Chinese city official spent $21B on ‘vanity projects’

A corrupt Chinese official loaded more than 150 billion yuan ($21 billion) onto his city’s debt books in one of the country’s most over-leveraged provinces, according to a state media documentary highlighting Beijing’s anti-graft efforts, Report informs via Bloomberg.

Li Zaiyong let his city “borrow blindly” during his tenure running Liupanshui city in Guizhou province between 2013 and 2017, with scant regard for the area’s “actual fiscal affordability,” state-run broadcaster China Central Television said in a documentary aired on Sunday.

Li green-lit 23 tourism-related construction projects, of which 16 have now been listed by the province as either inefficient or idle, according to the program. That included a ski resort — complete with a cableway billed as Asia’s longest — which the city borrowed more than 3 billion yuan to build. Liupanshui already has two other ski resorts, and gets less than two months of snow per year.

The total amount of debt racked up during Li’s tenure is roughly equivalent to the value of the city’s gross domestic product in 2022.

Chinese authorities have vowed repeatedly to curb local government debt, as provinces struggle to make repayments built up through reckless spending on infrastructure projects. Top officials last year vowed to “optimize the debt structure of central and local governments,” at a major conclave attended by President Xi Jinping, as they roll out a package to stem local debt risks.

“I knew I would hold a different post in a few years and I would be gone,” Liupanshui’s former Communist Party secretary told CCTV from a jail cell during the broadcast. “Whoever succeeds me will be held responsible” for the debt, he said.

Authorities began officially investigating Li in March 2023, several years after he left the post in Liupanshui — a city of about 3.61 million in the southwest province of Guizhou that’s one of China’s most indebted regions. He was arrested on charges of corruption and abuse of power in November, according to the website of the Central Commission for Discipline Inspection, the party’s disciplinary watchdog. It wasn’t clear if Li had yet been convicted.

In a separate statement, the CCDI accused Li of spending heavily on “vanity projects” and borrowing in a way that had “caused major debt risks and severely damaged the local ecological environment.” The agency also cited other instances of wrongdoing, including gambling.

The CCTV broadcast aired as part of a four-episode CCTV documentary detailing 12 cases of corruption against party cadres and officials.

Corruption cases involving government spending on infrastructure are not rare in Guizhou, which is also one of the poorest provinces in China.

Pan Zhili, a former party chief of Dushan county in Guizhou, was sentenced to 12 years in jail in 2020 for crimes including taking an “exceptionally huge amount” of bribes. The local government said Pan “took debt blindly to invest in projects regardless of people’s livelihoods, causing government debt risks to spike.” He has appealed.

The mountainous region of Guizhou claims to have nearly half of the world’s 100 tallest bridges thanks to rapid infrastructure expansion in recent years.

Each of its nine municipalities has at least one civil airport, with Liupanshui opening its own in 2014. That hub transported less than 20,000 passengers in 2022 — making it one of the least busy facilities in the country, according to the latest government figures available.