Fearful officials stall China's stimulus push

Beijing's plan to boost growth thwarted by local govts cowed by graft crackdown

HONG KONG • Local officials in China are dithering over project approvals and business deals, impeding Beijing's plans to use infrastructure spending to arrest slowing economic growth.

Though the National Development and Reform Commission (NDRC) approved 1.9 trillion yuan (S$424 billion) of investment projects in the first 10 months of this year, the country's top auditor estimates US$45 billion (S$64 billion) of projects are behind schedule, including a railway line in Yunnan which has been delayed five years by official sloth.

Provincial and city officials were once the vanguard of China's breakneck expansion, and they didn't always play by the rules for procurement or when awarding contracts or rights for land use. Now, when central government is trying to lift growth from 25-year lows, they fear drawing attention to themselves in case their past comes back to bite them.

China has stepped up inspection and auditing of big projects to curb graft since late 2012 when President Xi Jinping declared war on corruption, vowing to go after both powerful "tigers" and lowly "flies".

"Many fear that the more they do, the more likely they will get into trouble," said an official in southern Jiangxi province, who requested anonymity. "Local officials are not fully implementing the central government's policy measures."

Prosecutors investigated 4,040 civil servants at the county level or above last year, an average of 11 a day, Parliament was told in March.

But keeping their heads down is also getting them into trouble.

State media reported in September that nearly 250 officials had been punished for failing to spend government funds, delaying projects or sitting on land earmarked for development.

Premier Li Keqiang has repeatedly scolded procrastinating officials for laziness. Local media said he blasted officials for inertia at a meeting last year.

Mr Li has since been trying a little carrot to go with the stick, promising to promote "upright" officials while sacking crooked ones.

He also suggested local officials would be given a bit more rope to do the right thing. "We should give local authorities more autonomy in making decisions and give more support to local officials who are willing and capable of doing things," he told provincial officials during a meeting last month.

In the first 10 months of the year, local reticence has contributed to a slowing of annual growth in fixed-asset investment to 10.2 per cent, the weakest pace since 2000.

President Xi said last week that annual growth of at least 6.5 per cent was needed over the next five years to realise a goal of doubling GDP and per capita income between 2010 and 2020.

But policy insiders say weakness may persist if local governments continue to thwart Beijing's policies. "The anti-corruption campaign will continue, but corruption cannot be resolved overnight, and they need to boost local confidence," said an official in eastern Zhejiang province who requested anonymity.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 16, 2015, with the headline 'Fearful officials stall China's stimulus push'. Print Edition | Subscribe