In 2024, Beijing, Shanghai, Guangzhou, and Shenzhen, the four first-tier cities in China, all faced fiscal deficits. Yunnan Province and Heilongjiang Province even spent three times more than their income from the general public budget. Recently, all 31 provinces have requested to tighten the belt in 2025 for government agencies. Analysts point out that although local governments are essentially bankrupt, they cannot endure the same hardships as the people.
A review by the “Financial Times” of the budget execution in 31 provinces in 2024 and the budget draft for 2025 revealed that all provinces emphasize the need to tighten the belt in 2025, reduce administrative costs, and allocate more funds to support people’s livelihoods and major strategic tasks.
The concept of tightening the belt introduced by the Chinese Communist Party (CCP) can be traced back to the CCP’s two sessions in March 2019. At that time, CCP leader Xi Jinping, during discussions with Inner Mongolia delegates, emphasized the importance of party and government agencies leading by example in living frugally.
At the CCP Central Economic Conference in 2023 and 2024, it was respectively emphasized that government agencies should “get used to living frugally” and “adhere to living frugally”.
However, recent reports on the budget execution in 2024 and draft budgets for 2025 released by various provinces and cities indicate a fiscal deficit situation, necessitating the need to tighten the belt.
It can be seen from the data that in 2024, economically developed regions in China like Guangdong Province and the four first-tier cities were all experiencing deficits, with public expenditures exceeding income. The spending in Heilongjiang Province and Yunnan Province was even three times higher than their income.
The fiscal revenue mentioned in this article refers to local general public budget revenue, not the overall fiscal revenue. It consists of tax revenue and non-tax revenue, excluding income such as central government tax refunds and subsidies, and reflects the local economic vitality and fiscal strength, serving as the main source of disposable income.
Chinese-Australian scholar Zhang Xiaogang stated to Voice of America that “Local governments are essentially bankrupt. The CCP now has no way to solve it, so they have to adopt the so-called living frugally and save.”
Ms. Sheng Xue, editor-in-chief of “China Spring”, expressed to Voice of America, “There will definitely be different ways and resistance methods at the bottom. The CCP will try all means to maintain, protect, and even seize more interests. They cannot possibly suffer together with the people.”
Recently, the Jinan Military Retired Cadres Service Center planned a budget of 1.6371 million yuan to purchase birthday cakes for retired military cadres in 2025, sparking controversy.
Some netizens commented, “Do the 800 million farmers living in rural areas not contribute to the country?”
According to the “2024 Farmers’ Pension Price List” published on June 27, 2024, by Wolbao Net, in 31 provinces in China, Yunnan Province only provides 103 yuan per month. Overall, there are six provinces where the amount is under 120 yuan. In contrast, retired employees from government agencies receive a monthly pension of over 6,000 yuan, which is 50 times higher than what farmers receive.
In recent years, various levels of government have continuously introduced new living frugally policies, with some rules even becoming popular search topics. For instance, Anhui province requires all documents to be printed double-sided, and office supplies such as pens and notebooks will not be given out in meetings. Meanwhile, Suzhou stipulates that official travels along high-speed railway routes should not provide official cars for security, and if arranging official receptions in the office canteen, dishes should be similar to what regular employees have.
The recent massive layoffs and budget cuts in government agencies by Elon Musk, a key assistant to President Trump, have garnered global attention.
An account named “No King No Emperor (Austrian Special Forces Brigade)” on a X platform stated that after seeing the extensive budget cuts in the United States, the CCP’s measures like “double-sided document printing and no pens given out at meetings” seem like a comical act. By retreating, one can see that the CCP is insincere. The root of the financial crisis lies in power, and the CCP’s financial crisis cannot be resolved and will only explode.
Rumors circulated online at the beginning of this year suggesting that the basic salary of most civil servants would be increased by at least 500 yuan per month, starting from July 2024.
Some netizens remarked, “We, the common people, do not want the government to live frugally. We just hope that government officials could live similar lives to us, that would be enough!”
Another netizen added, “You don’t have to tighten your belts, we can endure your frugal days, and you can enjoy our good days. That should suffice!”
A review by the “Financial Times” of the audit work reports on the 2023 provincial budget execution and other financial revenues and expenditures revealed instances of “spending spree” in the budget execution. Violations like no budget, overspending, excessive meeting and training expenses, the “three public” funds, and irregular distribution of subsidies were found.
The Chinese Audit Office’s 2023 audit report also pointed out that some units (central) engaged in mismanagement of “three public” funds and spent 749 million yuan on building luxurious facilities. Professor Deng Shulian from Shanghai University of Finance and Economics mentioned to the “Financial Times” that the recurring problems of overspending seen in audits yearly were mainly due to the weak legal constraints on budgets.Once the government budget is legislated and passed, it becomes law, with legal binding force on government revenue and expenditure behavior. Many of the problems discovered by audits, such as lack of budget, overspending, and exceeding limits, constitute serious violations of budget regulations.