The National Development and Reform Commission (NDRC) issued a red circular recently, requiring local departments to learn lessons from the accident at a construction site of an unauthorized power station in north China's Inner Mongolian Region and put an end to such incidents.

In the circular, the NDRC urged local development and reform sectors to strengthen administration on projects involving fixed assets investment.

Projects inconsistent with China's industrial, environmental and land policies must be prohibited strictly, said the circular.

The construction of the power station was started in April 2004. It is designed to have two generating units each with a capacity of 300,000 kilowatts and be built at a cost of 2.89 billion yuan, or 366 million U.S. dollars.

According to a joint investigation by the NDRC, the Ministry of Construction and seven other central departments, the project was started without following standard procedures about project approval, land acquisition and tendering.

However, the regional and local authorities failed to stop the project from going on even after it was labeled illegal by central authorities.

To make it worse, the building housing the turbine generators collapsed while being built in July 2005, killing six people and injuring eight others.

The NDRC required in the circular that standard construction procedures must be followed and people who derelict their duty should be responsible for their behaviors.

The circular also required local governments to improve production safety.

The Chinese government has launched its macro-control move by issuing policies aimed at slowing down capital investment to prevent the economy from overheating.

However, local investment in fixed assets is still hot driven by the incentives of local governments for rapid economic growth.

According to the National Bureau of Statistics, China's fixed asset investment in the first seven months rose 30.5 percent over the same period last year, with investment in projects authorized by the central government up 26 percent and projects getting the green light from local governments to see a sharp rise of 31.1 percent.

Editor: Yan