Government agencies and state-owned enterprises in Beijing, Zhejiang, and other parts of China have recently reported salary cuts again. Whether civil servants, white-collar workers at state-owned enterprises, or employees at private companies, nearly every household is tightening their belts. From offices to markets, the sharp drop in income has triggered a chain reaction of collapsing consumer confidence. Some commentators have pointed to the emergence of a deep-seated economic and social crisis of trust.
As the economic environment continues to deteriorate, the pressure on ordinary Chinese families has become increasingly prominent since the beginning of 2025. Mr. Li, a grassroots employee at a central state-owned enterprise working in Beijing, lamented in an interview with this station on Monday (June 16): "I used to make 6,000 yuan a month, but now it's down to 5,000 yuan, and some allowances have disappeared. Some people at my wife's company (a private enterprise) have had their salaries cut, while others have received layoff notices, saying they'll only be able to work until the end of July."
Mr. Ma, who works at a state-owned enterprise in Beijing, also revealed that his company has implemented two rounds of salary cuts and layoffs since 2023. "Base salaries have been reduced, and the company has also canceled meal and transportation subsidies. The actual reduction in work this year has been reduced by 5% to 20% depending on the position. Work that used to be done by two or three people now requires one person, and the overall situation is extremely busy."
To cope with the financial pressure, some employees have resorted to part-time work to make ends meet. Mr. Wu said, "I can only look for work outside now, but it's hard to find. I've had to ask friends to recommend some outsourced design work."
According to public information, starting in 2025, central state-owned enterprises including China International Capital Corporation (CICC) and China Development Bank have been implementing "optimization measures" to reduce costs. Caixin.com previously reported that 27 central financial enterprises in China have begun implementing salary restrictions. These measures primarily target the salaries of executives and employees, with the goal of capping annual salaries at 1 million RMB, and potentially cutting the salaries of mid- and senior-level managers by half.
According to a grassroots employee at CICC, “Almost everyone in our building has had their salaries cut. Even the lowest-level employees have had their salaries cut by 5%. I heard that the cuts for mid- and high-paid employees are even greater.”
The "symbolic" salary cuts in the civil service system have become substantial
Mr. Zheng from Zhuji, Zhejiang, said that civil servants in the province were generally included in the salary cuts: "A friend of mine is a civil servant, and I heard that the average civil servant's annual salary has been reduced by another 50,000 to 60,000 yuan this year. Those at the section level and above have seen a reduction of 80,000 to 100,000 yuan, and those at higher levels have seen a reduction of around 150,000 yuan. They already saw a reduction the year before last, and this year's reduction is another one. However, civil servant salaries are already high, so the reduction is justified."
Last year, the Zhejiang Provincial Department of Finance released its 2023 Budget (Draft), which showed a 25% year-on-year drop in revenue from state-owned land transfers, leading to significant cuts in administrative spending. This fiscal strain is spreading across much of the country.
Mr. Geng, a resident of Qingdao, Shandong, told this station: "A relative of mine is a county civil servant. I heard that some township officials' salaries have been reduced. Not only are they receiving 70% of their salaries, but they've also had their salaries delayed. The county treasury is also running low on funds, and police officers at the police station are receiving fewer benefits than before."
In Guangdong, a legal professional stated that police salaries in several regions have plummeted: "Annual salaries have plummeted from 300,000 yuan the year before last to 200,000 yuan." A mid-level employee at a state-owned bank in Dongguan also revealed: "Our salaries have dropped by 30% in two years, and performance bonuses have been almost completely cut."
According to images and text posted on the X platform account "Teacher Li is Not Your Teacher," a blogger in Shandong Province exposed county-level financial difficulties on June 15th. The cousin of a deputy section-level official in the county said that the county hasn't sold a single piece of land in the past two years, and many real estate projects are on hold. The county's finances are heavily in debt and haven't recovered. The department's office car rental, which was used in August of last year, has still not been paid. She also hasn't been reimbursed for her own business trip expenses for six months.
The consumer market has cooled sharply and deflationary pressure has spread.
Mr. Meng, a Shandong resident, pointed out that while the government is trying to stimulate domestic demand, the wave of wage cuts has led to shrinking incomes and severely suppressed consumer spending. He told this station, "Price wars have become the last resort for many small businesses. For example, here, good spare ribs only cost 12 yuan per pound, and the purchase price of live pigs is only a few yuan. Pork prices have plummeted, and restaurants are desperately offering discounts to survive. This isn't competition; it's a drag on each other."
Ms. Su, a resident of Beijing's Haidian District, is also worried: "Small supermarkets around here are slashing prices like crazy. I'm afraid if we can hold on for a few more months, they'll all go bankrupt." She has observed a significant decline in daily consumption, starting with brand switching and extending to fewer gatherings and entertainment. "Now our family eats together every Saturday, and my son, daughter-in-law, and grandson go to a restaurant near our house. We used to go there two or three times a week."
While official Chinese data indicates that the economy was "generally stable" in the first quarter of 2025, local fiscal data reveals a different story. For example, Zhejiang Province's public budget revenue increased by only 0.2% year-on-year, while tax revenue actually decreased by 0.3%. Non-tax revenue increased by 1.8%, with most of this revenue coming from fines and "unconventional projects."
Jiangsu economist Wu Qinxue analyzed that salary cuts at state-owned enterprises, closures of private businesses, and vicious competition among businesses indicate a continued deterioration in local fiscal conditions. He said, "The government has no money to manage people, and the people are unwilling to spend. From salary cuts within the system to the collapse of consumption among ordinary people, a top-down 'austerity chain' is quietly forming across society."
Wu Qinxue believes that civil servants' salary cuts are just the beginning. The real problem is that "the public has lost its consumption motivation, businesses have lost confidence in development, and the economic imagination of society as a whole is shrinking."
Reporters' interviews revealed that "involution," "deflation," "wage cuts," and "cautious consumption" seem to be the key words describing China's economic situation. Wu Qinxue warned: "If 'living a tight life' is just a slogan, it may be tolerable. But if it becomes the norm, or even a situation where 'there is no way to survive,' then society's resilience and confidence will be truly tested to their limits."
