"Three Ways Xi Might Respond to China's Fiscal Bankruptcy"
Following on her piece on Chinese government finances, municipal on up to national that we linked in "China's Government Revenues Are Falling Dramatically", Jennifer Zeng proposes three possible policy responses.
From Japan Forward, October 4:
China's financial picture is bleak and Xi Jinping will have to act decisively to maintain power. And that could mean paving a potential path to war.
China is experiencing a significant economic slowdown. Part one of this report analyzed official tax figures to understand the severity of this situation. Beijing is grappling with a long-term drop in fiscal revenue, with the real estate crisis having a significant impact. Part two explores how China's economic downturn is affecting everyday lives. Crucially, it also examines three potential actions that Xi Jinping might consider to maintain power during this critical juncture.
Restroom Fees We have seen a lot of numbers. How do things look in daily life? Here are a few examples.
The above is a notice posted outside a public restroom in Kunming, the capital city of Yunnan Province.
The notice states that because the municipal government had not
allocated funds to maintain the daily operation of the public restroom
since January 2022, the public restroom could no longer be kept open for
free. A usage fee of ¥0.5 CNY ($0.07 USD) has been charged since June
19, 2023.
Unpaid Salaries This post, published on the Chinese social media platform Weibo, states that civil servants in Nanjing, the capital city of Jiangsu Province, have started to go unpaid. Jiangsu Province is the second wealthiest province in terms of GDP in China. Even so, civil servants in the provincial capital are apparently unable to draw their pay. Various district governments are having to borrow money to pay salaries.
Furthermore, the post states that teachers, healthcare workers, and
researchers in Nanjing's public institutions will face pay cuts and
layoffs. Civil servants will also face pay cuts and layoffs.
This chat record says that civil servants in Yunnan Province are also not receiving their salaries.
Bus Services Disrupted This notice was issued by the Dongkou (洞口) County Bus Company in Hunan Province on September 23, 2023.
In essence, it states that the local government has not provided
subsidies for three years, resulting in significant operational losses
for the bus company. The company owes its employees over ¥10 million CNY
($1.4 million USD) in unpaid wages and pension insurance. Therefore,
they have decided to suspend all bus routes starting from September 30,
2023.
Temples Shaken Down This post states that in March 2023, the Hebei District government in Tianjin had no money to pay salaries. They borrowed several billion yuan from a Buddhist temple called Dabeiyuan (大悲院) to sustain themselves.
However, by July, the Hebei District government ran out of money again and asked Dabeiyuan for more funds.
Dabeiyuan declined, stating that for thousands of years, it has
always been that secular society donates money to temples, not the other
way around. Why is the government now asking for more from us? The
temple asked, and called the situation "utterly ridiculous."
Dabeiyuan's refusal sparked a backlash. On September 11, 2023, the
Hebei District in Tianjin convened a meeting of various departments,
including public security, judiciary, fire department, urban management,
health, and industry and commerce. The purpose of the meeting was to
carry out a so-called "special rectification" in the area where
Dabeiyuan is located. This is clearly retaliation against Dabeiyuan for
refusing to lend the Hebei government any more money....
At the moment there is no hint that is the route the Politburo will take but if they don't the government just digs the hole they're in all the deeper.
