Investments that officials attract should not sway their evaluations

An employee counts yuan banknotes at a bank in Huaibei, Anhui province June 22, 2010. [Photo/Agencies]

THE LOCAL GOVERNMENT IN HANDAN, North China's Hebei province, recently said it suffered heavy losses in a 2008 project with expected investment from a South Korean company that called itself Hyundai Construction Group, which later turned out not to be part of the Hyundai Group as the government believed. Beijing News comments:

The Handan municipal government meant to attract foreign direct investment from the South Korean company, but actually it lost money in the process. Reports show that the investment by the local government－all taxpayers' money－was as much as 600 million yuan ($87.25 million), which was lost after the construction projects that they were "co-working" on came to a halt.

The South Korean company cheated in a rather simple way, analysts said, because a misrepresentation made it look like it was part of the Hyundai Group. The Handan government, which had the company's materials in different languages, failed to spot the differences in the Korean and Chinese materials provided by the company and as a result, suffered the loss.

There are strict procedures that local governments must follow when cooperating with foreign companies. Had the Handan government strictly followed them and compared the Chinese and Korean materials, it would have found the company was not part of the Hyundai Group.

They didn't, and the root cause is clear: The job performance evaluation of leading local officials often depends on how much foreign direct investment they can attract. Being distracted by the prospects of promotion, many leading local officials are so busy rallying investment for the local economy that they ignore the necessary procedures.

In some cases, leading local officials even "work" with the companies because they can benefit from the process. Previously when a similar incident happened in Jize county, Hebei province, the local officials even said it was okay because they had sold lots of land for commercial use at high prices.

The performance evaluation system for officials should be revised so that such investments won't be wasted in the future.