The report follows an investigation launched earlier this year into how China's roughly $250 billion in social security funds are managed.

Elderly targeted

Corruption and financial crime has soared in China in recent years as fraudsters capitalise on China's increasingly free-wheeling market economy.

Many of the victims are the elderly in rural communities who are easily persuaded to part with their savings by the offer of high returns from bogus investment schemes.

Commenting on the latest fraud figures, Gao Feng, deputy director of the ministry of public security, warned that the issue "could trigger social instability and impede economic security of the country".

Typical fraudulent schemes include stock holdings in non-existent companies, get-rich-quick promises involving real estate, illegal pyramid selling, and plans to establish high-tech or pharmaceutical companies that never materialise.

One example cited in the China Daily involved the Donghua Ecological Breeding Co in northeastern China which raised $725 million by persuading investors to put their money into a bogus scheme to breed ants.

Promoters of the project, which never materialised, promised investors returns of 35 to 60 per cent.