Government officials and heads of state-owned enterprises (SOEs) will be held accountable for bad investment decisions that result in huge economic losses, China's top auditor said yesterday.

Li Jinhua, head of the State Auditing Administration, said inspectors will conduct economic responsibility audits on government officials and SOE chiefs, and assess the cost-effectiveness of major infrastructure projects in order to avoid the misuse of state funds.

"In line with the newly amended Audit Law, we will audit government officials and SOE managers for the period of their tenure," he said.

"Further, an important next step for us would be conducting cost-effectiveness audits on major infrastructure projects."

Li was speaking on the sidelines of the ongoing Fourth Plenary Session of the National People's Congress (NPC), China's top legislature.

In Li's opinion, "Bad decisions could be more serious than embezzlement and corruption."

In his report to the NPC Standing Committee last June, Li said auditors discovered that 1.6 billion yuan (US$198 million) worth of state funds were being misused by 10 large SOEs.

In stark contrast, economic losses caused by bad or wrong decision-making and mismanagement stood as high as 14.5 billion yuan (US$1.7 billion).

Growing calls for government officials and SOE heads to be held responsible for bad decisions have been addressed in the newly amended Audit Law.

Article 25 of the law, amended by the NPC Standing Committee on February 28, and to come into effect on June 1, authorizes auditors to conduct economic responsibility audits.

Government officials and SOE heads will be audited for financial income and expenses, and other economic activities in regions and departments under their leadership.

Li yesterday also vowed to target the misuse of funds in huge infrastructure projects this year. This is in line with Premier Wen Jiabao's call for the building of a "saving country."

Li said the central government's decision to increase its spending on rural areas has made it vital for audit bodies at all levels to pay more attention to any problems that might arise as a result.

"All audit administrations, from the top to the bottom levels, especially local ones, should give priority to the issue from now on," he said.

"Special audit investigations on rural infrastructure projects will also be launched in the future."

Delivering his government work report on Sunday to nearly 3,000 lawmakers, Premier Wen pledged to shift the government's infrastructure investment priority from cities to the countryside.

The government plans to spend 339.7 billion yuan (US$42.3 billion) this year, and billions more over the next five years, to push ahead with plans to build a new socialist countryside.

(China Daily March 10, 2006)