Major investment projects still caught up in red tape

Major investment projects are struggling to get off the ground after being given the all clear by China's official auditor.

More than 90 percent were approved by Beijing last year, but work has yet to start on the projects, underlining the challenges of translating central government plans into action.

Liu Jiayi, chief of the NAO, released the figures after his office reported the annual audit result to the National People's Congress last week.

Of the 600 local projects worth up to 910 billion yuan ($147 billion), 557 have obtained approval, but work has yet to start on them. Up to 56 of the delayed projects were even approved before 2013.

The audit office also found that 43 projects had yet to be approved by central ministries more than 6 months after the applications were sent in. In one extreme case, the response to one project took four years and seven months.

Beijing is becoming worried about the lack of progress at local level for "key" projects. That is why the audit covered a wide range of investment sectors that involved central ministries, local governments and State-owned enterprises.

It not only examined the progress of investment projects, but also checked on how they performed once they were finished.

Hao Shuchen, a NAO official, told a Friday forum about the problems facing public investment projects.

In many cases, the authorities took a long time to approve them. After that process, funding requirements caused further delays.

Once the go-ahead was finally given, construction could be painfully slow. Finally, in certain cases, the finished projects were left partially empty.

"For example, many subsidized affordable homes are left idle one or two years after they are built," Hao said.

Shi Hongxiu, a public finance professor with the Chinese Academy of Governance, said local governments are not totally to blame for the problem. A lot of investment projects are simply given the go-ahead by Beijing to "stabilize economic growth".

For many projects, the central government allocates a small portion of the funding with the local governments picking up the rest of the bill, which causes delays.

Many projects approved by Beijing are not implemented at local levels due to lack of incentives. Many others, however, are carried forward by local governments before they get central government approval, Shi said.

"This illustrates the problem of an approval-based public investment system and a patchwork budget system," Shi said.