BEIJING - CHINA has recovered 26.8 billion yuan (S$5.8 billion) in public funds that were embezzled last year, according to its top auditor.

In a report submitted this week to the standing committee of the National People's Congress, Mr Liu Jiayi, head of China's National Audit Office, said 30 people so far have been arrested, indicted and sentenced in connection with cases, the official Xinhua News Agency reported late on Wednesday. Another 117 people were punished according to administrative and Communist Party rules.

Mr Liu said much of the money had been directly embezzled or illegally transferred by officials, but other problems included bad loans, dereliction of duty, and insider trading.

Audits last year of central government departments showed that oversight of conference and trip expenses 'is not strict enough' with instances of waste, false reporting of expenses and cheating, the report said.

'Some officials increase the number of personnel, change the route or prolong a stopover duration of official trips abroad without permission', said the report.

China's ruling Communist Party considers corruption a major threat to social stability and a serious challenge to its continuing grip on power. Government leaders have attempted to rein in graft through periodic anti-corruption crackdowns, though it has balked at subjecting party officials to outside supervision.

Mr Liu also proposed drafting a budget law to promote transparent financial management. -- AP