China has recovered and reallocated tens of billions of yuan that had been misused or diverted from pension funds, agricultural subsidies and government bond programmes, the country's top audit office said on Monday, as Beijing steps up efforts to tighten fiscal discipline and rein in local government risks.
The National Audit Office (NAO) published a report on the rectification of problems identified in the audit of the 2024 central budget execution and other fiscal revenues and expenditures, detailing how authorities had responded to violations uncovered earlier this year.
In its audit report released in June, the NAO said large sums of public funds had been improperly withheld, diverted or misappropriated by local governments and institutions.
The audit found that in 16 provinces and 175 counties, 4.164 billion yuan ($580 million) of agricultural subsidy funds had been intercepted or diverted for purposes such as repaying local government debt or paying public-sector wages. In some regions, payments to farmers had been delayed by an average of one year, and in extreme cases for as long as nine years.
It also found that 13 provinces had diverted 40.626 billion yuan from urban and rural residents' pension insurance funds to cover basic government spending — known as the "three guarantees", referring to livelihoods, wages and operations — or to repay debt.
In addition, 92 local governments across nine provinces were found to have misused 65.18 billion yuan in special-purpose local government bonds, mainly to plug fiscal gaps or service state-owned enterprise debt. Four provinces had also diverted 7.06 billion yuan in ultra-long special treasury bond funds for unauthorised purposes.
According to the new report, authorities have since taken steps to correct many of the problems.
Local governments in the 16 provinces involved have accelerated the disbursement of agricultural subsidies or returned the funds to the treasury for reallocation, amounting to 3.737 billion yuan.
In the case of pension funds, 13 provinces have repaid 13.083 billion yuan that had been used to repay government debt or for other improper purposes.
China's Ministry of Human Resources and Social Security has also launched a nationwide crackdown on social insurance fraud involving intermediaries who helped ineligible people enrol or claim benefits illegally. As a result, 10 provinces have recovered 122 million yuan in wrongly paid benefits.
Separately, 25 provinces have recovered 337 million yuan from about 19,000 people who had illegally claimed pension benefits by altering personal records or retiring early in violation of regulations.
On special-purpose bonds, 65 local governments have opened dedicated accounts and tightened approval procedures, leading to the return of 14.249 billion yuan in misused funds. Three provinces have also recovered 4.359 billion yuan in ultra-long special treasury bond funds.
The report also covered audits of major national investment programmes, including so-called "dual priority" infrastructure projects and "new consumption" initiatives, with rectifications involving 10.335 billion yuan.
China's National Development and Reform Commission has been instructed to claw back falsely claimed subsidies and deduct the amounts from local governments' 2025 funding allocations. In Yunnan province, authorities investigated suspicious home appliance subsidy claims, recovering or cancelling 4.4243 million yuan, disqualifying 23 companies and introducing new measures to prevent fraud.
The audit office also said seven provinces had repaid 3.342 billion yuan in illegally added implicit government debt. In nine regions, state-owned enterprises returned 1.848 billion yuan in agricultural loans that had been improperly pooled.
Tax authorities in 28 provinces and municipalities have refunded or offset 33.189 billion yuan in excess or prematurely collected taxes and late fees by guiding companies to correct their filings.
An official from the NAO's policy research department said all problems and recommendations identified in the 2024 audit had been included in the rectification process. Rectification notices and problem lists were sent to 138 local governments, departments and institutions.
Of the 2,186 issues that required immediate correction, 98% had been resolved by the end of September 2025, the official said. For the remaining 1,299 issues requiring phased rectification and 753 requiring long-term correction, authorities have drawn up timetables and roadmaps.
In total, local governments and departments have rectified problems involving 1.04 trillion yuan, introduced or revised more than 1,090 institutional rules, and taken disciplinary or legal action against 3,420 people.
Despite the progress, the audit office cautioned that some problems requiring immediate correction had not yet been fully addressed.
"The next step is to continue strengthening follow-up supervision and inspections to ensure that rectification is compliant, thorough and effective," the official said.
The disclosures come as Beijing faces growing pressure to manage rising local government debt, restore confidence in public finances and ensure that funds earmarked for social welfare and economic support reach their intended recipients.
China has repeatedly pledged to tighten oversight of fiscal spending, improve transparency and curb misuse of public resources, especially as economic growth slows and budgetary pressures intensify across many regions.
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