He noted that in many cases in which former property owners stood up for their rights, monetary compensation for demolition was intercepted and even used for speculation.

"If auditing authorities could effectively monitor governments' funds allocation processes and appropriately handle certain cases, they could then help to safeguard stability."

Sociology professor Lu Huilin from Peking University added that careful auditing could standardize governments' use of land-leasing fees, which could in turn "contain local governments' blind impulse for property development".

The auditor-general's report also pointed out that audits on local governments' debts revealed the debts remain outstanding for a long period, are very large and involve fiscal risks.

Liu said economic responsibility audits in 2010 found that 24.9 billion ($3.8 billion) yuan of public funds were misused by government employees. Eighty-two officials have been referred to prosecutors and Party discipline authorities in connection with misuse of public funds.