Recently, videos from social media platforms showed that all street shops in Chaozhou and Shantou, Guangdong, were forced to close overnight. The reason behind this sudden closure was due to safety and fire inspections conducted by the Chinese Communist Party, imposing strict checks and high fines on the shop owners, leaving them with no choice but to shut down. The increasing reliance on fines and confiscations as a source of local government revenue is seen as a risk that could lead to a vicious cycle, likened to a “temporary solution to a long-term problem”.
According to information circulating on social media, Chaozhou City issued a notice on November 20th in preparation for the “National Inspection of State Council’s Work on Safety Production and Fire Protection”, announcing the launch of a fire safety and environmental sanitation assessment. Businesses found to be non-compliant were ordered to halt production for several days, facing a fine of 50,000 Chinese Yuan if violations were discovered.
Some shop owners expressed that the combination of hefty fines and strict inspections left them no choice but to close their doors to avoid risks.
In early November, the State Council of the Chinese Communist Party initiated a special inspection of provincial governments’ work on safety production and fire protection for the year 2024, covering factories, restaurants, nursing homes, and other public places. Guangdong Province specifically called for a “comprehensive investigation and rectification” during a safety and prevention meeting held on the 18th.
A netizen posted a video on social media stating, “To escape the fire inspection, shops and factories in Chaozhou collectively shut down for several days. Some posted signs saying ‘afraid of ghosts’, some ‘pig feet and tea leaves were stolen’, and others claiming they were ’emotionally troubled’. This has now become known nationwide.”
Videos circulating online showed even international chain restaurants like McDonald’s and KFC choosing to temporarily close their businesses, with onlookers describing the scene as “even quieter than during the lockdown period”.
One netizen commented, “I have never seen it this difficult even after three years of the pandemic.”
Legal expert Mr. Chen from Guangdong told Radio Free Asia that this operation might bring in substantial revenue for the government.
He mentioned, “This is another means of making money. This is because small shops and private enterprises are not closing down fast enough”, suggesting that while the surface goal may appear to be eliminating safety hazards, it inadvertently aids local governments in generating revenue.
Chen further added that any actions involving inspections in the country are primarily for the purpose of imposing fines.
Some online users sarcastically remarked, “Once you’re inspected and found non-compliant, you’ll be fined. Closing the shop leads to a few hundred in losses, opening it results in thousands in fines. With the disasters, people suffer.”
Facing the predatory behavior of local Chinese Communist Party governments, the concerns of the public seem valid.
A local market supervision officer, Zhang, from Chengwu County, Shandong, was recorded in communication with businesses saying, “To put it bluntly, I don’t have the ability to support a business, but it’s too easy to bring one down. Catch a small problem, magnify it, and the business is done.”
Another netizen expressed, “I have never seen it this difficult even after three years of the pandemic.”
In recent years, China has witnessed a rise in the “fine economy”, with individuals or businesses being heavily penalized for minor infractions by the government. In some regions, fine and confiscation revenue have become a significant source of local government finances.
In February of this year, a resident of Minhou County, Fuzhou City, Fujian Province, was fined 50,000 Yuan for selling celery that exceeded pesticide residue limits, even though he made a profit of only 14 Yuan.
Similarly, in June 2023, Mr. Jiang from Luoyang, Henan, incurred a hefty fine of 110,000 Yuan for selling non-compliant vegetables and earning a profit of 21.05 Yuan.
In April 2021, the Chinese Communist Party’s media outlet “Ban Yue Tan” reported that in a mountainous county in northern China, with a general public budget income of just over 100 million Yuan annually, traffic violation fines alone generated over 30 million Yuan, accounting for a third of the local public budget income.
Researcher Liu Chengliang from Soochow University’s Dongwu Think Tank pointed out that fine and confiscation revenue, as a component of non-tax revenue, has seen abnormal growth in recent years.
The article revealed that China’s total national fine and confiscation revenue was about 306.2 billion Yuan in 2013, increasing to approximately 311.3 billion Yuan in 2020, 371.1 billion Yuan in 2021, and 428.3 billion Yuan in 2022. Fine and confiscation revenue from 2020 to 2022 accounted for over 10% of non-tax revenue.
According to official data, non-tax revenue refers to government funds received by state-owned units other than tax revenue. This includes government fund income, special income, administrative operational fee income, fine and confiscation income, among others.
Due to the compounded impact of factors such as the pandemic, economy, and foreign trade, in recent years, the growth of local Chinese Communist Party government revenue has slowed down, sometimes even experiencing negative growth, while essential expenses such as public welfare and debts continue to increase, intensifying the financial dilemma. “Gain through fines”, “profit-driven law enforcement”, and other chaotic practices have become increasingly common.
Analysts point out that the “fine impulse” of these local governments mainly stems from the “financial shortfall” they face. However, resorting to extracting money from businesses and individuals via fines is short-sighted and harmful, easily leading to a vicious cycle of “financial deficiency – revenue through fines – deteriorating business environment – businesses voting with their feet – shrinking tax base – even greater financial shortages”. Such a “temporary solution to a long-term problem” approach poses serious risks and potential long-term consequences.
Chinese-American economist Li Hengqing told Epoch Times that in every dynasty, as it nears its end, lacking funds and being unable to resolve issues through regular taxation leads to excessive fines.
The central authorities of the Chinese Communist Party have sought to decentralize control over non-tax revenue, allowing everyone to fend for themselves, with those who can grab the money being hailed as heroes. In such circumstances, they can only prey on ordinary people since the people lack power and capability to resist, allowing for rampant exploitation.
A retired teacher named Gu, from China, told Radio Free Asia that local government officials focus solely on meeting superior government pressure targets, abusing their authority in the process. He mentioned, “There are significant loopholes in supervision itself, with society lacking constraints on authority, enabling them to act with impunity.”