China's top auditor warns of economic development risks

Some enterprises falsified sales volumes or costs to reach their quota or evade taxes, he added.

The audits also showed that some companies blindly invested in the polysilicon, wind power and coal chemical industries.

Forty-five projects were launched without approval. The total investment for these projects had reached 58.3 billion yuan by the end of 2011, Liu said.

Innovation also needs to be improved, as technological investment at 53 enterprises lagged behind their production development, he said.

Loose implementation of central policies was also found in some state-owned financial institutions.

NAO said 27 branches of state-owned financial institutions provided loans worth a combined total of 28.44 billion yuan ($4.6 billion) for projects without proper procedures or necessary guarantee.

Nine branches charged extra fees totaling 421 million yuan for small business loans and export credit services. Meanwhile, 18.39 billion yuan was embezzled by clients and 2.2 billion yuan was transferred to private financial markets for usurious loans, NAO said.

In addition, some energy conservation and emission reduction policies were poorly implemented and were not properly evaluated according to law.

Punishment

During last year's audits, 175 cases involving serious violations of economic regulations were discovered and transferred to relevant departments. Authorities are investigating more than 630 people who allegedly committed economic crimes.

Some people were found to have engaged in rent-seeking related to administrative approvals, project construction, financial subsidies, lending and business management, Liu said.

Some people profited by using non-public information related mineral reserves, listed corporations and fund investment strategies, he said.

More than 5,000 companies or organizations were involved in illegal online banking operations, he added.

The audit office will seek to solve these problems and the State Council will report the situation to the Standing Committee of the NPC before the end of the year, Liu said.