Tens of billions in RMB of public funds meant for investment in infrastructure and public welfare projects were left idle last year, according to China’s top audit administration, reported Caixin.
The National Audit Office found that some RMB 50.4 billion ($7.1 billion) of funds local governments raised from new special-purpose bonds (SPBs) went unused last year, including RMB 13.2 billion that had been left idle for over a year, after it examined the books of 18 provincial-level governments and 36 of their cities and counties. Hu Zejun, head of the audit office, delivered the findings in a report to lawmakers on Thursday.
SPBs are a kind of local government debt that funds commercially viable infrastructure and public welfare projects, generally repaid with income generated from the specific projects they fund. The audit office attributed the idle funds to unreasonable project management and suspension of some projects. But some analysts say one key factor may be that local governments had trouble finding enough valuable infrastructure projects to invest in.
“After decades of investment and construction, there are fewer and fewer projects that can generate returns in the market,” Teng Tai and Liu Zhe, researchers at Beijing-based think tank Wanb Institute, wrote in a Caixin article, adding that it is difficult for local governments to find a large number of projects to invest in that can use funds raised from SPBs in a short period of time.