Ministry of Finance: "For new violations involving implicit debt and false conversion of debt, we will 'find, investigate, and hold accountable' together."

On September 19th, the Ministry of Finance released a report on eight typical cases of accountability for local government hidden debts. Local governments and units should deeply learn lessons from the typical cases in the report, draw analogies, and take precautions. They should effectively raise their political position, strengthen the "Four Consciousnesses", firm the "Four Confidences", and achieve the "Two Safeguards", resolutely implement the deployment of the Central Committee of the Communist Party of China and the State Council, take the prevention and resolution of hidden debt risks as important political discipline and rules, always establish a sense of risk and bottom line thinking, decisively curb the increase of hidden debts, properly dispose of and resolve existing hidden debts. The Ministry of Finance will effectively fulfill its oversight responsibilities, deal with illegal and irregular activities related to new hidden debts and debt conversion inaccuracies, following the principle of "finding one case, investigating one case, holding one accountable", continuously strengthen the accountability for hidden debts, and effectively prevent and resolve hidden debt risks. The original text reads as follows: The Ministry of Finance's Report on Eight Typical Cases of Accountability for Local Government Hidden Debts The Central Committee of the Communist Party of China and the State Council attach great importance to preventing and resolving the risks of hidden debts of local governments, with the Third Plenary Session of the 20th Central Committee of the Communist Party of China emphasizing the need to coordinate development and security and implement various measures to prevent and resolve the risks of local government debts. The Ministry of Finance will take the prevention and resolution of hidden debts as an important part of the special 2023 financial oversight action check, and will strictly deal with illegal and irregular acts such as new hidden debts and inaccurate debt conversions (hereinafter referred to as "false debt conversions"), and promote relevant localities and departments to hold accountable in accordance with the law. In order to further uphold financial discipline, provide guidance through education, and decisively curb the increase of hidden debts, the Ministry of Finance now reports... (Continued in the next message due to character limit)Dongxiang District of Fuzhou City incurred hidden debts of 340 million yuan through new loans from local state-owned enterprises. From March to December 2022, the Finance Bureau of Dongxiang District of Fuzhou City used 3.4 billion yuan of financing funds allocated from Fuzhou Dongxiang Industrial and Technological Innovation Investment Group Co., Ltd. and Fuzhou Dongxiang Urban Investment Development Co., Ltd. in the name of returning capital reserves for overall use, resulting in the accumulation of hidden debts of 3.4 billion yuan. The Discipline Inspection Commission of Jiangxi Province and the Supervision Commission of Jiangxi Province have organized accountability for the relevant personnel in accordance with the regulations. Li, former Deputy Secretary and District Mayor of Dongxiang District, was given a warning; Li, former member of the Standing Committee of Dongxiang District and Deputy District Governor, was given a disciplinary warning within the Party; Zhu, former Party Secretary and Director of the Finance Bureau of Dongxiang District, was given a serious warning within the Party; Liu, former Chairman of Fuzhou Dongxiang Industrial and Technological Innovation Investment Group Co., Ltd., was ordered to conduct a written inspection; Chen, former Chairman of Fuzhou Dongxiang Urban Investment Development Co., Ltd., was given a warning; and other relevant personnel were also dealt with accordingly.Five, Meihuakou City in Tonghua City, Jilin Province, primarily borrowed 2.98 billion yuan in hidden debt from public hospitals. In December 2020, according to the meeting summary of the Meihuakou City Government, the original Meihuakou City Central Hospital (now Meihu Hospital of the First Affiliated Hospital of Jilin University) borrowed from the Tonghua Meihuakou Branch of Jilin Bank in the name of supplementary operating funds and transferred 2.98 billion yuan to Meihuakou City Financial Resource Investment Co., Ltd. Among them, Meihuakou City Financial Resource Investment Co., Ltd. used 1.59 billion yuan to purchase state-owned assets, and the resulting sales revenue was handed over to the city treasury by Meihuakou City State-owned Assets Management Co., Ltd.; the remaining funds were also transferred to the Meihuakou City Finance Bureau for overall use. The actual repayment of the above-mentioned loan