pledged to clamp down on financial risks.

Policymakers have warned about the risk of asset bubbles due to high levels of corporate and household debt in the economy.

Quoting an unnamed NDRC official, China Daily reported yesterday that local governments will be asked to calculate the data which would then be collected by the regulator to improve supervision.

The newspaper also said, quoting sources familiar with the matter, that the NDRC was revising benchmarks for urban rail project approvals with a view to improve standards to curb financial risks.(SD-Agencies)