China’s local authorities misused US$5 billion from special purpose bonds, auditors tell legislature
- 10 Chinese cities or counties were found to have misused 13.7 billion yuan (US$2 billion) of special purpose bond proceeds for corporate operations and payroll
- National Audit Office also found 21.7 billion yuan of funds sitting idle for more than a year, deputy head Wang Benqiang told the national legislature on Wednesday
Auditors have urged finance and economic planning officials to step up “look-through” supervision and to improve their assessment of projects after finding some local authorities had misused proceeds from special purpose bonds intended to shore up the struggling economy.
Wang Benqiang, deputy head of the National Audit Office, told the national legislature in an annual report on Wednesday that some local authorities had spent the proceeds from the sale of bonds outside the designated nine areas, while billions of yuan is sitting idle in other regions.
This year, 10 cities or counties were found to have appropriated 13.7 billion yuan (US$2 billion) of bond proceeds for corporate operations and payroll, the report said, with 21.7 billion yuan of funds sitting idle for more than a year.
There is a lack of effective means to dynamically monitor the use of funds
“There is a lack of effective means to dynamically monitor the use of funds,” said Wang.
“The government should enhance regulatory coordination to handle local debt risks.”
Special purpose bonds were designated to support local projects, including transport, energy, environmental protection, logistics, urban facilities and affordable housing.