China Reform Monitor: No. 945

January 10:

China’s National Audit Office (NAO) will conduct an audit of rural education funding this year in an effort to uncovering misuse of funds, auditor general Liu Jiayi said in comments carried by the South China Morning Post. In recent years Beijing has spent billions to upgrade township- and county-level schools, which have seen mass closures and dwindling enrolment amid rapid urbanization. Last week a China Central Television expose` found that school authorities in Jieshou, Anhui had inflated enrollment at rural schools allowing them to swindle 10.63 million yuan in government subsidies designed for students. The NAO will also investigate irregularities in China’s social security fund and in government subsidized housing projects. Last year the agency recouped 100 billion yuan from 120,000 government agencies and 26,000 government officials.

January 11:

To date China has invested 137.6 billion yuan in the South-to-North Water Diversion Project including 57.8 billion yuan in 2011 alone, according to the Office of the South-to-North Water Diversion Project Commission of the State Council. This year China will invest another 64 billion yuan in the project, which is designed to divert water from water-rich south to the arid north. In 2002 construction began on the project, which consists of eastern, middle and western routes; the eastern route will begin transferring water in 2013. China has already relocated 330,000 people who lived near the Danjiangkou Reservoir, the middle route’s water source, and another 1,500 people will be resettled in 2012. Over the next ten years China will spend 400 billion yuan per year for water conservation, the official People’s Daily reports.

[Editor’s Note: Recent reports suggest that due to high pollution levels the South-to-North Water Diversion Project will have limited benefits. Before the water from the south can be used it must be purified, a process that substantially increases costs. In response, rather than rely on southern water supplies some cities like Tianjin have begun to build desalinization facilities.]

January 15:

Under cover of darkness unidentified gunmen attacked a Chinese commercial vessel, the Shengtai-11, on the Mekong River in Laos as it was returning from Thailand to Guanlei Port in Xishuangbanna, Yunnan. Although there were no injuries, police from China and Laos arrived at the scene to investigate, the official China Daily reports. Passenger services on the river were suspended for four months after tourists were robbed in the river’s Golden Triangle area in August. Shipping services were also halted after 13 Chinese sailors on two cargo ships were killed on the river on October 5. International transport on the Mekong River fully resumed on December 10 when police from China, Laos, Myanmar and Thailand began joint patrols to ensure safe transit along the river.

January 16:

China has signed an agreement for cooperation in the development and use of nuclear energy with Saudi Arabia, the world’s largest oil producer. “The nuclear energy cooperation agreement seeks to strengthen scientific, technological and economic cooperation between Riyadh and Beijing,” said a Saudi official quoted in the Arab News. The state-run Saudi oil giant Aramco and China’s Sinopec also finalized an initial agreement first signed last year to develop a 400,000 bpd refinery in Yanbu, on the Kingdom’s Red Sea coast. Saudi Arabia is China's biggest source of imported oil and China is Saudi Arabia’s biggest oil customer, although Riyadh is keen to diversify its economic ties. China’s state-owned companies will also help build Saudi infrastructure including railways, ports, electricity and telecommunications.

January 17:

India and China have established a joint panel including senior diplomats and military officials to maintain peace on their disputed Himalayan border. The group will facilitate real-time contact between Beijing and New Delhi in case of intrusions along the Line of Actual Control, the de-facto China-India border. The Deutsche Presse-Agentur news agency reports that the announcement came at end of the 15th round of border talks between China’s State Councilor Dai Bingguo and India’s National Security Advisor Shivshankar Menon in New Delhi. Territorial disputes along the 3,500 km border led to a brief war in 1962 and continue to cause tensions.