principal and interest was borne by the government, forming a new hidden debt of 2.98 billion yuan. The Jilin Provincial Discipline Inspection Commission and the Jilin Provincial Supervision Commission organized the accountability of relevant personnel according to the regulations. Wang, the former Secretary of the Meihuakou City Committee, was given a disciplinary warning; Wang, the former member of the Meihuakou City Committee and Deputy Mayor, was given a cautionary talk; Sun, the former Secretary of the Party Group and Director of the Meihuakou City Finance Bureau, was given a disciplinary warning; Hu, the legal representative of Meihuakou City Juyuan Investment Co., Ltd. and Meihuakou City Chuangyuan Development Investment Co., Ltd., was given a cautionary talk; Li, the former director of Meihuakou City Central Hospital, received criticism and education; and other relevant personnel were also dealt with. Six, Baotou City in Inner Mongolia Autonomous Region borrowed from a financial leasing company to repay existing hidden debts and to act as debt restructuring, resulting in an inaccurate debt restructuring of 68 million yuan. From September 2018 to December 2019, Baotou Light Industry Vocational and Technical College borrowed from FE HORIZON Financial Leasing Co., Ltd. and Ping An International Financial Leasing Co., Ltd. to repay 20 existing hidden debts totaling 68 million yuan, including funding for the practical training building and affiliated facilities project, and this was treated as debt restructuring in the local government's hidden debt statistical monitoring system, resulting in an inaccurate debt restructuring of 68 million yuan. The Inner Mongolia Autonomous Region Discipline Inspection Commission and the Inner Mongolia Autonomous Region Supervision Commission organized the accountability of relevant personnel according to the regulations. Zhang, the former Director of the Baotou City Finance Bureau, received a verbal warning; Qi, the Deputy Director of the Baotou City Finance Bureau, received criticism and education and was also ordered to make a written inspection; Li, the former head of the Debt Management Office of the Baotou City Finance Bureau, received a disciplinary warning within the Party; Wang, the former section chief of the Debt Unit of the Baotou City Finance Bureau, received a disciplinary warning within the Party; Ren, the former director of Baotou Light Industry Vocational and Technical College, received criticism and education and was also ordered to make a written inspection; Xue, the former Vice President of Baotou Light Industry Vocational and Technical College, received criticism and education and was also ordered to make a written inspection; and other relevant personnel were also dealt with. Seven, Lingao County in Hainan Province requires the proxy bank to advance payments and has not cleared new hidden debts of 8.4 billion yuan for a long time. From November to December 2022, the Lingao County Finance Bureau violated the regulations of various local finance departments not to require proxy banks to extend settlement and to advance funds for a long period. According to the communication opinions with Industrial and Commercial Bank of China Limited Lingao Branch, Agricultural Bank Of China Limited Lingao County Branch, China Construction Bank Corporation Limited Lingao Branch, and Hainan Lingao Rural Commercial Bank Limited, the above-mentioned banks were required to delay settlement and advanced funds by 8.4 billion yuan. As of the end of December 2022, the Lingao County Finance Bureau had not settled the long-term advances, resulting in new hidden debts of 8.4 billion yuan. The Hainan Provincial Discipline Inspection Commission, the Hainan Provincial Supervision Commission, and the China Banking and Insurance Regulatory Commission organized the accountability of the relevant units and personnel according to the regulations. Tang, the former Deputy Secretary and County Mayor of Lingao County, received criticism and education, was ordered to make a written inspection, and was reported; Li, the former member of the Lingao County Committee and Deputy County Mayor, received a cautionary talk; Pang, the former Director of the Lingao County Finance Bureau, and Wang, the Deputy Director, received disciplinary warnings; Luo, the head of the Treasury Department of the Lingao County Finance Bureau, received a cautionary talk; Industrial and Commercial Bank of China Limited Lingao Branch was fined 450,000 yuan; Agricultural Bank Of China Limited Lingao County Branch was fined 450,000 yuan; China Construction Bank Corporation Limited Lingao Branch was fined 450,000 yuan; Guo, the former head of Industrial and Commercial Bank of China Limited Lingao Branch, and Xie, the Deputy Head in charge, were given warnings; Wang, the former head of Agricultural Bank Of China Limited Lingao County Branch, and