1. Case notification
On November 6, the Ministry of Finance issued the "Circular on Typical Cases of Local ** Implicit Debt Accountability", which notified 8 typical cases of implicit debt accountability investigated and dealt with since 2022, three of which involved IsraelThe expected proceeds of the land are used as repayment**, as follows:1.Some areas in Hubei Province require provincial state-owned enterprises to advance funds for the construction of new hidden debts. Since 2008, Suizhou City, Xianning City, Ezhou City and its affiliated Huarong District, Jingzhou City and its affiliated Jingzhou District, Yichang City and its affiliated Yidu City, Huangmei County of Huanggang City, Enshi City, Enshi City, Zhongxiang City of Jingmen City and other places**, as well as the Management Committee of Wuhan East Lake High-tech Development Zone, the Management Committee of Xiangyang Dongjin New Area (Xiangyang Economic and Technological Development Zone) and Hubei United Investment Group*** former Hubei Provincial Transportation Investment Group*** now Hubei Transportation Investment Group *** former Hubei Provincial Cultural Tourism Investment Group*** At present, three provincial state-owned enterprises such as Hubei Cultural Tourism Group have signed an agreement to advance funds by three enterprises to undertake comprehensive urban development business such as first-class land consolidation and development, infrastructure construction, etc., and the local government will reimburse the development costs and appropriate income of enterprises with land revenue. From August 2018 to the end of June 2021, new hidden debts were formed214.800 millionYuan. In this case, the local government signed an agreement with a provincial state-owned enterprise to advance funds to undertake the comprehensive urban development business, and the local financeThe land proceeds are used to reimburse the development costs and appropriate income of the enterprise2.Liuzhou City, Guangxi Zhuang Autonomous Region, requires state-owned enterprises to advance funds to build new hidden debts for projects that should be arranged by the financial budget. Since February 2016, Guangxi Liuzhou Beicheng Investment and Development Group, Guangxi Liuzhou Urban Construction Investment and Development Group, Guangxi Liuzhou Rail Transit Investment and Development Group, Guangxi Liuzhou Dongcheng Investment and Development Group, according to the Standing Committee of the Municipal Party Committee and the resolution of the Municipal Executive Meeting, have advanced funds to undertake the first-level consolidation and development of land that should be arranged by the financial budget, and the business of land acquisition and storage. From 2018 to the end of June 2021, new hidden debts were formed176.9.5 billionYuan. In this case, the local government required the local state-owned enterprises to advance funds for construction and should be arranged by the financial budgetThe first-level consolidation and development of land, and the agency of land acquisition and storageand other businesses. 3.Pengzhou City, Chengdu City, Sichuan Province, with the expected land transfer income as the return on investment of the project**, requires state-owned enterprises to advance funds for construction and new hidden debts. In January 2021, according to the decision of the relevant meeting of the Pengzhou Municipal Party Committee and Pengzhou City, as well as the "Implementation Plan for the Development and Investment Cooperation of Pengzhou Mengyang New Town Area" issued by the Office of the Leading Group for the Construction of Mengyang New Town in Pengzhou City, Pengzhou City authorized Pengzhou State-owned Assets Management to act as a comprehensive urban operator for the comprehensive development of Mengyang New Town Area, and carry out investment, financing, development, and development of infrastructure, real estate development and other projects in the region. construction and operation work, and a commitment to return on investment in the project based on expected land transfer income**. As of the end of September 2021, the company has raised a total of 43.2 billion yuan will be used for the construction of the new city area, forming new hidden debts4.3.2 billionYuan. In this case, Pengzhou City authorized Pengzhou State-owned Assets Management to act as a comprehensive urban operator for the comprehensive development of the Mengyang New Town Area, and to carry out the investment, financing, development, construction and operation of infrastructure, real estate development and other projectsCommitment to the expected income from land transfer as the return on investment of the project**
2. Policy requirements
The above three cases all violated the policy provisions on debt control: the notice on regulating land reserve and fund management and other related issues (Cai Zong [2016] No. 4) stipulates that "the project undertaking entity or business shall strictly perform its contractual obligations and obtain remuneration according to the amount agreed in the contract, and shall not be linked to the income from the transfer of land use rights". The "Notice on Further Regulating the Debt Financing Behavior of Local **" (Cai Shui 2017 No. 50) stipulates that "local ** shall not promise to use the expected income from the transfer of reserve land as the debt repayment fund of the financing platform company**", and the guiding opinions of banking and insurance institutions to further prevent and resolve the hidden debt risks of local ** (Yin Bao Jian Fa [2021] No. 15) require financial institutions to "not provide financing with the expected land transfer income as the debt repayment fund of the enterprise**". 3. Impact on the development model of the area
