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Wuhan economic zone to regulate government investment

Updated: 2017-10-26

The Wuhan Economic and Technological Development Zone (Hannan District) recently launched measures to regulate government investment, a move aimed at streamlining decision-making to prevent abuse of power and improve efficiency.

The investment regulation, which applies only to the development zone (Hannan District) itself, targets fixed assets investment projects using district-level financial funds, higher-level financial funds and debt funds.

According to the regulation, the government of Hannan district may invest in non-profit infrastructure and public service facilities, by means of both direct investment and capital injection. Investments could include projects such as urban infrastructure, transportation, environmental protection, agriculture, science and technology, culture, education, health, and administrative management-related facilities. The projects will be classified and managed by different departments. According to the plan, urban construction, transportation, water conservancy and ecological environment protection projects will be managed by the Construction Bureau; other projects will be reviewed by the Development and Reform Bureau, which also decides the total annual budget.

The regulation requires all the projects to have reserve times, which means there will be a period after submission of the last group of projects allocated for preparation in which no work may be performed. The government is banned from skipping this reserve period to carry out a tender or start immediate construction. 

The government will check the project proposals, the feasibility reports, the preliminary designs and the budget reports for urban infrastructure construction projects with a total investment of 50 million yuan and above and other projects with a total investment of 3 million yuan and above, according to the regulation. Projects with an investment below these amounts may be more flexible and skip certain paperwork. The project owner must select an institute with corresponding qualifications to prepare the paperwork and submit it in accordance with procedures prescribed in the regulation.

The regulation states that during project construction any change of the total amount of investment due to adjustments of plans or force majeure should be submitted for approval. 

Project owners must submit project proposals three to five years in advance. The government will put feasible ones into a special repository and release a preliminary work plan. After that point it will only, in principle, invest in projects selected from the preliminary work plan. 

The Finance Bureau is in charge of government investment funds. Project owners, under the guidance of the Finance Bureau, should establish a strict capital management mechanism to ensure that the funds are used properly, according to the regulation. 

The regulation makes clear that project owners may implement the projects by themselves or commission a professional project management company to manage them. Project owners are responsible for bidding and procurement of their projects and for ensuring that the projects are completed on time and meet quality standards. 

Projects, after completion, must meet acceptance criteria. Preliminary acceptance of the projects must be carried out by project owners, before they are submitted for government-led investigation and acceptance. If needed, professional experts will participate in the process to help solve complex technological problems, said the regulation.

The Development and Reform Bureau and the Construction Bureau are required to supervise the implementation of the government investment plan, while the Finance Bureau will be responsible for supervision of finances. The Audit Bureau will take responsibility for carrying out project audits in accordance with the law. 

The regulation comes into force immediately to replace an earlier regulation.