Four cases of misuse of research funds have been disclosed on an official website, and the companies and universities involved have been punished.
It is the first time the Ministry of Science and Technology has published details of such cases, according to Beijing Youth Daily.
A large amount of public money was allocated at the beginning of the year to accelerate technological development, the ministry said.
However, some applicants tried to obtain funds by submitting fake receipts and other documents.
They include a heat diffusion technology company in Dalian, Liaoning province, and the Beijing University of Posts and Telecommunication, the website said.
The Dalian company was conducting a study of ecological public lighting and low-carbon buildings, but the ministry found it embezzled 4.07 million yuan (S$700,000) from the research fund.
The company produced fake financial documents during an inspection by officials.
The ministry has reclaimed the funds it gave the company and banned it from applying for grants to conduct technological studies for three years, the website said.
The funds given to the Beijing University of Posts and Telecommunication were also withdrawn. It was found to have paid excessively large consultation fees to experts and to have submitted fake railway tickets when claiming the cost of fares, according to the ministry.