China calls for ‘strict accountability’ at local government levels where funds are misused

State Council says it is forbidden to use public funds for ‘luxurious office buildings and halls, vanity projects and unnecessary landscaping works’

In recent weeks, top Chinese officials have expressed concerns about mounting headwinds facing the world’s second-biggest economy

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China’s State Council, chaired by Premier Li Keqiang, says it is necessary to strengthen the oversight of local government debt. Photo: Xinhua

Published: 2:35pm, 25 Nov 2021Updated: 3:03pm, 25 Nov 2021

China’s State Council says local governments should be held accountable for wasteful spending, as Beijing seeks to strike a balance between controlling growing debt risks and maintaining steady economic growth.

While China’s overall debt level has stabilised and is steadily declining, the economy is facing “new” downward pressure, according to a report by the official Xinhua News Agency on Wednesday after the State Council executive meeting, which was chaired by Premier Li Keqiang.

As such, it is necessary to strengthen the oversight for local government debt to ensure that funds are used to expand domestic demand and promote consumption, according to the council, China’s cabinet.

“It is strictly forbidden to use funds for luxurious office buildings and halls, vanity projects and unnecessary landscaping works,” the council said, adding that misusing funds, violating borrowing guidelines and letting public funds sit idle must be “resolutely” prevented.

“If problems are found, serious rectifications and strict accountability must be implemented,” the council added.

Last month, the State Council named and shamed eight local government projects in four western provinces over their loose debt policies, and it told local officials to “strictly follow fiscal discipline” in its latest effort to rein in mounting local government debt and excessive borrowing in the property sector.

Over the past few weeks, Li and the People’s Bank of China have increasingly expressed concerns about mounting headwinds facing the world’s second-biggest economy.