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

Auditor-General Li Jinhua 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 their economic responsibilities during their tenure in office," he said.

"Meanwhile, conducting cost-effectiveness audits on major infrastructure projects will become a very important task for us at the next stage."

The top auditor stressed the main aim of these audits is to expose problems involving economic losses and wasted resources in huge infrastructure projects.

Li made the comments on the sidelines of the on-going annual session of the National People's Congress (NPC), China's top legislature.

He once warned of massive economic losses resulting from bad investment decisions by government officials and SOE heads, saying, "wrong decision-making is more serious than embezzlement and corruption."

In his report to the NPC Standing Committee last June, Li said auditors in a 2005 campaign discovered the illegal use of 1.6 billion yuan (US$198 million) in 10 large SOEs.

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

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 be enacted on June 1, authorizes auditors to conduct economic responsibility audits for the first time.

Government officials and SOE heads will be audited for financial incomes and expenses, and other economic activities in the regions and departments under their leadership, according to the law.

Li yesterday also vowed to target the misuse of funds for huge infrastructure projects this year. This comes as Premier Wen Jiabao's calls for the building of a "saving country."

He 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 potential problems that may arise.

"All audit administrations, from the top to the bottom level, 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."

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

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

(China Daily March 10, 2006)