A recent report by a national television program highlighted issues with an agricultural training base in Junan County, Linyi City, Shandong Province. The project, with a total investment exceeding 700 million yuan, was intended as an agricultural training facility. However, after its completion, it was not used for its stated purpose. Instead, the complex houses a conference hall, a hotel, apartments, small gardens, a gymnasium, and even recreational facilities like a mahjong room. Notably, 368 million yuan of the project's funding came from government special bonds.
Special bonds are issued specifically to raise capital for particular public-welfare projects that are expected to generate their own revenue streams for repayment. The issuance and use of these bonds are governed by national regulations. State Council guidelines call for a "negative list" management system for areas where special bonds can be invested. This list explicitly prohibits funding for projects with no revenue potential, extravagant government buildings, vanity projects, most real estate developments excluding affordable housing and land reserves, commercial facilities like theme parks, and general competitive industrial projects. Specifically, items such as "training centers" and "administrative conference centers" are included on the prohibited list.
Furthermore, the guidelines emphasize strengthening supervision and accountability, urging resolute action against违规 usage. Authorities are required to address issues like idle funds or违规 use discovered during routine oversight, establish detailed problem ledgers, and ensure strict rectification. Clear regulations are also in place for handling various instances of illegal or违规 special bond usage.
The emergence of such situations often stems from complex factors. Special bonds require projects to have a public-welfare nature and sufficient revenue-generating capacity for self-repayment. Suitable projects include infrastructure for emerging industries like IT, new materials, and biomanufacturing; computing equipment and related infrastructure; safety and smart upgrades for traditional infrastructure like highways and airports; and infrastructure for health, elderly and child care, and provincial industrial parks. However, at some local government levels, there is often a lack of well-prepared, high-quality projects. This leads to a practice of "project packaging," where proposals are made under seemingly legitimate industrial categories to secure funding. After approval, construction plans are altered based on so-called "actual needs," resulting in the completion of projects that should be on the negative list.
Local governments must clearly recognize that using special bonds requires strict adherence to legality and regulations, exercised with extreme caution. If low-quality or non-compliant projects consume significant resources, leading to idle funds, genuinely good projects may subsequently lack support. This represents a severe loss of capital efficiency, akin to "bad money driving out good," exacerbates local debt risks, and undermines government credibility.
This necessitates comprehensive, full-chain supervision over the entire process of special bond "borrowing, use, management, and repayment." Before approval, substantive reviews must be strengthened to prevent "feasibility studies" from becoming mere "approvability studies." During implementation, cross-departmental,穿透式 oversight mechanisms for fund usage should be established to track every expenditure, ensuring that intended revenue-generating public-welfare projects are not substituted with unauthorized ones. Afterwards, accountability mechanisms must be perfected to guarantee that final projects align with their approved plans, with legal and regulatory consequences for any issues identified.
Special bonds are not "free money"; each debt incurred impacts future fiscal revenue, public welfare expenditures, and government credibility. Local authorities have reportedly established a joint investigation team to conduct a comprehensive review, promote thorough rectification of the issues, and pursue serious accountability in accordance with rules, discipline, and law. It is crucial to remember that debt carries costs, and violations of laws and regulations will inevitably incur consequences.
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