Over US$257 Billion in Illegal Funds Devoured in China

By Chen Jinjiang, The Trend Magazine Staff
February 9, 2007 12:00 am Last Updated: February 9, 2007 12:00 am

CHINA—An investigation carried out by the Central Commission for Discipline Inspection (CCDI), the Research Office of the State Council, and the Ministry of Supervision reveals that government and party [Chinese Communist Party] bodies illegally consumed 2 trillion yuan (approximately US$257 billion) in public funds in 2006. The figure includes fund embezzlement, entertainment, holiday and tourism expenses, study abroad, gifts, bonuses, benefits.

The astronomical amount—2 trillion yuan—was revealed in the 2006 CCDI working report at the CCP Political Bureau meeting on Dec. 25, 2006.

The investigation entitled “The Condition about Government and Party Organizations Illegally Borrowing and Embezzling the Public Fund (Taxes),” was conducted from Nov. 1, 2006 to Dec. 18, 2006. More than 700 CCDI committee members, officials, and experts were involved in the investigation and reexamination. He Yong, deputy secretary of the CCDI and secretary of the Secretariat of the CPC Central Committee was in charge of the investigation.

Two trillion yuan equals 50.5 percent of the national taxes in 2006 (3.980 trillion yuan) or 11.5 percent of China's GDP in 2006 (18.5 trillion yuan).

Two trillion yuan is equivalent to the national taxes in 1996 and in 1997 (The total in 1996 was 1.71 trillion yuan and in 1997, 1.983 trillion yuan.)

Two trillion yuan equals the gross national product of agriculture, forestry, and the livestock industry of the entire nation in 2005.

Sources of Illegal Funds

The report shows eight main sources of illegal funds:

1. Budgeting huge sums of unnecessary funds

2. Allocating funds banned by regulations

3. Keeping different books for taxation

4. Embezzling administration and project funds that should be allocated to low-level organizations

5. Manipulating of accounting systems by people in power and positions of authority

6. Taking loans from financial organizations

7. Inflating the number of employees in the organization

8. Having local authorities set favorable policies

During a state conference, the Auditor General, Li Jinhua said, “No provincial government has submitted a report of administrative expenses within 5 percent accuracy. It is a big problem and a complex issue. It is characteristic of systemic corruption.”


Between May 2005 and October 2006, the Counselors' Office of Shanghai Municipal Government launched the investigation “About the Condition of Illegally Borrowing and Embezzling Public Funds in Shanghai.”

The report revealed that in 2004, government and party institutions in Shanghai devoured 104.5 billion yuan (approximately US$13.4 billion) for entertainment, tourism, travel, studying abroad, gifts, bonuses, benefits, and subsidies. In 2005 the figure was 127.6 billion yuan (approximately US$16.4 billion).

Guangdong Province

In September 2006, CCDI's report “The Investigation of Illegally Borrowing and Embezzling the Public Funds of Guangdong Province” revealed that 248.5 billion yuan was misappropriated in 2005. The majority of the money was allocated as follows:

• One hundred and twenty-three cadres from the provincial and city level used 4.135 billion yuan for entertainment and gifts. Two hundred and twenty-three thousand people used 3.97 billion yuan for travel expenses.

• Cadres spent 1.6 billion yuan on 2,750 new and above standard cars. (The regime assigns a type of car depending on the status of the cadres.)

• One hundred and eighteen billion yuan was used for bonuses and benefits.

• Seventy-two billion yuan was deposited in over 13,700 private accounts of local organizations to avoid being monitored by higher authorities.