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Land market blues

(China Daily)
Updated: 2008-06-06 07:46

A regular and transparent land market management system goes a long way in preventing irregularities and corruption in land deals.

The National Audit Office on Wednesday published an investigation on how incomes from land transfers have been used. It suggests that, although most local governments have established a sound land management system as required by the Ministry of Land and Resources, irregularities do exist to enable some to circumvent rules for local benefits.

To prevent local governments from squandering the income from the transfer of land use rights, State rules stipulate that the net income must be put into a special account and managed as a special budget fund, and it can only be used for infrastructure construction and land development. But this investigation shows that 71.18 percent of such net income in 11 cities from 2004 to 2007 was not put into the special account under budget management.

That means this money was not included in the budget of these municipal governments. The result is the use of this money does not fall under the supervision of local people's congresses. This financial violation has created scopes for local governments to misuse the money, and even room for corruption.

This investigation has found that 8.373 billion yuan ($1.2 billion) of such income out of a total of 186.413 billion has already been misused by local governments in building office buildings or hotels and filling up the deficits in their expenditure, where, according to the rules, it should never go.

As a matter of fact, many local governments are hiding the net income from land transfers by placing it outside their budget. The intention for doing so is obvious. With a large sum of money not included in the budget but at their disposal, local governments feel free to spend it in whatever way they like.

This is also one of the reasons why local governments' enthusiasm for land enclosure has been so great for years. Little wonder that land transfer deals have become one of the major sources of corruption.

It is reassuring to know that the National Audit Office will continue to supervise how well local governments correct their mistakes by returning the misplaced money back to their budgeted accounts.

What is even more hopeful is that rules are amended each time auditing officers find loopholes that make it possible for some to escape or circumvent the rules. There are no rules that can completely plug all loopholes, but an ever-improving system will make things better.

(China Daily 06/06/2008 page8)