It may come across as a good thing at first glance. Smoky chimneys and blazing boilers moved from city areas to the suburbs; steel mills, chemical plants and other polluters relocated; environmentally friendly and resource-saving technologies introduced to heavy industries; and infrastructure in city areas ramped up.

But the Old Industrial Base Restructuring Plan, approved by the State Council last month, has raised concerns that splashing out on low efficiency government-owned entities and relics of sunset industries is antithetical to market reforms and a waste of taxpayers' money.

Trillions of yuan are expected to be pumped into the 10 year plan starting this year that will rejuvenate 120 cities saddled with heavily polluting and cash-guzzling state run heavy industries set up in the early days of the country's industrialisation drive.

Yuan Gangming, a researcher at the Chinese Academy of Social Sciences said that "I think the plan would hurt the economy more than the CNY 4 trillion (HKD 4.54 trillion) stimulus package did, in terms of the wastage it would generate.”

He said that "I'm afraid the move comes across as a sweetener to regions that lag behind in market reforms, rather than one seriously aimed at improving productivity through market forces." The government went on a CNY 4 trillion infrastructure-building spree in the wake of the 2008-09 global financial crisis.

Although officials defended the move, saying it helped China avoid a slowdown, many economists blame it for a raft of white elephants, bad loans and severe indebtedness of local governments.

Mr Yuan said that "This plan will involve an even more than 4 trillion yuan, given its scope and the difficulty of reviving struggling enterprises.”

From Jiamusi in Heilongjiang province to Liupanshui in Guizhou, the plan covers 95 cities and 25 districts in first tier cities, including the Shijingshan district of Beijing and the Minhang district of Shanghai, which are the cradles of these cities' heavy industry.

Under the scheme, the central government will set aside funds for relocating the plants and arrange fiscal transfers to local governments to support the economy during the transition. It will also encourage investment firms to issue bonds to finance infrastructure construction in the sites vacated by the old plants.

Relocating heavy industries is a costly exercise. In Shijingshan, the relocation of steelmaker Beijing Shougang to Caofeidian, a district in Tangshan, Hebei province, took six years, finishing in 2010. It cost more than 50 billion yuan.