12/30/2008, 00.00
CHINA
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Corruption in China costing up to US$ 8.4 billion

In the first 11 months of 2008 some 57 billion yuan were embezzled or wasted. Hundreds of officials and employers are accused. But the mainland’s highly-centralised political system is also held responsible for poor controls as local officials tend to inflate local economic data to promote their careers.
Beijing (AsiaNews/Agencies) – Auditors have found that 57 billion yuan (US$ 8.4 billion) have been “misused or embezzled” by officials or employees in government agencies and companies during the first 11 months of this year, this according to Liu Jaiyi, auditor general of the National Audit Office (NAO). Central authorities have also accused local government officials of inflating economic data to promote their career.

In the period under consideration, NAO found 837 cases of wrongdoing and handed them to judicial and supervision departments which brought disciplinary action against 64 senior officials and 226 employees.

Auditors found that major state-owned corporations and banks such as the China Bank of Industry and Commerce, the China Construction Bank and Citic Group were involved, stuck with problems like ‘false fiscal reports’. Even then auditors found that cases of embezzlement were hard to differentiate from cases of bad management.

A case in point is that of former Shanghai Communist Party Secretary Chen Liangyu, who is accused of improperly investing “only” 3.2 billion yuan in public funds. But his is the most serious example in years.

Over the years mainland leaders have called for zero tolerance against corruption and bad government. But the situation has not improved whilst embezzlement and bad management can compromise “grain reserve safety, overseas investment risks and national energy safety,” Mr Liu said.

Next year the NAO plans to focus on the government’s recently announced stimulus package, especially as it relates to reconstruction after the earthquake in Sichuan.

Experts note however that the problem is complicated by the fact that monitoring of lower-level authorities can only come from “higher up”. By contrast, public protests and complaints are instead crushed.

In order to avoid bad government, central authorities are studying whether to stop provincial governments from compiling their own economic data.

Wu Xiaoling, a member of the Standing Committee of the National People's Congress, lamented the tendency of lower-level authorities to flaunt their administrative performance through inflated GDP figures.

For at least the past decade, local officials have built their careers on their provinces’ economic performance. However, last year and in 2006, total GDP was trillions of yuan higher than the central government's tally.

Economist Han Meng told the South China Morning Post that this “is actually a systematic political phenomenon rather than a sporadic event,” explaining that when “the central government declares that the first priority of the country is to deliver fast economic growth, who would dare to lag behind.”

For this reason Han concludes that the problem cannot be limited to anti-tampering data collection procedures but must include overhauling the mainland's highly centralised political system, whose priorities tend to shape everyone else’s behaviour.

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