China's top auditing authority announced on Wednesday the recovery of around 2.7 billion yuan ($428.57 million) that was embezzled from affordable housing funds in 2011.
Authorities have also canceled about 7,000 households' rights to stay in the housing, according to a report released by the National Audit Office.
China has been working to build subsidized houses for low-income earners due to widespread complaints about housing costs. The government plans to build and renovate 36 million houses during the 12th Five-Year Plan (2011-15).
In June, the National Audit Office released a report on the central government's 2011 budget in which it disclosed the embezzlement of 2.96 billion yuan that had been allocated for affordable housing.
Experts said some local governments are now in a dilemma: They cannot disobey the central government's policies yet are reluctant to pay for the increasingly expensive projects.
Caught in those circumstances, some have resorted to giving the impression that their projects are progressing faster than they really are, lowering the quality of the projects or earmarking the project money for other purposes.
Earlier media reports citing local auditors said Chuxiong prefecture, in Yunnan province, took 1.77 million yuan meant for low-rent housing and earmarked it for an office building in 2010.
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