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QINGDAO TODAY
在线翻译:
szdaily -> Business -> 
Government investment behavior under scrutiny
    2019-05-07  08:53    Shenzhen Daily

THE government has announced long-considered rules on how and where government funds should be invested as China cracks the whip on misappropriation and dubious use of State financing across the country’s vast structure of government.

Government investment plans must be reviewed for their alignment with national economic and social development goals before they can be approved, the State Council said in a decree published late Sunday.

China will also increase budgetary constraints on government investment funds, which must not be inflated by illegal borrowing, the State Council said.

The rules on government investment behavior were first drafted in 2001 but were never implemented.

Some local governments, eager to beat growth targets, had poured funds into projects that went over-budget and were low in returns. Approvals for investment were sometimes subjective and some projects ran into management problems.

If the initial investment estimate for a project exceeds the forecast already approved in the feasibility study by 10 percent, the project may have to be re-evaluated, the State Council said.

The rules will take effect July 1.

The large amount of funds raised by local governments over the years has been a concern, especially off-balance-sheet borrowing outside quotas approved by the Central Government. Such “hidden” local government debts could be in the trillions of dollars in total, S&P Global Ratings warned last year.

To deleverage the economy, China in recent years began to crack down on risky lending practices and rampant borrowing.

President Xi Jinping in January said that local governments and State enterprises must strike a balance between stabilizing growth and fending off risks, warning against so-called “grey rhinos,” referring to highly obvious yet ignored threats.(SD-Agencies)

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