China's social security network - which covers the largest number of people in the world - is focusing on shortening the gaps between urban and rural, developed and less-developed regions, said a nationwide audit.

The National Audit Office's report, released on Thursday, concluded China has "basically" established a social security management system from 2005 to 2011.

The report inspected the operation of 18 security funds in 2,790 counties, 404 cities and 37 province-level regions over that period.

It also detected flaws in the management system and found 132 cases of malpractice concerning 300 suspects.

"Looking into the allocation of social security resources, the focus is on less-developed and rural regions," said the report.

"It makes efforts to shorten regional security gaps."

Since 2005, the central government has injected nearly 80 percent of its social security investment into central and western parts of China - where 53.8 percent of the Chinese population lives.

The investment in those regions rose 54.7 billion yuan ($8.6 billion) in 2005 to nearly 361 billion yuan in 2011, exceeding the growth rate of the national GDP.

At the same time, the investment in social security funds for farmers has grown substantially as well, the report said.

Financial subsidies for the new rural pension system increased from just over 1 billion yuan in 2009 to 35.2 billion yuan in 2011.

Meanwhile, subsidies for the new rural cooperative medical system surged from 542 million yuan in 2005 to 80.1 billion yuan in 2011.

Monthly allowances for low-income families in rural areas also grew 87 percent over the period.

Lu Quan, an expert with the social security research center at Renmin University of China, said taxation, which subsidizes the security funds, varies in places and therefore leads to security gaps regionally.

"For Central and West China, their abilities to make up losses of the funds are quite limited," said Lu.

"Injections from the central government together with increasing input in rural residents' pension and medical expenses have shown the government's determination to improve the livelihood of residents there."

Officials from the top audit authority said the audit aims to assess whether China's economic boom has been shared by its people and if the security system serves the people well.

Citing the report, Chen Taihui, head of the office's social security audit division, said China's social security system made a "historical breakthrough and has built itself a network that covers the largest number of people in the world".

"The audit result shows the funding scales of our social security have expanded constantly. The funds are generally safe and sound and operate steadily and with standards.

"The system effectively plays the roles well as a booster, buffer, stabilizer and safety network."

According to the report, the 18 social security funds had 2.84 trillion yuan of income and spent 2.11 trillion yuan in 2011.

Despite the strong financial standing and extensive coverage, the network has flaws too, as the report revealed.

The audit found local governments appropriated or illegally operated 1.73 billion yuan of the funds for other ends such as building stadiums, office buildings and buying cars.

A total of 1.85 billion yuan had been handed out to ineligible recipients or compensation claims.

Less standardized management of the funds in 392 counties, 96 cities and 13 province-level regions resulted in 42.7 billion yuan not being managed directly under designated fiscal accounts.

Officials of the National Audit Office added that in the wake of some high-profile court sentences on fund grafts, the funds have become a "high-tension line" that few dare to cross.

A court meted out a death sentence in July to Liu Baolu, former director of a social security fund in Gansu province, for embezzling 28 million yuan over 10 years.

Another official, Zhang Xun'an in Huainan, Anhui province, was put behind bars for 10 years for keeping pensions and subsidies that were paid to more than 50 pensioners who had died.

Contact the writers at wanghuazhong@chinadaily.com.cn and chenxin1@chinadaily.com.cn

(China Daily 08/03/2012 page3)