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Reluctance to Use Government Funds Due to Corruption Crackdown Leaves Surplus $157B Idle

| Sep 19, 2015 07:49 AM EDT

NDRC's Xu Kunlin said that about $31.4 billion in unspent fiscal funds will be invested in major construction projects.

Beijing's anti-corruption campaign had left idle another $157 billion in government funds, which the government has since repossessed.

The said fund amounted to 6 percent of the projected government spending for 2015.

HSBC Bank estimated in May that unspent government funds since previous years in China may reach $596 billion.

The ongoing crackdown on corruption, China's biggest ever, has made local officials reluctant to use government funds to stay out of trouble and has served as an obstacle for government investment.

The campaign also prompted officials to retire early to avoid being embroiled in anti-corruption probe.

Xu Kunlin, the head of the National Development and Reform Commission's investment office, said that about $31.4 billion in unspent fiscal funds will be invested as soon as possible in several major construction projects.

Xu added that the focus is on "re-adjusting the usage" of those funds.

The NDRC had approved feasibility studies for two road projects worth $973.65 million, and for railway, highway and bridge projects worth $23 billion.

Analysts said that these moves signify that officials are focusing on infrastructure spending than other reforms that boost growth in the short term.​

The unspent fund is seen by economists as sign that growth of state investments in China has been sluggish.

Data released last week showed that China's economy lost more steam in August, with growth in investment and factory output missing forecasts.

China's economic growth is likely to fall below 7 percent, analysts said, and that China must loosen policy to increase investment, which is seen as the best way to boost growth in the short term.​

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