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China: New Department to Monitor Overseas Assets

(Sept. 8, 2008) China's National Audit Office (NAO), a ministry under the State Council (Cabinet), recently set up a new Overseas Audit Department to strengthen the auditing of overseas state-owned assets and curtail fraud in that sector. The assets, whose value is estimated to be more than 100 billion yuan (about US$14.8 billion), are held by “more than 80 central government ministries and agencies.” However,”no one knows their exact number or scale” because of “messy management,” law professor Li Shuguang of the China University of Political Science and Law was quoted as stating. (Wu Jiao, New Office to Audit Assets Outside China, CHINA DAILY, Aug. 21, 2008, available at http://www.chinadaily.com.cn/bizchina/2008-08/21/content_6956747.htm.) The major agency responsible for overseeing all of China's assets, domestic and overseas, is the State Council's State-Owned Assets Supervision and Administration Commission. In 2007, according to Li, the total value of these assets was more than 12 trillion yuan, “with a considerable amount belonging to overseas branches.” (Id.)

The State Council Provisions on the Primary Official Duties, Internal Organization, and Staffing of the National Audit Office, promulgated in a circular issued on August 11, 2008, provide not only for the establishment of the new Overseas Audit Department but also for a State Enterprises Audit Department and an International Cooperation Department. The Overseas Audit Department is responsible for organizing audits of the finances of state overseas units of government agencies and, through “lawful, appropriate methods,” audits of the overseas assets, duties, and profits and losses of central state-owned enterprises and financial institutions. It also is responsible for launching related special audit investigations. (Shenji shu jiang jiaqiang jingwai zhongyang guoyou zichan shenji [NAO to Strengthen Auditing of Overseas Central State-Owned Assets], Aug. 11, 2008, available at http://www.cs.com.cn/xwzx/03/200808/t20080811_1551590.htm.) The restructuring of the NAO is part of the overall institutional reform plan of the State Council, under the program of “the three determinations” (determination of official duties, internal structure, and staffing requirements), which was approved by the National People's Congress on March 15, 2008 (see 4 W.L.B. 2008).