The Chinese government attaches great importance to coordinated regional development and has continuously enriched and improved its concepts, strategies and policy frameworks. Drawing on their own comparative advantages, different regions in China have been integrating into the new development paradigm, as a result their economies have been growing steadily and their development has achieved in a more balanced way.

Since 2021, the National Audit Office of China (CNAO) has been grounding its efforts in economic oversight, focusing on its main responsibility of auditing the authenticity, lawfulness, and effectiveness of fiscal revenue and expenditure, and putting the audit of coordinated regional development at the top of public finance performance audit.

Through auditing coordinated regional development programs, the CNAO are trying to remove institutional obstacles and explore new methodologies for audit institutions to play a better role in serving national governance and promoting high-quality development.

I. The Chinese Government Continuously Advances Coordinated Regional Development

At present, the principal contradiction facing Chinese society has evolved into the contradiction between the people’s ever-growing needs for a better life and unbalanced and inadequate development.

China’s economy has also shifted from a phase of rapid growth to a stage of high-quality development. Against this context, the Chinese government accurately grasped the feature of current development stage, applied the new development philosophy, and stepped up in fostering a new development paradigm, proposed updated plans on coordinated regional development, and achieved remarkable progress.

Establishing the Approach for Advancing Coordinated Regional Development

Under the new circumstances, promoting coordinated regional development entails respecting the nature of economy, encouraging all regions to pursue development based on their resource endowments, leverage their comparative advantages, and remove barriers to the flow of production factors.

It aims to facilitate the rational flow and efficient aggregation of various productive factors, to promote concentration of industries and population in regions with advantages, and to improve overall economic efficiency.

Efforts shall be made to boost innovation, to build a dynamic system for high-quality development, to improve the distribution of major productive forces, and to leverage the role of key regions as growth poles.

The economic and population carrying capacity of regions with economic advantages shall be strengthened, while other regions shall enhance their capacity in safeguarding food security, ecological security and etc., so as to form a regional economic structure featuring complementary strengths and high-quality development.

Building a Strategic Framework for Coordinated Regional Development

Since 2012, China has planned and implemented a series of major regional development strategies, including the Coordinated Development of the Beijing-Tianjin-Hebei Region, the Development of the Yangtze Economic Belt, the Development of the Guangdong-Hong Kong-Macao Greater Bay Area, the Integrated Development of the Yangtze River Delta, the Comprehensive Reform and Opening Up in Hainan, and the Ecological Protection and High-quality Development of the Yellow River Basin.

China has also promoted the large-scale development of western China, the full revitalization of northeast China, the rise of the central region, and the trailblazing development of the eastern region, and supported the accelerated development of areas with special characteristics.

In addition, China implemented the functional zoning strategy and the new urbanization strategy, and gave full play to the synergies between strategies, which enhanced coordination and connectivity in regional development.

Improving Institutional Mechanisms for Coordinated Regional Development

Sound institutional mechanisms have been put in place for aligning development strategies among different regions, fostering integrated market, boosting regional cooperation and mutual support, and establishing inter-regional compensation mechanisms, so as to better advance the coordinated development of developed and underdeveloped regions as well as the eastern, central, western and northeastern regions.

Efforts have been made to elevate regional cooperation by supporting inter-provincial bordering areas in establishing a cooperation mechanism featuring unified planning, integrated management, joint development and shared benefits.

China has improved transfer payment to support underdeveloped regions and gradually achieve equitable access to basic public services. It also refined interest adjustment mechanisms for regional cooperation, supported diversified compensation arrangements between upstream and downstream regions in river basins, and encouraged benefit-sharing models such as joint industrial parks and enclave economies.

II Actions and Achievements of CNAO in Auditing of Coordinated Regional Development

Over the past five years, CNAO has conducted eight audits, revealing more than 1,600 findings of various types. These audits urged relevant central departments and local governments to fulfill their primary responsibilities for rectification of audit findings, enabling audit work to effectively underpin and support coordinated regional development. In this regard, three major areas of work have been prioritized:

Grounding audit priorities in development plans and conducting full-cycle audits throughout their formulation, implementation, coordination and oversight. Guiding economic and social development through medium - and long-term plans is an essential approach to national governance in China. The 15th Five-Year Plan for National Economic and Social Development sets out strategic arrangements for economic and social development over the next five years, featuring major policies, key measures and flagship projects. It guides and coordinates annual programs, public budgets, financial and credit support, exploration and utilization of natural resources, public services, industrial development, social security, and access to education, medical care and housing. In this sense, development plans represent the highest-level efficiency benchmarks for public expenditure. China’s five‑year development plans, together with regional, spatial and specialized plans, form a unified national planning system, with regional plans serving as a key pillar of five‑year development plans.

