China demands closer eye on welfare funds

Beijing, May 22: China's government spending watchdog has demanded closer monitoring of the country's social security funds, state media reported, urging local auditors to fight abuse of funds meant for welfare and pensions.

The National Audit Office told local auditors to ensure that money meant for old-age pensions, health insurance, unemployment assistance and injury compensation was not diverted, Xinhua news agency yesterday reported.

''Ensure that the coverage of social insurance payment collection expands and there are no major problems in fund security,'' the official directive said.

Abuse of welfare funds has become a volatile political issue in China, where citizens are increasingly worried about medical costs and a growing population of retirees has strained coffers. The flow of money into government-controlled funds has also attracted corruption and mismanagement.

An official investigation last year into the misuse of Shanghai's 10 billion yuan social security fund has implicated more than a dozen senior city officials and businessmen, including the then city Communist Party chief Chen Liangyu, who became the most senior Chinese Communist Party official to be sacked since 1995.

A national audit of social security funds last year found 7.1 billion yuan had been misappropriated, with much of the money lent or spent on projects that the nation's rules do not allow, Xinhua said.

By the end of 2006, the nation's social security funds had reached 282.8 billion yuan, it added.

But a government think-tank researcher told Xinhua that China needed to rethink cumbersome investment rules for funds, rather than hope that audits will cure abuses.

''If the government could figure out better ways for the funds to invest with proper regulations, embezzlement would be curbed more effectively,'' said Tang Jun, a researcher at the Chinese Academy of Social Sciences.

Reuters>