Since the implementation of the "Government Investment Regulations," many provinces have followed up with policy documents. Currently, 19 provinces, municipalities, and autonomous regions have explicitly prohibited "advance-funding construction," stipulating that government investment projects shall not be financed by construction contractors advancing funds. Another locality recently issued a document with even more detailed provisions.

On June 5, the Development and Reform Commission of the Guangxi Zhuang Autonomous Region issued an announcement soliciting public comments on the "Measures for the Administration of Government Investment of the Guangxi Zhuang Autonomous Region," explicitly stating:

Local governments do not bear debt repayment responsibility for state-owned enterprise debts.

1. State-owned and state-controlled enterprises shall follow the principle of prudence in external investment and financing, strictly control their asset-liability ratio, and shall not over-borrow beyond what is realistic.

2. For projects financed and constructed by state-owned enterprises through market-based means, where there is no follow-up funding guarantee or where continued implementation is difficult due to decision-making errors, the principle of "whoever borrows bears responsibility" shall apply, and the state-owned enterprise itself shall be responsible for cleanup and disposal; the government shall not bear debt repayment responsibility.

No new government investment projects shall be started in the following year in regions with debt risks.

1. For regions where the government debt ratio exceeds the warning line (300%) or where debt risk incidents have occurred, the intensity of government investment shall be reasonably controlled and government debt risks strictly prevented. Except for projects explicitly required to be built by the state and the autonomous region and emergency rescue and disaster relief projects, no new government investment projects shall be started in the following year.

2. People's governments at all levels in the autonomous region shall strengthen budget constraints on government investment funds, shall not raise government investment funds by borrowing debts in various ways in violation of laws and regulations, shall not arrange project construction beyond the fiscal capacity of the corresponding level, and shall strictly prohibit the commencement of projects without confirmed funding sources.

Government investment projects shall not be financed by construction contractors advancing funds.

1. For government investment projects, "starting construction before approval" and "constructing while approving" are strictly prohibited. Government investment projects that do not meet the prescribed construction conditions or have not completed approval procedures such as preliminary design (or equivalent procedures) shall not be started without authorization, and designing while constructing is strictly prohibited.

2. Construction funds required for government investment projects shall be ensured in place in accordance with relevant national and autonomous region provisions, and shall not be advanced by construction contractors. Settlement and payment of project progress payments shall not be refused or delayed on the grounds that the completion financial final accounts review has not been completed.

3. Where a project unit commits any of the following acts, it shall be ordered to make corrections; depending on the specific circumstances, fund allocation shall be suspended or stopped, or funds already allocated shall be recovered, construction activities shall be suspended or stopped, and the responsible leaders and directly responsible persons shall be given sanctions in accordance with law:

(1) Starting construction of a government investment project without approval or without meeting the prescribed construction conditions;

(2) Obtaining government investment project approval or government investment funds such as investment subsidies or loan interest subsidies through fraud or deception;

(3) Changing the construction location of a government investment project without approval, or making major changes to construction scale, construction content, etc.;

(4) Increasing the investment estimate without authorization;

(5) Requiring construction contractors to advance funds for government investment projects;

(6) Failing to implement an approved government investment project without justified reason, or failing to implement it in accordance with the construction period.

4. Project participating units held accountable for violations of laws and regulations shall, in accordance with provisions, be included in the bad credit record, subject to industry access bans, prohibited within the time limits prescribed by relevant laws and regulations from participating in government procurement activities at all levels within the administrative region of Guangxi, and prohibited from undertaking business related to government investment projects.

5. Where a violation of these Measures constitutes a crime, criminal liability shall be pursued in accordance with law.

View the full text: Announcement on Soliciting Public Comments on the "Measures for the Administration of Government Investment of the Guangxi Zhuang Autonomous Region"

Scroll to the end of the article to view the full text.

What does the "Government Investment Regulations" stipulate?

The "Government Investment Regulations" officially came into effect on July 1, 2019. How enforceable are these Regulations?

1. Where construction contractors are required to advance funds for government investment projects, or where approved government investment projects are not implemented without justified reason or not implemented in accordance with the construction period, the responsible leaders and directly responsible persons shall be given sanctions in accordance with law.

2. Where a violation of these Regulations constitutes a crime, criminal liability shall be pursued in accordance with law.

These Regulations specifically regulate government investment behavior and are the first administrative regulation in the field of government investment in China. Article 22 explicitly stipulates: "Government investment projects shall not be financed by construction contractors advancing funds." The promulgation of an administrative regulation by the State Council explicitly prohibiting "construction contractors advancing funds" for government projects carries authority that ministerial notices cannot match.

1. Prohibition of "advance-funding construction": Government investment projects shall not be financed by construction contractors advancing funds.

2. Construction periods shall not be arbitrarily compressed: Government investment projects shall reasonably determine and strictly implement construction periods in accordance with relevant national provisions, and no unit or individual may illegally interfere.

3. Timely completion final accounts: Completion acceptance shall be carried out in accordance with relevant national provisions, and completion financial final accounts shall be promptly handled after completion acceptance passes.

4. Where construction contractors are required to advance funds for government investment projects, or where approved government investment projects are not implemented without justified reason or not implemented in accordance with the construction period, the responsible leaders and directly responsible persons shall be given sanctions in accordance with law.

5. Where a violation of these Regulations constitutes a crime, criminal liability shall be pursued in accordance with law.

A summary of documents from other provinces and municipalities is as follows:

Beijing

On January 2, 2023, the Beijing Municipal People's Government issued the "Measures for the Administration of Government Investment of Beijing" (Jing Zheng Fa [2023] No. 1), effective from the date of issuance.

Article 27: Funds required for government investment projects shall be ensured in place in accordance with relevant national and municipal provisions.

Government investment projects shall not be financed by construction contractors advancing funds.

Article 39: Where a project unit commits any of the following acts, it shall be ordered to make corrections; depending on the specific circumstances, fund allocation shall be suspended or stopped, or funds already allocated shall be recovered, construction activities shall be suspended or stopped, and the responsible leaders and directly responsible persons shall be given sanctions in accordance with laws and regulations:

(1) Starting construction of a government investment project without approval or without meeting the prescribed construction conditions;

(2) Obtaining government investment project approval or government investment funds such as investment subsidies or loan interest subsidies through fraud or deception;

(3) Changing the construction location of a government investment project without approval, or making major changes to construction scale, construction content, etc.;

(4) Increasing the investment estimate without authorization;

(5) Requiring construction contractors to advance funds for government investment projects;

(6) Failing to implement an approved government investment project without justified reason, or failing to implement it in accordance with the construction period.

Article 41: Where a violation of these Measures constitutes a crime, criminal liability shall be pursued in accordance with law.

Notice of the Beijing Municipal People's Government on Issuing the "Measures for the Administration of Government Investment of Beijing" (Jing Zheng Fa [2023] No. 1)

Anhui

Article 35: The finance department shall, based on the approved budget and in accordance with laws, administrative regulations, and relevant provisions on treasury management, promptly and fully handle the allocation of government investment funds.

Article 36: The commencement of construction of a government investment project shall comply with the construction conditions prescribed by relevant laws, regulations, and these Measures; where the prescribed conditions are not met, construction shall not commence.

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Article 40: Funds required for government investment projects shall be ensured in place in accordance with relevant national and provincial provisions. Government investment projects shall not