MESSY MANAGEMENT AND MISUSE

The NAO said 2.46 percent of the total land proceeds were not paid into the special accounts, while 71.18 percent of the net proceeds, the above-mentioned 186.41 billion yuan, were not put into local budgets.

Zhai Aicai, deputy head of the agriculture, resources, and environment audit department of the NAO, said land proceeds, if not included into the special account and local budgets, would be easily misused or embezzled.

The NAO found that about 8.37 billion yuan of land proceeds were misused. About 5.23 billion yuan was used to construct office buildings and other facilities for local governments, while about 3.14 billion yuan was used for loans and investment against rules, according to the report.

COLLECTION FAILURE OF LAND PROCEEDS

There were also cases of unpaid or uncollected land proceeds, although the majority, or 94.08 percent, of land proceeds had been duly collected, the report showed.

About 4.79 billion yuan of land proceeds in nine cities, including Tianjin, Changsha, Nanning, Chengdu, Harbin, Shanghai, Hefei, Guangzhou and Jinan, or 2.17 percent of the total 220.46 billion yuan, were illegally deducted or exempted.

More than half of the illegal deductions and exemptions were attributed to irrationally lower land prices, reimbursement of fees for land use, or charging fees for land use from local governments instead, the report said.

Experts had warned the improper deduction or exemption of land use charges would enable real estate developers to get a large area of land with relatively smaller amounts of money, which in effect lowered the cost for developers.

Ten cities, except Beijing, also saw a combined 17.33 billion yuan in late land proceeds payments; some cities had even granted the use of land before land users handed in the required fees, according to the report.

Zhai noted it would bring more risks to commercial banks, as real estate developers usually received loans from banks on the mortgage of the land use certificates, and later paid back bank loans and land use fees with proceeds from apartment sales.