BEIJING - Investors sold off Chinese stocks Monday on worries that official spending could be curtailed after a weekend announcement of an audit of government debt -- which authorities want to curb even though it has helped fuel growth.

The National Audit Office said Sunday that it had been directed to carry out the check by the powerful State Council, the country's cabinet, and it would begin soon. The move raised concern in the market that government spending on capital projects could be cut back after driving the economy for years, hitting companies that rely on such expenditure.

Chinese shares ended down 1.72 percent on Monday, led by falls in infrastructure stocks. The benchmark Shanghai Composite Index dropped 34.54 points to 1,976.31 on turnover of 65.87 billion yuan ($10.74 billion). China's growth model has long been based on taking advantage of the country's cheap and abundant labour to manufacture products for export, alongside credit-fuelled domestic investment to develop infrastructure.

Now, though, the government says the situation is unsustainable and the growth model should be rebalanced towards consumer demand. Concerns about the debt burden focus on trillions of dollars of government borrowing, especially by local authorities. The International Monetary Fund earlier this month estimated that the combined obligations of both central and local governments stood at 45 percent of the country's gross domestic product.

Chinese provincial and municipal governments have borrowed vast sums, often with little thought as to how they will be repaid, to spend on infrastructure projects that give local economies a short-term boost.

Many of them, however, fail to generate adequate long-term returns, such as the country's notorious "ghost cities".

The IMF warned of the risk of "a disorderly adjustment in local government spending".

"This would drag down growth, with adverse global spillovers," it said.

Haitong Securities analyst Zhang Qi told AFP that news of the debt audit "adds downward pressure to the already bearish market".

"Trading shrinks and capital is being withdrawn from the market as investor confidence is waning," Zhang said.

Hong Kong-based Societe Generale economist Yao Wei said in a report that the audit order appeared to be a "message from the leadership" to signal its determination "to contain debt risk despite rising concern over growth".

"This is nonetheless a sensible choice, in our view," Yao added.

China's economy grew 7.5 percent year-on-year in the April-June period, slowing from the first quarter's 7.7 percent. This in turn was worse than 7.9 percent in the final three months of 2012.

China's economy is a key engine of global growth but last year recorded its worst performance since 1999, expanding 7.8 percent.

China's new leadership under President Xi Jinping and Premier Li Keqiang appear to be willing to accept lower growth in the hopes that weaning the country off its addiction to investment will ultimately result in stable and sustainable economic growth.

China is not the only Asian country where government debt has become a concern. In the world's third-largest economy Japan, public debt is more than twice the size of the economy -- the worst figure among industrialised nations.