July 24 (Bloomberg) -- China banned government departments, Communist Party agencies and state-owned companies from constructing new office buildings for five years as the country seeks to cut wasteful spending.
The ban includes construction for purposes of training, meetings and accommodation, the government said in a statement on its website yesterday, calling for resources to be spent instead on developing the economy and improving public welfare. Projects that have already won approval and not under construction should also be halted, the government said. All localities should report on the implementation of the new rules by Sept. 30, according to the statement.
President Xi Jinping, appointed as the ruling Communist Party’s general secretary in November, last month pledged a “thorough cleanup” of the party amid a yearlong campaign aimed at ridding its ranks of bureaucracy and extravagance. China’s economy grew 7.5 percent in the second quarter and is at risk of the weakest annual expansion in 23 years.
“The main purpose of the call for a ban on new government buildings is largely symbolic in that these are a highly visible sign of government officials misusing public monies,” Andrew Wedeman, a political science professor at Georgia State University and author of “Double Paradox: Rapid Growth and Rising Corruption in China,” wrote in an e-mail. “A real assault on corruption, however, requires a much less visible, long-term effort to attack the causes of corruption, not just those involved and the visible symbols of corruption.”
Wedeman said he doubted that money not spent on public buildings would be re-channeled into education, welfare or social programs, so the economic impact probably won’t be large.
“I feel good when I see facilities for serving people are well constructed,” Xi was quoted by the official Xinhua News Agency as saying yesterday during a visit to the city of Wuhan in Hubei province. “I feel bad when I see magnificent government offices.”
The ban applies to courts, prosecutors, labor unions and youth leagues, according to yesterday’s statement. Some departments and local authorities have recently built office compounds in violation of regulations, which has hurt the image of the party and the government, according to the statement.
The People’s Daily, the Chinese Communist Party’s official newspaper, published a front-page article in May criticizing a government building in the city of Jinan, in Shandong province. The newspaper, citing online speculation that the building cost 4 billion yuan ($652 million), said the structure was evidence of the need for more strict supervision of local governments. A building modeled on the White House, in Fuyang in Anhui province, drew public criticism in 2007.
Total local government debt may have risen 13 percent to 12.1 trillion yuan in 2011 and 2012, Moody’s Investors Service estimated in June, adding to risks that the central government will be forced to bail out local authorities and take over their liabilities.
Local finance departments shouldn’t release funding for projects without proper approvals, and land agencies shouldn’t grant property-use rights, according to the statement.
While the policy allows restoration of buildings with outdated facilities, such projects must be designed to remove safety risks and restore office functions without adding luxurious renovation, the government said in the statement.
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