Only three months ago Xinhua was praising Zhen’an county in Shaanxi province for “pushing forward with infrastructure construction in an effort to build a liveable and eco-friendly environment”.
The article was accompanied by aerial pictures of the mountainous region, showing, among other structures, a grandiose new school with traditional Chinese roof, extensive gardens and an arched stone bridge.
Now that very same school is back in the headlines as another example of a needlessly extravagant project in a poverty-stricken place.
News of the school’s fancy construction comes after another impoverished county – Dushan in Guizhou – was found to have borrowed huge sums to build a largely decorative complex that was never completed.
Both governments are now technically bankrupt and will need to be bailed out by their prefectural or provincial bosses.
Why do so many small towns splurge on these over-the-top, out-of-budget projects? Beijing News says the answer is about showing off: “To put it bluntly, local leaders focus on vanity projects, thinking it will advance their political careers,” it said. As well as classrooms, dormitories, teacher accommodation and a gym, the 272-acre campus in Zhen’an features a huge banqueting hall and a private meeting room decorated with dark, expensive-looking wood.
The school can accommodate 6,000 students and cost over Rmb700 million ($101 million) to construct, according to media reports. Speaking to Xinhua, one local leader said the aim of the project had been to start the remodelling of the whole town with a Tang Dynasty aesthetic, in a bid to attract tourists to the area. But in reality the town couldn’t even afford to build the school, let alone any other projects. Last year the county collected just Rmb178 million in revenues. This year, because of Covid-19, it is expected to earn much less.
The 12-year loan the town took out for the school also has to be paid back at a rate of Rmb50 million a year. “The county will pay back part of the money, and then find a way to get the funds from upper government to cover the rest,” a local official told Xinhua.
This attitude is all too common in China, according to a recent article in the South China Morning Post. Small regional banks simply act as “money bags” for local authorities, it said, and local governments often take out loans with little intention of paying them back. “The great majority of them operate with the intention to exhaust financial and fiscal resources for quick development,” the newspaper noted. In the case of Dushan – which spent an incredible Rmb40 billion in its construction binge – the president of a local bank was also found to have perpetrated “irregularities in the granting of loans”.
Dushan and Zhen’an are now being investigated for financial impropriety but there is little to suggest that other local leaders won’t be tempted to follow a similar path. After all, if the financing is cheap and the debt is hidden, why not build a 20-storey pagoda, or a giant glass bridge, in hope of bringing in a bunch of tourists?
© ChinTell Ltd. All rights reserved.
Sponsored by HSBC.
The Week in China website and the weekly magazine publications are owned and maintained by ChinTell Limited, Hong Kong. Neither HSBC nor any member of the HSBC group of companies ("HSBC") endorses the contents and/or is involved in selecting, creating or editing the contents of the Week in China website or the Week in China magazine. The views expressed in these publications are solely the views of ChinTell Limited and do not necessarily reflect the views or investment ideas of HSBC. No responsibility will therefore be assumed by HSBC for the contents of these publications or for the errors or omissions therein.