The Chinese government failed to pay some 89.85 billion yuan
(US$10.86 billion) for government-funded construction projects by
2002, said a report by an inspection team under top
legislature.??
A report on the implementation of Construction Law was submitted
to the fifth session of the tenth National People's Congress (NPC)
Standing Committee Monday by an inspection team sent by the
NPC.
Investors of construction projects across the country owed a
total 336.5 billion yuan (US$40.69 billion) to construction
companies by 2002, the report said.
Some 39.6 percent of the money in arrears took place in real
estate projects and 26.7 percent in government-funded construction
projects, it added.
Late payment for construction has become prevalent in the
industry and is worsening, the report said.
"Defaulting payment for construction companies has greatly
damaged the government's image," said Li Tieying, head of the
inspection team and vice-chairman of the NPC Standing
Committee.
Meanwhile, many construction companies also failed to pay their
employees, most of whom are migrant workers from rural areas, the
report said.
It suggested that the State Council launch an inspection
nationwide and come to a solution in next three years.
"Backroom operations" are also "prevalent and hard to dig out"
in the industry, the report said.
Construction companies usually sign back-room contracts with
developers offering discounts during the bidding.
The back-room contracts, known as "black contracts," have
lowered the quality of projects, the report added.
Bribery and corruption occurs during the bidding, approval
process, and equipment and material buying. "One-third of the
lawsuits regarding bribery were within the construction industry in
recent years," the report said.
The Chinese government should first streamline the management of
government-funded projects and rigidly punish back-room activities,
Li said.
The report proposed that the NPC Standing Committee amend the
Construction Law, issued in 1997.
The present Construction Law did not clarify how to deal with
the payment arrears for construction companies and lacks efficient
guidelines for developers, it said.
According to the National Bureau of Statistics (NBS), the
country's construction industry output value increased by an annual
average 15.2 percent from 1998 to 2002 and the industry contributed
to 6.6 to 6.8 percent.
(Xinhua News Agency October 27, 2003)