Audit reports from several provinces in China have revealed the presence of subsidy fraud in trade-in initiatives, including credential theft and 'price hike before subsidy' schemes.
According to Caixin, fiscal funding to support equipment upgrades and consumer goods trade-in programs has been one of the top audit priorities for provinces in 2024.
Multiple provinces reported that some merchants increased government subsidies through irregular price hikes, as well as engaging in fraudulent subsidy claims and slow payout of subsidy funds.
As of August 6, 10 provinces (including municipalities and autonomous regions) have published their 2024 provincial fiscal budget audit reports.
Beijing disclosed that some products had their prices raised to increase government subsidies, with five companies failing to apply to the Municipal Commerce Bureau for price adjustments as required. They raised the registered prices by changing product codes, uploading bundled set items or services, and sold 13,500 items in total, resulting in an additional 2,771,100 yuan (1.6291 million ringgit) in government subsidies.
The report states that in Beijing, non-registered buyers used borrowed or stolen personal purchasing credentials to buy computers and other products in bulk, amounting to a total value of 247 million yuan (145 million ringgit), suspected of fraudulent subsidy claims; in Hainan, an inspection found that three companies and 413 products were involved in 'price hike before subsidy,' bundled sales, and other fraudulent practices, involving transaction amounts totaling 7.07 million yuan (415,650 ringgit).
In June, several regions in China suspended trade-in subsidy policies for consumer goods, sparking speculation about the possible cancellation of national subsidies ('guobu'). However, Chinese authorities have since announced that a new batch of trade-in funds for consumer goods will be allocated in July, with an emphasis on sustainability and balanced principles to ensure the policy is smoothly implemented throughout the year.