Accordingly, audits of coordinated regional development take regional development plan as main audit subject, covering the full-cycle of development plans from formulation, implementation to coordination and oversight. In terms of plan formulation, auditors focus on the rationality and consistency of the planning, as well as the efficiency of implementation mechanisms. In terms of implementation, auditors examine the formulation of specific measures, progress in reform tasks, construction of major projects, and financing as required by the plans, revealing difficulties and problems in implementation, and promote the full implementation of the plans. In terms of coordination and oversight, auditors review the duty fulfillment of central departments in monitoring, analyzing, coordinating and supervising the implementation of development plans, and identify mal-performed cases. Practice shows that CNAO has ensured whole-process oversight of regional development plans. In particular, it disclosed violations such as the abuse of power in regional development plan formulation to seek improper personal profits, playing a unique and important role in ensuring the sound formulation of development plans and promoting the common well-being of society.

Adopting a focused and targeted approach to deliver impactful outcomes thorough in-depth examination of key projects and funds. Given the extensive content, broad scope and complex hierarchy of regional development plans, the relevant audits must be targeted and focused to achieve maximum impact. In developing audit plans, auditors studied relevant policies and decisions concerning the audited regions, aligned them with the priorities and distinctive features of regional plans, and precisely defined the focus of audit. For instance, in the audit of the Beijing-Tianjin-Hebei Coordinated Development, auditors focused on the implementation of relieving Beijing of functions non-essential to its role as China’s capital as the starting point; in the audit of the Yangtze Economic Belt, auditors focused on stepping up conservation of the Yangtze River and halting its overdevelopment as the primary issue. In conducting audits, auditors adopted the research-based approach by following the work stream of “Target-Policy-Project-Funding”, closely examining issues such as delay of major projects and deficiency of fund allocation. Auditors delved deep into the institutional root causes behind problems, seriously investigated suspected violations of discipline and laws, and provided a reliable assessment of the implementation of regional development plans. The audit reports have been highly commended by central leadership, and relevant central departments and local governments have made concrete actions to rectify problems identified by audits, achieving sound results.

Strengthening whole-process oversight and establishing an integrated coordination mechanism to ensure efficient delivery.

Regional development plans follow a working mechanism whereby the central government leads general coordination, provincial governments bear overall accountability, and municipal & county-level governments ensure implementation. Relevant central departments are responsible for providing comprehensive guidance for the implementation of regional development strategies and conducting routine work such as coordination and supervision; relevant local governments assume the primary responsibility for implementation.

In practice, CNAO, on the one hand, strengthened vertical collaboration through auditing, at the same time, the performance of central departments and local governments in executing regional plans. In auditing central departments, efforts were made to sort out lists of major projects and problems identified at the central department level, issue lists of coordinated items, and instruct local auditors to conduct in-depth verification. In auditing local governments, problems identified were promptly communicated and cross-verified with central departments audit teams, so as to trace major problems to their sources and dig into deep-rooted institutional causes.

On the other hand, CNAO strengthened horizontal collaboration among audit teams in different regions on common issues such as inter-regional coordination and river basin coordination. In this case, once local audit teams identify common issues, such information will be submitted to the Department of Policy Research of the CNAO for analysis and assessment. The Policy Research Department then will provide a unified approach and scope of investigating similar issues, and request local audit teams for further verification and follow-up, and at last, adopts consistent wording in the audit reports for issues with the same nature. In this way, a horizontal and vertical coordination mechanism featuring clear division of responsibilities and unified actions in auditing regional development plan has been established.

III Challenges and Countermeasures in Auditing Coordinated Regional Development

In five years, the CNAO accomplished from initiation of coordinated regional development to full audit coverage of all corrdinated regional development strategies. Nevertheless, to further deepen theoretical research and improve audit quality, it is necessary to strengthen research-based audit, continue to refine mechanisms, and enhance capacity in identifying and investigating major problems.

Strengthening study on the regional planning system. The CNAO will conduct in-depth studies of plans and policies, fully understand the ultimate goals of each strategy made by the central leadership, and sort out the operation characteristics of the coordinated regional development system by focusing on the tasks and connections of each strategy. And the CNAO will identify power-concentrated areas and fund-intensive areas to select audit subject and priorities, and adopt focused approach to address major issues.

Improving the organization of audit assignments. The CNAO will remain a clear understanding on the development plans, relevant audit assignment, and final audit reports, oversee the exercise of power by following the flow of project funds, intensify audits of central departments and relevant regions, and further improve coordination and collaboration mechanisms. This will better foster a sound cycle among the allocation of audit resources, the operation of audit mechanisms, and the utilization of audit results.

Enhancing capacity for understanding and analyzing major issues. The CNAO will continue to analyze economic issues from national governance perspective, pay close attention to investigating suspected violations of discipline and laws, and cage power within their mandate in development plan formulation, implementation and oversight. And the CNAO will reveal the most serious and prominent problems in the implementation of regional plans to create substantive deterrence and ensure that audit-based oversight is authoritative and effective.

Looking ahead, CNAO will continue its coordinated regional development audits with the focus on the effectiveness of implementation of national strategies, strengthen cross-regional coordinated oversight, remove policy barriers, promote the free flow of production factors, and safeguard high-quality regional development through audit-based oversight.