The Chinese government has been boosting consumption by continuously promoting subsidies for upgrading consumer goods and large-scale equipment renewals. A Chinese audit report has revealed that some companies have exploited loopholes by issuing fake invoices to claim subsidies, while some schools have also exaggerated project lists that were subsequently approved.
On the 24th, China's National Audit Office released the 'Audit Work Report on the Execution of the 2024 Central Government Budget and Other Fiscal Revenues and Expenditures.' The report reveals several irregularities that have emerged following the implementation of subsidy measures such as replacing old consumer goods with new ones and large-scale equipment upgrades.
Caixin Net reported on the 25th that for the first time in March 2024, the central government explicitly planned to issue ultra-long-term special treasury bonds for several consecutive years, with 1 trillion yuan (592.222 billion ringgit) to be issued in 2024, specifically for the implementation of major national strategies and the construction of key sectors (referred to as "dual-priority construction").
Starting in July 2024, this will be expanded to include "two new initiatives," that is, 300 billion yuan (177.667 billion ringgit) will be allocated to support large-scale equipment upgrades and the replacement of old consumer goods with new ones. The replacement of old consumer goods is a nationally subsidized (state subsidy) promotional activity familiar to most consumers, and according to policy, is targeted only at certain items such as home appliances and automobiles.
The Chinese audit report found that a small number of companies were involved in defrauding state subsidies.
For example, in Yunnan, five home appliance sales companies exploited loopholes in the review department's failure to verify commodity logistics information, arranged for employees and relatives to swipe cards in stores without delivering actual goods, then returned the full amount in cash. With this method, they issued a large number of fake invoices and transaction certificates to fraudulently claim 1.7121 million yuan (1.0139 million ringgit) in home appliance replacement subsidies.
Problems have also surfaced in multiple provinces in terms of applying for, allocating, and using ultra-long-term special treasury bonds. For instance, Xiamen University included fitness equipment such as running machines and barbells worth 1.6961 million yuan (1.0045 million ringgit) in its "advanced teaching and scientific equipment" list for declaration, which was later approved.
There have been problems with ultra-long-term special treasury bond funds being falsely listed as expenditures or being misappropriated. For example, six provinces falsely listed expenditures amounting to 8.308 billion yuan (4.92 billion ringgit) through the method of "allocating instead of spending," and four provinces diverted 7.06 billion yuan (4.181 billion ringgit) to "sanbao" (guaranteeing salary, operations, and basic livelihood) or other special project expenditures.
The audit traced the use of the 1 trillion yuan in additional treasury bonds issued in 2023 and found that 352.7 billion yuan (208.877 billion ringgit) were used for post-disaster reconstruction and enhancing disaster prevention and mitigation capabilities. After reviewing 206.6 billion yuan (122.353 billion ringgit) in 13 provinces, about 32.4 billion yuan (19.188 billion ringgit) were found to be idle or misappropriated, accounting for 15.68%.