Source: Bloomberg

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Audit work report shows that some of China's provinces have failed to effectively use the funds raised by special bonds to issue it, causing the outside world to question their ability to stimulate investment and economic growth.

Analysts from Zhao Wei of Guojin Securities have issued analysts that 80%of the regions of the 25 provinces that have released the 2022 budget audit work report have disclosed their special debt management and use problems.These issues include insufficient project preparation, misappropriation of bond funds, and failure to issue funds in a timely manner.

These analysts wrote in a report on Wednesday that the local audit report revealed that one of the current "blocking points" of the current steady growth is to stabilize the capital capital.The general existence of local special debt management and insufficient project preparation are important factor that may cause stable growth of funds.

Beijing has been pressured local governments to accelerate the issuance of special bonds to increase infrastructure expenditure and offset the decline in investment in real estate and private sector.At the end of September, the last period of the final period for the addition of the new special bonds of each province was determined, and it was used to use it by the end of October.In 2023, China ’s special bonds for local governments were 3.8 trillion yuan.

Audit report highlights the limitations of this method, and it is becoming more and more difficult for provinces to find good project investment.

According to the report of Guojin, special debt management issues disclosed in Henan, Jiangsu, Shanxi and other places involved a large amount.The report pointed out that the most common problems include the scope of expanding the use of the province's violations of regulations.

The Henan Provincial Audit Report found that 8.6 billion yuan of RMB special bond funds were idle for more than 90 days in the financial department or project unit.Among them, 29 cities and counties bond funds totaled 6.6 billion yuan, and the idle was up to 300 days.

According to the audit report of Shanxi Province, the projects in 38 cities and counties have been slow, and 3.7 billion yuan of special debt is deserved in financial or project units.Another 11 special bonds applied to the completed projects failed to form a physical workload and effectively drove investment.