Corruption is widespread in China, but Beijing is aiming to hold a 'clean' Games and a special committee has been set up to stamp out corruption related to the event.

Transparency International, the global corruption watchdog, commended the procurement procedure for construction projects set up by the committee. 'If they follow through with these procedures they will be world leaders in anti-corruption techniques,' said Transparency International project director for construction and engineering, Neill Stansbury.

But preventing Olympic corruption will be difficult, particularly in construction, which in all countries is considered especially susceptible to bias. 'Nowhere is corruption more ingrained than in the construction sector,' says Peter Eigen, chairman of Transparency International. On Wednesday the watchdog released its annual global corruption report - this year focusing on construction.

The myriad government permits and regulations involved in building projects leave officials open to bribery, and with stiff competition among construction firms there are clear incentives for them to resort to greasing palms. The corruption can in turn lead to shoddy work as firms looking to cut costs bribe officials to turn a blind eye to safety irregularities. Corruption also eats up funds that could be used on additional projects.

All of these factors apply to China, which was ranked 71 out of 146 countries in Transparency International's Corruption Perception Index. 'Local officials play a decisive role in the tendering process and in many cases have ignored the relevant regulations,' Transparency International said of China's construction industry.

The rapid modernisation of China's cities has created huge opportunities for corruption. High-profile projects also help boost officials' chances of promotion, at the expense of many poor householders who receive inadequate government support. 'With such a skewed motivation, it is little wonder that officials become spellbound by 'image projects' that can have serious consequences on the long-term development of the local economy,' the Transparency International report said.

'Householders have been forced by corrupt municipal councils and provincial governments to move out of their homes, which are then demolished and the sites developed.'

Mr Stansbury said he was impressed with the procedures being introduced by the high-powered supervisory committee. He said between 20 and 30 experts would award construction contracts for the Olympics. To deter bribery for each contract, five of these experts - randomly chosen by computer - would be called on their mobile phones and quickly meet to decide which firm would win the tender. During the meeting, the five hand in their phones to prevent outside communication and do not leave until the tender has been decided.

All the accounts related to each construction project will be audited twice a year - a much tougher requirement than in many construction projects in western countries. 'We can only dream of such powers,' said Mr Stansbury.

While the regulations look strong on paper it remains to be seen how tightly they will be enforced. 'The big question is implementation,' he said.

Despite inspections every six months, auditors still may not have a clear indication of what is happening on the sites on a daily basis. 'Unless you have a supervisor on the project counting the lorry loads in and counting the lorry loads out ... [the] auditors won't spot that level of corruption,' Mr Stansbury said. 'So it depends on the inspection regime all the way down and it's going to be very, very difficult.'

Away from the Olympics building spree, the government has also introduced a pilot scheme in five provinces where contractors convicted of bribery offences are blacklisted from future government tenders. But a major difficulty will be securing the convictions.

Last summer the National Audit Office issued a damning report on government corruption, part of which revealed the misuse of funds earmarked for sports facilities and training. Out of 55 government departments that were investigated, 41 had misused about 1.4 billion yuan, according to the audit report.

Transparency International Asia and Pacific (China) programme officer Liao Ran said the report had served as a deterrent to future corruption.

'Those concerned ministries had to submit an action plan on how they were going to address the issues exposed by the report,' he said. 'Encouraged by these results, the National Audit Office has decided that this year's auditing range will be extended to cover the military and the Communist Party's institutions.'

However, some ministries had refused to co-operate or submit their action plans as to how they would cut corruption.

China has focused its anti-corruption efforts on high-ranking officials. Transparency International quotes one report which suggested that up to five billion yuan may have been stolen by high-level officials who have fled overseas. But the report raises concerns about suspects having fair trials.

Another concern is the high-level of media corruption identified by Transparency International.