China’s cash-strapped local governments accused of misusing funds as economic pressure grows
- China’s audit office says local governments have misused proceeds from special purpose bonds and falsified information to receive coronavirus subsidies
- 23 small- and medium-sized banks were found to have understated their bad loans by 170.96 billion yuan (US$25 billion), among other financial transgressions
Dozens of local governments and small- to medium-sized banks in China have been found to be in breach of financial rules, as authorities in Beijing crack down on systemic risks amid growing pressure on the economy.
A total of 10 regions misused the proceeds of 13.66 billion yuan (US$2.03 billion) worth of special purpose bonds – which are allocated primarily for infrastructure spending – on business operations and personnel wages last year, according to China’s National Audit Office.
The results of the inspection, delivered by the National Audit Office at the bimonthly session of the National People’s Congress Standing Committee on Tuesday, looked at the use of the central government budget and fiscal spending in 2021.
With local authorities bearing the cost of coronavirus prevention measures such as mass screening, some 26 of China’s 31 provincial-level jurisdictions falsified information to obtain 543 million yuan of central government subsidies for people affected by the pandemic, the auditor general Hou Kai said at the session.
A total of 28 provinces misused 1.431 billion yuan of funds for debt repayment and infrastructure projects.