China's National Audit Office on Friday said a spot check of land transfers made in 2009 and 2010 revealed that nearly 70 percent of the cities and counties surveyed were involved in illegal activity.
The latest audit looked at eight provinces and three municipalities, including Beijing, Tianjin and Shanghai.
A spot check in 24 cities and counties found that 16 of them violated land transfer regulations in 2009 and 2010.
In seven cities and counties, including Shenyang in Liaoning province and Yichang and Xiangyang in Hubei province, local governments re-purposed a total of 13,606 hectares of collectively owned land without going through the proper procedures. Local governments later took back 11,726 hectares of land, the audit said.
In addition to the illegal use of collectively owned land, 10 cities and counties were found to have transferred without official approval a total of 1,106 hectares of land, of which 66 hectares were nationally protected, for theme parks and residential buildings.
The office said the governments mentioned in the audit report are improving their land management system and strengthening supervision of the land market.
The top audit agency also said more than 1.5 billion yuan ($238 million) from land transfer fees were illegally allocated in 12 cities and counties to purchase or build office buildings, residential buildings and theaters.
During the audit, three cases involving illegal land use were reported to local authorities and 10 people were punished, but no further details were revealed.
Amid soaring property prices, the increasing number of land abuse cases in recent years has troubled Chinese authorities.
Yan Jinming, a land management professor at Renmin University of China, said local governments are often tempted to illegally transfer land since the fees generated from the process are the main source of revenue for local governments.