China's top auditor: Major state banks engaged in tax evasion and illegal lending

China's top audit body has revealed significant financial irregularities at two of the nation's largest state-owned banks, highlighting intensified scrutiny amid fiscal pressures. The National Audit Office reported that the Bank of China evaded approximately 2.4 billion yuan (US$352 million) in taxes between April 2023 and August 2025.

According to the annual report, the Bank of China allegedly facilitated this tax evasion by enlisting employees to contribute small amounts to package 11 private equity funds as public funds, thereby qualifying them for tax exemptions. This practice is particularly noteworthy as the audit office rarely publicly singles out major state-owned lenders for tax evasion.

In a separate finding, the Agricultural Bank of China, another of the country's "big four" lenders, was accused of illegally issuing 11 billion yuan in loans to farmland projects between December 2021 and August 2025. The report indicated that some of these funds were subsequently misappropriated for purchasing wealth management products and repaying existing debts.

These revelations come at a time when China's local governments are facing revenue shortages due to a prolonged property downturn. Beijing has consequently intensified tax enforcement efforts targeting both corporations and high-income individuals. In response to the audit findings, Bank of China stated it "sincerely accepts the audit supervision" and is committed to improving its compliance capabilities, as reported by local media. China Everbright Group, another state-backed financial firm, was also criticized for management failings.

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sincerely accepts the audit supervision