Monday, 24 November 2008

China New Guidelines for Stimulus Spending

The central government has released guidelines on preventing waste and corruption as it rolls out its economic stimulus plan, as public concern over the government’s handling of taxpayers’ money increases.

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Guanyu said...

China New Guidelines for Stimulus Spending

Stephen Chen
24 November 2008

The central government has released guidelines on preventing waste and corruption as it rolls out its economic stimulus plan, as public concern over the government’s handling of taxpayers’ money increases.

Governments at all levels were prohibited from spending funds from the stimulus package to furnish office buildings, Xinhua quoted the regulations, jointly issued by the National Development and Reform Commission and the Ministry of Finance, as saying.

Industries that consumed a lot of energy and were heavy polluters should not expect extra funding, nor should industries whose production capacity already exceeded market demand, the regulations said.

Beijing will spend more than 4 trillion yuan (HK$4.5 trillion) over two years to steer the mainland’s economy away from recession. Before the end of this year, provinces are obliged to deploy 100 billion yuan of additional investment.

The unprecedented move was met with applause at home and abroad, but a subway collapse in Hangzhou two weeks ago that killed 21 workers raised concerns about corruption, manufacturing quality and civil service efficiency.

Public prosecutors, courts, and auditing and environmental protection bodies were urged to maximise efforts to root out corruption.

An investment project must boost gross domestic product while helping the country move its industrial base from low-end manufacturing to technologically competitive industries, the regulations said.

Priority would go to urban welfare housing, agricultural infrastructure and roads, airports and railroads to ensure the nation was equipped for sustainable economic development.

But the regulations also emphasised the need for an immediate effect from the investment, a requirement likely to further burden construction companies already struggling to keep up with demand.

Projects must be accelerated, the investment intensified and deadlines shortened, the regulations said.