December 27, 2021 Special Dispatch No. 9698

Chinese News Agency Duowei: Big Pay Cuts For Civil Servants, As China's Economy Prepares For 'Difficult' Period

December 27, 2021
China | Special Dispatch No. 9698

Civil servants are an important part of all levels of the Chinese Communist Party (CCP) civil bureaucracy, and are also the most extensive and fundamental force over which the CCP maintains its rule. Since the founding of the People's Republic of China (PRC), civil servants, known as Party cadres, have been treated so well that the Party's own media has called their treatment "super-national." Their wages and various explicit and implicit benefits have constantly risen.[1]

However, civil servants in the CCP's ruling bodies in some of China's richest provinces have recently seen their salaries and benefits slashed – a rare and serious occurrence that suggests that something is very wrong with China's economy and that the communist regime is in something of a financial crisis.

According an article published by the Chinese news agency Duowei, these cutbacks are mainly due to the combination of COVID-19, the trade war, and floods in many parts of China this year. The article stated that almost all Chinese provinces are in deficit this year, with only Shanghai showing a surplus. Other factors, according to other analyses and reports, include the massive spending on Xi Jinping's Belt and Road Initiative and other projects, as well as a huge problem in China's business environment, with a large number of enterprises going bankrupt and entrepreneurs generally losing faith in the CCP and being reluctant to invest and expand. As a result, the country's tax revenues have not risen, and the economic foundation is being undermined.

Below is the Duowei article:[2]


'Civil Servants In China Were Considered To Be The Most Reliable Jobs'

"The talks about civil servants' pay cuts this year seem to be true in some parts of China (many friends who are civil servants themselves have confirmed the news). Provinces and cities such as Jiangsu, Zhejiang, Guangdong, Fujian, and Shanghai may be hit by the first wave. Someone disclosed on Weibo that in December, civil servants in Shanghai, Jiangsu, Zhejiang, Guangdong, Fujian and other provinces and cities received salary reduction notices, with a cut of about 20 to 30%.

"This source gives an example: the annual salary of the director of the police station in Shanghai was reduced from 350,000 yuan to less than 200,000 yuan, and the annual salary of section-level civil servants was reduced from 240,000 yuan to 150,000 yuan.

"When I first saw the news, I was shocked. Civil servants in China were considered to be the most reliable jobs even among the iron rice bowls, but now they got a salary cut! It left me speechless!

"The state has a unified national standard for the 'Headship Pay Grades' of civil servants. That is to say, according to the Headship Pay Grade, the salary of civil servants in Jiangxi and Guizhou is similar to that in Zhejiang and Guangdong. But the standard of the Headship Pay is quite low, and will not cause too much fiscal burden.

"In the past, Headship Pay only accounts for a small proportion of civil servants' income. The largest proportion is performance allowances and various subsidies. Those subsidies constitute the income gap among civil servants between coastal and inland areas. Compared with Jiangxi and Guizhou, government revenue in Jiangsu and Zhejiang is much higher. Therefore, the salary income of civil servants in Jiangsu and Zhejiang is also much higher than that of civil servants in western provinces.

"At present, in a certain area outside the Pearl River Delta in Guangdong, subsidies for government employees have begun to be postponed, and only basic wages can be guaranteed. The subsidy for civil servants is delayed for two months, and for teachers is delayed for one month.

"In the past few years, university graduates who settled in Shenzhen received a subsidy of 15,000, and a master's degree student of 25,000, which has now been canceled. Shenzhen is one of the cities with the most abundant fiscal revenues in the country, and it is conceivable that it is more difficult for other cities to maintain these subsidies.

'China's Economic Growth May Not Be As Good As Everyone Thinks'

"There may be two reasons:

"First, the overall economic environment is not good. China's economic growth may not be as good as everyone thinks. The government is under great financial pressure and can only increase revenue (strictly investigate and deal with tax compliance such as enterprises or network anchors) and reduce expenditure (reduce the welfare performance of civil servants, etc.).

"Second, after the state announced its policy that teachers' salaries should not be lower than the salaries of local public servants, many teachers found that their salaries were still lower than that of local public servants. Some teachers began to send letters and even tried to initiate litigation. People have said that the Jiangxi teacher case had quite a big impact within the government's civil service system, and caused a wide range of civil servants' pay cuts across the country.

"Since the beginning of this year, multiple unfavorable factors such as the pandemic, trade wars, and floods have superimposed the effects of China's economy, which has directly affected the fiscal revenues of various regions. The Premier of the Chinese Communist Party Li Keqiang has repeatedly called on the Chinese 'to live a hard life.'

"In August 2021, the financial column 'Gelonghui' released official statistics. According to the Financial Revenue and Expenditure of 31 Provinces and Cities in China in the First Half of the Year 2021, only Shanghai had a 'fiscal surplus.' The remaining 30 provinces and cities all have fiscal deficits. The most stressed provinces such as Henan, Sichuan, and Yunnan all have gaps between revenue and expenditure of more than 250 billion yuan.

"In addition, the Ministry of Finance announced the latest local government bond issuance data on November 23. As of the end of October 2021, the balance of local government debt across the country was approximately 29.7 trillion yuan. From January to October 2021, 6.5 trillion yuan of local government bonds will be issued nationwide.

"A report by Goldman Sachs Group stated that the total debt of local governments in China has reached more than half of China's GDP, and these hidden debts will not appear on the balance sheets of local governments. Regarding the current situation of China's economy, on December 2, Li Daokui, professor of the School of Social Sciences of Tsinghua University and dean of the Chinese Academy of Economic Thought and Practice, delivered a speech at the 14th Golden Unicorn Forum.

"He warned that the operation and development of China's economy in the next few years may be the most difficult period since China's reform and opening up. Taiwanese economist, Mr. Hsieh (謝金河), posted on Facebook on the 4th that the CCP's sanctioned economist came out and said that China's economy is not good, which is very unusual. Hsieh believes that the authorities intend to alert the Chinese people through the mouths of government economists."


[1] According to reports in CCP media, the salaries and treatment of civil servants in the Communist Party and government bodies a) enjoy wages that are generally higher than the average income of ordinary workers, as well as a range of welfare subsidies; b) benefit from a range of housing subsidies, including welfare housing, internally subsidized housing, and price-restricted housing – and in some cases can buy a house at one-tenth of the market price; c) enjoy free medical care, paid for by taxes; d) do not have to pay pension insurance but enjoy pensions that are much more generous than those of ordinary workers. They can also use their status and power to earn gray income and obtain benefits for themselves and their families. Other reports in China's media said that Chinese civil servants are the best paid among civil servants worldwide., January 23, 2014;, May 25, 2021.

[2], December 9, 2021.

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