China’s top legislative body is reviewing a damning annual audit that reveals widespread mismanagement, fraud, and embezzlement of billions of yuan in public welfare funds, prompting government authorities to launch targeted corrective actions to safeguard public livelihoods.
Presented by Auditor-General Hou Kai to the Standing Committee of the National People’s Congress on Tuesday, the 2025 fiscal audit evaluated the central government’s budget implementation and nationwide fiscal governance. Beyond its broad assessment of public spending, the report flagged severe irregularities across multiple high-priority social sectors, including childcare, compulsory education, employment support, public healthcare, elderly care services, affordable housing, and disability assistance. The most substantial problems were uncovered in two core social safety net programs: work-related injury insurance and maternity support funds.
Auditors traced nearly 4.87 billion yuan (equivalent to approximately $715.8 million) in problematic funds within the injury insurance system. The investigation found that roughly 3.97 million workers employed in high-risk industries either had no injury coverage at all or were enrolled under illegally reduced coverage standards that left them underprotected. As of the end of September 2025, a cross-provincial review of construction sites found that 34,100 active projects across 24 provinces had failed to provide injury insurance for 2.26 million migrant workers, resulting in 2.53 billion yuan in unpaid mandatory insurance premiums.
In addition to systemic undercoverage, auditors uncovered deliberate fraud dating back to 2013: across 22 provinces, 580 injured workers and collaborating employers had fraudulently claimed 48.13 million yuan in compensation by submitting fabricated workplace accident reports and falsified medical treatment records.
Maternity insurance and related subsidy programs also faced widespread irregularities totaling 1.08 billion yuan, with violations directly undermining the benefit rights of more than 1 million eligible people. In one common scenario, gaps in policy enforcement and calculation errors for maternity leave entitlements left 21,000 individuals across 21 provinces unable to access a total of 103 million yuan in rightfully owed benefits. In another disturbing pattern of abuse, 496 employers in 13 provinces intercepted 30.05 million yuan in maternity benefits that were intended for 3,511 of their female workers, diverting public funds designated for employee support to corporate use.
In an official statement released Wednesday, the National Audit Office noted that these widespread irregularities have directly eroded public trust in social welfare programs and diminished the tangible benefits that citizens are supposed to receive from government social policy. The office called for expanded, consistent audit oversight across all public spending sectors that impact people’s daily lives, with a specific priority placed on strengthening oversight of grassroots-level welfare distribution.
The audit’s scope extended beyond social welfare to examine public fund allocation in agriculture, finance, and natural resource conservation projects, uncovering additional cases of misuse and mismanagement. In one high-profile environmental project, a wetland protection initiative falsely claimed to have completed all required resident relocations for the protected area. In reality, fewer than 30% of the 27,000 planned relocations had been finished, with only 7,700 people moved, while persistent garbage and sewage contamination continued to threaten the wetland ecosystem.
In another case of public fund waste, 135 agricultural technology promotion projects spread across 92 counties, funded with a total of 516 million yuan in public investment, were either diverted to non-compliant uses such as corporate exhibitions and entertainment events or left completely idle with no tangible impact on local agricultural development.
Moving forward, the National Audit Office has committed to ramping up follow-up inspections and ongoing oversight to ensure all identified irregularities are fully resolved. A full public update on the progress of rectification and corrective actions is scheduled for release before the end of 2026.