China warns local govts not to misuse tech innovation funds

BEIJING, (Reuters): China on Wednesday published revised rules on how local governments should manage funds allocated by Beijing for scientific and technological innovation, at a time when local government finances are under stress.

The rules reiterate the need for local governments to report wasteful and illegal use of such funds to central government ministries, and warn against the use of such funds for debt repayment, pensions and civil servant salaries, according to a document on the website of China’s ministry of finance.

“Encourage all localities to thoroughly implement major national policies for scientific and technological reform and development, solidly promote self-sufficient innovation, and enhance scientific and technological innovation capabilities,” China’s finance and science and technology ministries said in the document.

The focus on improving the allocation of such funds comes amid a property sector slump that has strained local government finances.

But growing U.S. export controls aimed at cutting off Chinese access to the world’s most advanced chip and chip-making tools have led Beijing to mobilise billions of dollars to accelerate China’s technological self-sufficiency, and demand local governments to follow suit.