Chinese Local Governments Urged to Curb Spending Amid Financial Strain

Multiple local governments in China have been urged to curb spending amid the current financial strain. China commentators suspect the measures suggest governments at all levels might be running short on cash but are inclined to let the grassroots take the brunt.Chinese state mouthpiece Xinhua reported on March 27 that the Ministry of Finance urged local governments to cut down spending on three official activities: receptions, overseas business trips, and take-home vehicles; reduce activities like forums, festivals, and exhibitions; and enhance budgetary constraints and execution supervision.Since January, local administrations in Inner Mongolia, Hunan, Beijing, and other regions have introduced various specific measures complying with the tightened budget, such as refurbishing old office supplies, extending the service life of take-home vehicles to over eight years, mandating attendees to bring their own cups to meetings, and so on, according to multiple local Chinese media reports.Li Yuanhua, a former professor at China’s Capital Normal University, said the Chinese Communist Party (CCP) ’s huge and wasteful bureaucratic system had exhausted many of its revenue streams.“It used to rely heavily on land sales. But this major income source is gone since the real estate market has essentially collapsed. Local governments have completely bankrupted from losing their tax revenues due to the economic downturns with private enterprises, state-owned enterprises, and even foreign companies,” said Mr. Li Yuanhua.He mentioned that some governments had resorted to selling long-term operation rights to local tourism sites.Related StoriesLast year, due to financial constraints, Sichuan Province sold its 30-year operation rights to the Leshan Giant Buddha, the world’s largest stone Buddha statue built during the Tang Dynasty (618-907), for 1.7 billion yuan ($240 million).“The central government also ran out of funds,” said Mr. Li Yuanhua, referring to the late former Chinese Premier Li Keqiang, who conducted an urgent online meeting with 100,000 local government officials who were asked to immediately take action to “stabilize” the situation in China in 2022. Mr. Li Keqiang said China’s economy was facing an even greater challenge than at the start of the pandemic in 2020, according to Xinhua’s report.However, Mr. Li Yuanhua told The Epoch Times that while the government’s financial constraints are genuine, local officials might still show some showmanship in responding to the central call to tighten spending. “As long as the extravagant spending bureaucracy of the CCP remains unaddressed, any superficial cost-cutting attempt would be irrelevant,” said Mr. Li Yuanhua.Liu Shaochun, a former deputy director of a local Forestry Bureau of Hunan Province, agreed. He said, “This decaying and malevolent regime survives on the support of a bureaucratic class.”Mr. Liu told The Epoch Times that he believed the measures were similar to the regime’s anti-corruption campaign, which serves as “rather selective actions for political expediency than genuine anti-corruption efforts.”It is widely believed the general public will bear the brunt of the fund shortage.A Guangdong official spoke to The Epoch Times anonymously, indicating the severity of the situation, as indicated by the year-end bonuses having been scrapped. He said, “Simply being able to pay salaries on time each month is considered a success for many local authorities.”According to him, subsidies allocated to businesses are entirely delayed due to financial shortages. “At present, only the essentials matter—ensuring regular monthly salaries. Everything else is no longer feasible,” he stated.Li Yuanming contributed to this report.

Chinese Local Governments Urged to Curb Spending Amid Financial Strain

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Multiple local governments in China have been urged to curb spending amid the current financial strain. China commentators suspect the measures suggest governments at all levels might be running short on cash but are inclined to let the grassroots take the brunt.

Chinese state mouthpiece Xinhua reported on March 27 that the Ministry of Finance urged local governments to cut down spending on three official activities: receptions, overseas business trips, and take-home vehicles; reduce activities like forums, festivals, and exhibitions; and enhance budgetary constraints and execution supervision.

Since January, local administrations in Inner Mongolia, Hunan, Beijing, and other regions have introduced various specific measures complying with the tightened budget, such as refurbishing old office supplies, extending the service life of take-home vehicles to over eight years, mandating attendees to bring their own cups to meetings, and so on, according to multiple local Chinese media reports.

Li Yuanhua, a former professor at China’s Capital Normal University, said the Chinese Communist Party (CCP) ’s huge and wasteful bureaucratic system had exhausted many of its revenue streams.

“It used to rely heavily on land sales. But this major income source is gone since the real estate market has essentially collapsed. Local governments have completely bankrupted from losing their tax revenues due to the economic downturns with private enterprises, state-owned enterprises, and even foreign companies,” said Mr. Li Yuanhua.

He mentioned that some governments had resorted to selling long-term operation rights to local tourism sites.

Last year, due to financial constraints, Sichuan Province sold its 30-year operation rights to the Leshan Giant Buddha, the world’s largest stone Buddha statue built during the Tang Dynasty (618-907), for 1.7 billion yuan ($240 million).

“The central government also ran out of funds,” said Mr. Li Yuanhua, referring to the late former Chinese Premier Li Keqiang, who conducted an urgent online meeting with 100,000 local government officials who were asked to immediately take action to “stabilize” the situation in China in 2022. Mr. Li Keqiang said China’s economy was facing an even greater challenge than at the start of the pandemic in 2020, according to Xinhua’s report.

However, Mr. Li Yuanhua told The Epoch Times that while the government’s financial constraints are genuine, local officials might still show some showmanship in responding to the central call to tighten spending. “As long as the extravagant spending bureaucracy of the CCP remains unaddressed, any superficial cost-cutting attempt would be irrelevant,” said Mr. Li Yuanhua.

Liu Shaochun, a former deputy director of a local Forestry Bureau of Hunan Province, agreed. He said, “This decaying and malevolent regime survives on the support of a bureaucratic class.”

Mr. Liu told The Epoch Times that he believed the measures were similar to the regime’s anti-corruption campaign, which serves as “rather selective actions for political expediency than genuine anti-corruption efforts.”

It is widely believed the general public will bear the brunt of the fund shortage.

A Guangdong official spoke to The Epoch Times anonymously, indicating the severity of the situation, as indicated by the year-end bonuses having been scrapped. He said, “Simply being able to pay salaries on time each month is considered a success for many local authorities.”

According to him, subsidies allocated to businesses are entirely delayed due to financial shortages. “At present, only the essentials matter—ensuring regular monthly salaries. Everything else is no longer feasible,” he stated.

Li Yuanming contributed to this report.

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