The National Development and Reform Commission (NDRC) will launch another round of inspections this month on the status of investment projects under the 4-trillion-yuan (US$586 billion) stimulus package.

The inspection would focus on the project schedule as well as funds allocated from local governments, a source at the NDRC was quoted by the Beijing News as saying.

According to an NDRC document out in August, as of June, 442 projects in the first four batches of investments under the central government's stimulus package launched at the end of 2008, were yet to begin.

More than 300 of the delayed projects come under the fourth batch of investment, which was initiated in August 2009 with a budget of 80 billion yuan.

China announced the 4-trillion-yuan stimulus package at the height of the financial crisis in November 2008 to boost domestic demand after slumping overseas demand dragged down the country's exports and threatened growth.

The central government is shouldering 1.18 trillion yuan of the bill, while lower level governments and other investors are expected to account for the rest.

"The increasing delays seen in the fourth batch of the investment suggest that local governments had used up their funds in the earlier projects and lack new funding channels," said Wang Jianhui, chief economist with Southwest Securities.

"In most projects, the central government provides 25 percent of the funding, and the local governments have to cover the rest."

Last week, the Ministry of Finance started floating the seventh and eighth group of local government bonds to help local governments address their financial woes. The bonds have a combined value of 35.8 billion yuan.

China has sold 153 billion yuan of local government debt so far this year, and the annual target in 2010 is set at 200 billion yuan.

"Accelerating inflation in recent months is another reason for the delays since the local governments have to readjust their project budgets, which takes time," said Wang.

Data released over the weekend showed China's consumer price index rose 3.5 percent in August, up 0.2 percentage points from July, making it the fastest pace in 22 months.

In the document, the NDRC vowed to "comb through" the investment projects involved in the stimulus package.

Delayed or problematic projects would face the risk of cancellation or lower central government investment budgets. Approval for new projects may also be delayed, the document said.

In response to the document, the Department of Water Resources of Zhejiang province has set a deadline for its lower units to report back the latest financial status of their projects.

Audit work on the implementation of the 4-trillion-yuan stimulus package began as early as September 2009.

(China Daily September 16, 2010)