China's National Bureau of Statistics released its latest economic data, still emphasizing that key indicators are showing growth and the economy is improving. However, the CPC Central Committee and the State Council have contradicted this with their actions. A recent document urged all Party and government agencies to lead by example in austerity measures. Is China's economy improving or deteriorating? Interpretations vary widely as to whether the Party and government's actions are genuine.
China's National Bureau of Statistics released economic data for April on Monday (May 19), showing steady and rapid growth in key indicators and emphasizing the continued positive momentum of China's national economy. However, the People's Daily's front page that day was dominated by content advocating for Party and government agencies to economize, combat waste, and live frugally.
A People's Daily commentary noted that the newly revised "Regulations on Strict Economy and Opposition to Waste in Party and Government Organs" issued by the CPC Central Committee and the State Council represent an upgraded anti-waste system, further tightening the screws on Party and government organs to lead a frugal life and ensure that limited financial resources are used effectively. The revised regulations impose new requirements for economy on official travel, receptions, and conferences. For example, overseas research and study trips are prohibited, and mutual banquets with public funds are prohibited. Exhibitions, forums, and sports meets are avoided if possible. Furthermore, a responsibility system against extravagance and waste is implemented, and those who condone waste are held accountable.
Analysis: Whenever the economy is in trouble, the CCP issues documents on tightening the belt and getting by
Independent Chinese political scholar Chen Daoyin told this station that upon taking office, Chinese President Xi Jinping issued a document advocating for thrift, anti-waste, and austerity, including the "Eight Regulations," to usher in a new era and establish new achievements for Xi. However, a review of the CCP's history reveals that similar documents have always been issued during periods of economic hardship or major challenges.
Chen Daoyin said, "Since 1949, the CPC Central Committee has issued similar documents numerous times. We need to examine the timing of these issuances. For example, in 1958, the Great Leap Forward and the so-called three years of natural disasters triggered a decline in China's economy. In 1980, the economy was just recovering from the brink of collapse. In 1997, during the financial crisis, the economy underwent a major overhaul. During these periods, documents advocating strict economy and opposing waste were issued. Regarding the same issue, referring to the history of the CPC since its founding, we find that these documents were issued at times when China's economy was facing difficulties and financial strains. Money was running out, and even landlords had no surplus grain. The extravagance and wastefulness of Party and government agencies had already impacted the normal operation of the national finances, and if things continued like this, the country would collapse, hence the call for austerity."
Chen Daoyin said that from the China-Latin America Forum just held in Beijing, it was announced that China will provide 66 billion yuan in credit funds to Latin American countries and other countries. It can be seen that the requirement to live a tight life is only aimed at local governments and grassroots civil servants, and will not affect the central government.
Local governments have already tightened their belts and laid off contract teachers, withholding relocation compensation.
In fact, local governments had already begun tightening spending before the central government's announcement. This station previously reported that several provinces, including Henan, Shandong, and Guangdong, had already seen wage arrears and allowance cuts for teachers and civil servants. Jia Lingmin, a retired teacher in Zhengzhou, told this station that she had heard that due to government fiscal constraints, junior school staff and contract teachers had been laid off.
Jia Lingmin said, "The school's office staff are considered minor civil servants. They used to receive bonuses higher than their base salary, but now they only receive a salary, with almost no bonuses or performance bonuses. Schools farther from the city previously publicly recruited many contract teachers. They're considered teachers, but they're not on the payroll, not civil servants. They still have pension insurance and receive regular salaries. I know a teacher whose classmate was a contract teacher, and they've been fired and left their job."
A Chinese lawyer who goes by the pseudonym Mr. Wu has handled cases involving house demolitions. He told our station that he has discovered that many local governments, due to financial constraints, have withheld compensation that was originally intended for displaced households as a means of cutting costs.
Mr. Wu said, "Local governments are cutting back on various funding. For example, when residents win compensation for demolition, the government diverts the money to administrative expenses, preventing compensation from being paid. There are also government-sponsored projects like urban village renovations and large-scale rural demolitions. Developers and construction companies are required to deposit compensation funds for displaced households into accounts under government oversight. These funds often never reach the displaced households because they have been embezzled by the government."
The next step in tightening the belt is reducing bureaucracy
Cheng Xiaonong, an economist who formerly served as director of the Comprehensive Research Office at the China Institute for Economic System Reform, told RT-Mart that local governments in China have long taken extreme measures to reduce spending. For example, some have reduced the use of water dispensers and mandated double-sided printing, demonstrating that further reductions in local administrative expenses are difficult. Further central government demands that local governments tighten their belts would simply mean layoffs.
Cheng Xiaonong said, "The so-called 'tightening the belt' simply means the country's financial resources are insufficient. But local governments have long been drained of resources, and the only thing they can really cut now is manpower. This document is a warning signal, using a subtle tactic to force local governments to begin preparing for layoffs. Furthermore, the cuts should be subtle, so as not to damage the image of the Communist Party. For example, if those who have reached retirement age cannot be rehired, the government will save on these expenses. For example, they can recruit a small number of civil servants, pay them lower wages, and replace them in these positions. Those who previously earned higher salaries can be allowed to retire early, reducing manpower costs and shifting the expenses of these civil servants from local budgets to social security funds."
Cheng Xiaonong said that China had reduced local fiscal pressure by issuing special bonds and assisting local governments in debt replacement in the second half of last year, but the real estate problem has not been resolved, and insufficient domestic demand has been compounded by the effects of the tariff war. It is believed that local governments in central and western regions will not be able to hold on this year and will take the lead in layoffs and reducing spending.