Wen, the Deputy Head in charge, were given warnings; Guo, the former head of China Construction Bank Corporation Limited Lingao Branch, was given a warning. Eight, Yongning County, Yinchuan City, Ningxia Hui Autonomous Region, pledged financing for rural drinking water and agricultural irrigation franchise rights, resulting in 3.2 billion yuan in new hidden debt. In March 2023, according to the "Implementation Plan for the Rural Drinking Water and Agricultural Irrigation Franchise Project in Yongning County" approved at the executive meeting of the Yongning County Government, the Yongning County Finance Bureau signed an "Asset Transfer Agreement for the Rural Drinking Water and Agricultural Irrigation Franchise Project in Yongning County" and an "Franchise Agreement for the Rural Drinking Water and Agricultural Irrigation Franchise Project in Yongning County" with Yongning County Fengyuan Agricultural Development Co., Ltd., transferring the rural drinking water and agricultural irrigation franchise rights to the company. Yongning County Fengyuan Agricultural Development Co., Ltd. signed a "Pledge Contract" with the Agricultural Development Bank of China Yongning County Branch, borrowing 3.2 billion yuan for a term of 20 years for the rural drinking water and agricultural irrigation franchise project. The attachment materials of the "Pledge Contract" included the rights to the pledge debt issued by the Yongning County Finance Bureau.Explanation on the budget funds related to the rural drinking water and agricultural irrigation franchise project in Yongning County promises to include the full amount of water fees paid to the irrigation canal, as well as the updating and maintenance costs of rural drinking water and agricultural irrigation equipment in the budget during the franchise period, forming an additional hidden debt of 320 million yuan. The Discipline Inspection Commission of the Ningxia Hui Autonomous Region, the Supervision Commission of the Ningxia Hui Autonomous Region, and the China Banking Regulatory Commission organized accountability for relevant units and individuals in accordance with discipline and regulations. Former Secretary of the Yongning County Party Committee Zhu was criticized and educated; former Yongning County Magistrate Luo was given a government warning; former Deputy Magistrate of Yongning County Huang was given a government warning; former Director of the Finance Bureau Xie was given a government demerit; former Director of the Housing and Urban-Rural Development Bureau of Yongning County Bai was criticized and educated; the former Chairman of Fengyuan Agricultural Development Co., Ltd. of Yongning County, Qu, was given a government warning; the former General Manager of Fengyuan Agricultural Development Co., Ltd. of Yongning County, Tang, was given a government demerit; the Agricultural Development Bank of China Yongning County Branch was fined 500,000 yuan; the former Deputy Director of the Agricultural Development Bank of China Yongning County Branch (temporary person in charge) Wang was given a warning; other relevant personnel were also dealt with accordingly.The above eight typical cases expose deviations in the performance concept of some localities and units' leading cadres, lack of discipline awareness, in the implementation of the decision-making arrangements of the Party Central Committee and the State Council, there are orders that are not followed, prohibitions that are not enforced, cutting corners, making exceptions, severely affecting the effectiveness of preventing and resolving hidden debt risks. The relevant responsible persons are seriously held accountable, fully demonstrating the strong determination and firm will to hold lifetime accountability and reverse the responsibility for hidden debt issues. Localities and units should deeply learn lessons from the typical cases reported, draw lessons from one another, and take them as a warning. They should effectively improve their political stance, strengthen the "four consciousnesses", firm up the "four confidences", and ensure "two upholds", resolutely implement the decisions of the Party Central Committee and the State Council, regard the prevention and resolution of hidden debt risks as important political disciplines and rules, always maintain a sense of risk and bottom-line thinking, resolutely curb the growth of hidden debts, properly dispose and resolve the stock of hidden debts. The Ministry of Finance will effectively fulfill its main responsibility for financial supervision, for new hidden debts and debt mismanagement violations, we will "discover, investigate, and hold accountable together", continuously strengthen the investigation and accountability for hidden debts, effectively prevent and resolve hidden debt risks. This article is excerpted from the "Ministry of Finance Official Website" by GMTEight Editor: Liu Jiayin.