China has urged its local governments to cough up funds to ensure major projects in its 4-trillion-yuan (US$586 billion) stimulus plan could be completed on time.

It is estimated that local governments need to raise 170 billion yuan to match the central government's first two batches of investment of 230 billion yuan, Zhang Shaochun, vice-minister of finance, told four specialized committees of the National People's Congress yesterday.

Till the end of last month, local governments have allocated only 88 billion yuan, he said.

Zhang's statement comes close on the heels of a National Audit Office report, which found that "only 48 percent of the funds local governments had to contribute for 335 projects are in place".

The central government, however, has allocated 94 percent of its share for the projects in 18 provinces and regions, the report said.

"The reason why local governments have not been able to raise the funds is because many of them are located in the poorer middle and western regions and have limited fiscal income," Zhang Hanya, a researcher with the National Development and Reform Commission, told China Daily.

The Ministry of Finance issued 111.8 billion yuan of local bonds on behalf of 23 provinces, regions and municipalities by May 22 to help poorer governments, Zhang Shaochun said.

The central government will issue bonds worth a total of 200 billion yuan, he said.

"The bonds, along with the 88 billion yuan already in place, will be sufficient to ensure the projects are completed on time," he said.

The National Development and Reform Commission (NDRC) Vice Minister Mu Hong said yesterday that matching funds for the first batch of central government investment should be in place by the end of this month, while that for the second and third batches should be in place by the end of September.

The official, however, did not say if the local governments will be punished in case they don't meet the deadline.

Mu said: "Of the 300 billion yuan planned central government investment, 269 billion yuan has been allocated."

The huge investment, part of the 4-trillion-yuan stimulus plan, will be used on sectors like housing, education, healthcare, technical innovation, farmland irrigation infrastructure, transport infrastructure and environment and energy projects, he said.

The Communist Party of China Central Commission for Discipline Inspection, the Party's internal anti-graft body, and the Ministry of Supervision organized two rounds of checks on the usage of central government funds at the local level, sending 24 teams of officials to the grassroots.

Mu said that the checks found that central government-funded projects "have been implemented well as a whole", except for a few which have not started according to plan or made slow progress.

"No funds were used in energy-consuming, high-polluting and resource-consuming industries," he said.

The central government said it will also strengthen supervision on how the local governments utilize the funds.

The National People's Congress (NPC) Standing Committee deputy secretary-general Li Lianning said that the top legislature will also send teams to the grassroots level to check on the progress of these major projects between May and August.

It will be a new attempt by the NPC to strengthen its supervision over government work, he said.

(China Daily May 27, 2009)