BEIJING - Nearly half of the misused funds uncovered in the auditing of China's local government debts in 2010 has been recouped, authorities said on Wednesday.

Of the 530.9 billion yuan (about $84.3 billion) of misused funds uncovered for the year 2010, around 259.2 billion yuan had been recouped by October 2011, the National Audit Office (NAO) said in a report on the year's auditing progress.

The majority of China's local government funds are raised through local government financing vehicles (LGFVs), which are mainly set up to fund construction projects and have come under fierce criticism from people alleging they are poorly supervised and managed.

Violations of the management of local debts involved illegal guarantees for local debts, misdirected funds to capital, property and energy-consuming markets, and the operation of fake investment companies, the report said, adding that the governments have been moving actively to correct the irregularities.

The NAO said earlier that local government debt totaled about 10.7 trillion yuan at the end of 2010.

To ease local governments' financial strains and curb fast-spreading debt risks, China's State Council has allowed four local governments, including Shanghai and Shenzhen, to issue their own bonds.

Meanwhile, the NAO said 375 million yuan had been recouped after auditors found that a total of 82 government units had illegally kept 414 million yuan for unauthorized use.

The report said authorities had made improvements on 1,581 regulations at the NAO's suggestion and 699 people had been punished concerning the illegal cases in 2010.