China’s Audit Watchdog Calls Out Banks for Cheating on Loans

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Loans totaling 68.1 billion yuan that four state-owned banks issued in the name of supporting tech innovation were used for other purposes such as arbitrage, the National Audit Office found.

Some state-owned banks misrepresented loans they made, falsely claiming they supported key sectors such as tech, green transition and agriculture, a report from the National Audit Office (NAO) revealed.

Misrepresentation is among a list of violations committed by state-owned financial institutions highlighted in an annual audit report presented to the standing committee of the National People’s Congress by Hou Kai, the auditor general, on Tuesday.

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The NAO report revealed that some state-owned banks falsely claimed their loans supported key sectors such as tech, green transition, and agriculture.
Loans amounting to 68.1 billion yuan were misused for purposes including arbitrage instead of tech innovation support.
The audit uncovered various violations, including inflated lending practices and 31.4 billion yuan of loans to "zombie" enterprises at the end of 2023.

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What Happened When

2023：: NAO report examined the implementation of the government budget, including matters related to state-owned assets.

End of 2023：: Audit found four banks had 31.4 billion yuan of outstanding loans to zombie enterprises.

Tuesday, June 25, 2024：: Annual audit report presented to the standing committee of the National People’s Congress by Hou Kai, the auditor general.

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