This notice of hidden debts has once again sounded the alarm for the planning and implementation of development projects in the area. The model of using the expected income of land as a return mechanism is listed as a new hidden debt by the Ministry of Finance. The planning of development projects in the area should be more focusedIntroduction and upgrading of industries in the areato improve the industrial chain and supporting facilities, and improve the overall competitiveness and sustainable development of the area. **attaches great importance to the prevention and resolution of local ** hidden debts (hereinafter referred to as hidden debts) risks, and clearly requires lifelong accountability and back-checking responsibility for hidden debts. In recent years, the Ministry of Finance, in conjunction with relevant departments, has continued to intensify its work, always maintained a high-pressure situation, seriously investigated and dealt with new hidden debts and untrue resolution of hidden debts (hereinafter referred to as "false debts") and other violations of laws and regulations, and promoted relevant localities and departments to effectively carry out hidden debt accountability work. In order to resolutely curb the addition of new hidden debts, further strengthen financial and economic discipline, and give play to the role of warning and education, the 8 typical cases of hidden debt accountability investigated and dealt with since 2022 are hereby notified as follows (3 cases above + 5 cases below):1. Xi'an City, Shaanxi Province, added new implicit debts through debt financing by state-owned enterprises. From August 2019 to December 2020, according to the decision of the Xi'an Municipal Special Issues Conference, the construction funds of Xi'an International Conference Center and other projects will be borne by the municipal and district finances. Xi'an Shiyuan Investment (Group)** in the name of the construction of 3 projects including the exhibition hall of Xi'an International Convention and Exhibition Center, borrowed 7 billion yuan from 5 banks including Bank of Communications Co., Ltd. *** Shaanxi Branch, and as of the end of June 2021, the actual withdrawal of the project was 61500 million yuan, of which 2.6 billion yuan was used for the construction expenditure of the Xi'an International Conference Center project, forming a new hidden debt2.6 billionYuan. 2. Yanling County, Xuchang City, Henan Province requires ** bank to advance funds and have not liquidated new hidden debts for a long time. From June 2019 to December 2020, the Yanling County Finance Bureau violated the provisions of local financial departments that prohibit the deferred liquidation of ** banks and long-term advance of funds, and in accordance with the "Entrusted Cooperation Agreement on Centralized Treasury Payment" signed with the Yanling County Branch of the Agricultural Bank of China (hereinafter referred to as the Yanling County Branch of the Agricultural Bank of China), the Yanling County Branch of the Agricultural Bank of China was required to postpone the liquidation and pay the expenses that should be borne by the finance in violation of the regulations128.4 billion yuan;From March to October 2020, the Yanling County Finance Bureau, in accordance with the "Entrusted Cooperation Agreement on Centralized Treasury Payment" and "Yanling County Finance and Treasury Centralized Payment Business Agreement" signed with China Construction Bank Co., Ltd. Yanling Branch (hereinafter referred to as China Construction Bank Yanling Branch), requested the Yanling Branch of China Construction Bank to postpone the liquidation and pay the expenses that should be borne by the finance in violation of regulations7300 million yuan. The total amount of the above funds is 201.4 billion yuan, which will be used for project funds, land purchase index funds, operating expenses, people's livelihood projects and other expenditures. As of the end of January 2022, the Yanling County Finance Bureau has not liquidated the long-term advance funds, forming new hidden debts20.1.4 billionYuan. 3. Jingdezhen City, Jiangxi Province, with state-owned enterprises as the main body, borrowed new money to repay the old and treated it as a chemical debt, resulting in false debts. From January to June 2021, Jingdezhen Urban Construction Investment Group Co., Ltd. and its subsidiaries obtained financing funds through the issuance of medium-term notes, ultra-short-term financing bonds, financial leases, fixed asset loans, working capital loans, etc.34.3 billion yuan, repaying 12 mature hidden debts and treating them as debts, resulting in false debts34.3 billion yuan;Jingdezhen State-owned Assets Operation and Investment Holding Group Co., Ltd. raised funds with short-term financing bonds, debt financing instruments, shantytown reform loan advance funds and its own funds120.5 billion yuan, repay the due hidden debts and treat them as debts, resulting in false debts12.0.5 billionYuan.
4. The Shaanxi Branch of the Agricultural Development Bank of China violated laws and regulations by providing financing and related services to local ** and its departments. In 2020, the Agricultural Development Bank of China Shaanxi Branch decided to support the construction of relevant projects in Yiyi District, Yanliang District, Zhouzhi County and other districts and counties, taking into account the repayment of the Xi'an River and Lake Water System Protection and Governance Project and the provincial, municipal and district-level water conservancy construction. In June 2020, Agricultural Development Bank of China Xi'an Yiyi District Branch signed a loan contract with Xi'an Yiyi Xingshui Water Co., Ltd., with a contract amount of 4600 million yuan, the actual withdrawal is 3300 million yuan, and the loan balance as of the end of June 2021 was 3300 million yuan. In September 2020, Agricultural Development Bank of China Xi'an Yanliang District Branch signed a loan contract with Xi'an Yanliang District Xingshui Industrial Co., Ltd., with a contract amount of 113.5 billion yuan, the actual withdrawal is 72.6 billion yuan, with a loan balance of 72.6 billion yuan;From September to November 2020, the Zhouzhi County Branch of the Agricultural Development Bank of China signed three loan contracts with Zhouzhi County Xingshui Water Co., Ltd., with a total contract amount of 2200 million yuan and all drawdowns, as of the end of June 2021, the balance of the loan was 2200 million yuan. The above-mentioned loans are all used for the protection and management of rivers and lakes in Xi'an, and the balance of the loans forms new hidden debts12.7.6 billionYuan. 5. Agricultural Bank of China Co., Ltd. Wuhu Branch and relevant sub-branches in the jurisdiction violated laws and regulations to provide financing and related services to local ** and its departments, and added hidden debts. From July to August 2020, according to the relevant decisions of the loan review committee, the documents issued by the local ** and the department authorizing the relevant companies to raise funds that should be arranged by the financial budget, Wuhu Huangshan Road Branch issued a loan of 200 million yuan to Wuhu Jun'an Construction Co., Ltd., Wuhu Zheshan Branch issued a loan of 200 million yuan to Wuhu Biopharmaceutical Technology Co., Ltd., and Wuhu New Era Branch issued a loan of 200 million yuan to Wuhu High-tech Construction and Development. Wuwei City Branch issued a loan to Wuwei Hairong State-owned Assets Operation and Management800 million yuan was used for flood relief expenditures, and as of the end of June 2021, the loan balance formed a new hidden debt4.7.1 billionYuan. List of high-quality authors