BEIJING, Sept. 16 -- China did not recall 1 trillion yuan (157 billion U.S. dollars) of unspent budgets from local governments as reported, but is reallocating a much smaller amount of fiscal funds, an official with the country's top economic planner said Wednesday.

Reuters reported earlier this week that China has seized up to 1 trillion yuan from local governments that failed to spend their budget allocations.

The figure was "inaccurate" and the government is "sorting out" more than 200 billion yuan in unspent fiscal funds and reallocating them to invest in major projects, including some for improving people's livelihood, said Xu Kunlin, head of the investment department at the National Development and Reform Commission, at a press conference.

With its economy slowing, China has tried to activate unspent fiscal funds to sustain an expansionary fiscal policy and shore up growth.

The Ministry of Finance said in July a total of 13.1 billion yuan of idle fiscal funds will be retrieved from central government departments and another 243.8 billion yuan will be recovered from local government departments.

The funds will be redistributed to areas that urgently need money to support investment and improve people's livelihood, the ministry said.

China plans to raise its budget deficit to 2.3 percent of GDP for 2015, up from last year's target of 2.1 percent, as fiscal spending plays a key role in countering downward pressure in the economy.

Fiscal expenditures in August jumped 25.9 percent to 1.28 trillion yuan, faster than the 24.1-percent growth rate in July. Combined spending in the first eight months expanded 14.8 percent to 10.29 trillion yuan, official data show.