The Chinese government is out of money! Even the military and civil service start getting pay cuts.

Summary

The Chinese military commission issued measures to improve army construction efficiency, emphasizing a frugal budget mindset. The document indicates China's financial constraints post-zero COVID policy, with widespread pay cuts and delays for civil servants and military personnel. Corruption remains rampant despite anti-corruption efforts, affecting military expenditures. Local governments are also tightening budgets, reflecting severe financial strain. Economic challenges, reduced revenues from real estate, and the impact of global trade dynamics have exacerbated financial difficulties, leading to significant fiscal reforms and austerity measures across various sectors in China.

Takeaways

• 📉 China's military commission issued a document emphasizing frugality and efficiency in military spending to improve the quality and efficiency of army construction.
• 💰 The document suggests that the government may be experiencing financial constraints affecting military funding.
• 🏦 Since the second half of 2021, a wave of pay cuts has affected civil servants and military personnel across almost all of China's provinces.
• 💸 Delays in salary and pension payments have been reported for civil servants, military personnel, and retirees.
• 🔍 Reports indicate widespread salary reductions in military research institutes and other state sectors.
• 📊 Financial difficulties have led to a reduction in public expenditures and downsizing of government staff at various levels.
• 💼 Corruption within the Chinese military remains a significant issue, despite anti-corruption efforts by Xi Jinping.
• 🚫 Local governments face financial constraints, affecting their ability to provide subsidies and maintain infrastructure projects.
• 🏠 The real estate crisis has significantly reduced local government revenues from land sales, exacerbating financial difficulties.
• 🌏 External factors, such as the trade war and the Russia-Ukraine conflict, have negatively impacted China's manufacturing sector and local revenues.

Q & A

What is the title of the document issued by China's military commission on June 20th?

The title of the document is 'Measures on Insisting on Struggling Hardly and Building the Army Diligently and Thriftily'.

What is the main focus of the document issued by China's military commission?

The main focus is to improve the quality and efficiency of army construction by maintaining a mindset of living on a tight budget and careful budgeting.

Why is the slogan of building a frugal military significant at this time?

The slogan is significant because it is seen as a sign that the government is running out of money for the military.

What impact did the zero COVID policy from 2020 to 2022 have on local finances in China?

The zero COVID policy emptied local finances, leading to a wave of pay cuts for civil servants across almost all of China's provinces.

What difficulties are being faced by civil servants and retirees in China regarding their salaries and pensions?

Many civil servants and retirees are experiencing delays in their salaries and pensions, with payments being made half a month or a month later than expected.

How has corruption historically affected the Chinese military's expenditures?

Corruption has led to significant portions of the military budget being misappropriated by officials, with estimates suggesting that 20% of military spending is taken by corrupt officials.

What measures has Xi Jinping taken to combat corruption in the military?

Xi Jinping has carried out a major purge of the military, knocking out at least 160 generals in the name of anti-corruption, and has raised military salaries three times to reduce reliance on 'gray incomes'.

What financial constraints are local governments in China facing, and how are they addressing these issues?

Local governments are facing financial constraints due to reduced revenues from land sales and are cutting civil servants' salaries and bonuses, as well as reducing staff and tightening control over public expenditures.

What impact has the trade war and the Russia-Ukraine war had on China's manufacturing sector?

These events have resulted in fewer orders for China's manufacturing sector, negatively affecting local revenues and exacerbating financial constraints.

Why are local governments in China struggling financially despite previous infrastructure investments?

Many infrastructure projects lack fiscal returns and have become liabilities that require extra money for maintenance, compounded by the real estate crisis which reduced revenue from land sales.

Outlines

00:00

📉 China's Military Budget Cuts Amid Financial Strains

On June 20th, China's military commission issued a document emphasizing frugality in military spending due to financial constraints. This directive reflects the broader economic struggles faced by the Chinese government post the zero-COVID policy, which has led to widespread pay cuts and delays in payments for civil servants and the military. Veterans and current military personnel have reported reductions in benefits and subsidies, highlighting the severe financial issues affecting the state sector.

05:04

💸 Corruption and Financial Issues in China's Military

The financial difficulties in China's military extend to other sectors, including police and military research institutes, which have also experienced salary cuts. Historical corruption within the military, exemplified by cases like Guo Wenshan and Xu Caihou, has further strained resources. Despite Xi Jinping's anti-corruption campaigns and increased military spending, the underlying issues of financial mismanagement and corruption persist, affecting the morale and stability of the armed forces.

10:05

📊 Financial Constraints and Cutbacks Across China

The Chinese government has implemented measures to tighten spending, impacting civil servants and local governments. Efforts to streamline staffing and reduce administrative costs reflect the financial constraints faced by the central government. Economic challenges, exacerbated by the trade war and reduced local revenues from real estate, have led to significant fiscal shortfalls. Local governments, previously reliant on land sales, now face severe financial crises, prompting salary and pension cuts to manage the budget deficits.

Keywords

💡Military Commission

The Military Commission refers to China's top military body that oversees the People's Liberation Army (PLA). The document mentioned, 'Measures on Insisting on Struggling Hardly and Building the Army Diligently and Thrifty,' aims to improve the quality and efficiency of military construction, emphasizing a frugal and efficient use of resources.

💡Frugal Military

This term reflects the CCP's push for a thrifty approach to military spending, implying strict budgeting and resource management. The video suggests this is a response to financial constraints and is part of a broader effort to streamline expenditures without compromising military effectiveness.

💡Zero-COVID Policy

China's Zero-COVID policy was a strict approach to containing the COVID-19 pandemic, leading to significant economic strain. The policy, enforced from 2020 to 2022, resulted in emptied local finances and has contributed to ongoing financial difficulties, including pay cuts for civil servants and the military.

💡Pay Cuts

The script mentions widespread pay cuts for civil servants and military personnel, reflecting financial austerity measures. These cuts include reduced allowances and bonuses, with delays in salary and pension payments, illustrating the severe fiscal constraints faced by various sectors.

💡Corruption

Corruption within the Chinese military is highlighted as a significant issue, with historical references to high-profile cases involving massive embezzlement and bribery. Despite anti-corruption efforts by Xi Jinping, corruption remains a challenge, particularly in military procurement and promotions.

💡Military Spending

Military spending in China has seen substantial increases over the years, partly to support modernization efforts. However, the script points out that a significant portion of these funds is lost to corruption, affecting the overall efficiency and integrity of the military.

💡Xi Jinping

Xi Jinping is the current President of China and the leader of the CCP. He has initiated anti-corruption campaigns within the military and increased military salaries to reduce reliance on corrupt practices. His policies aim to strengthen military efficiency and control corruption.

💡Economic Decline

The script outlines China's ongoing economic decline, exacerbated by the Zero-COVID policy and the real estate crisis. This economic downturn has led to financial constraints at both central and local government levels, impacting public sector salaries and military funding.

💡Civil Service

The civil service in China includes various government employees who are facing significant pay cuts and delayed payments. This sector's financial difficulties are indicative of broader economic challenges and austerity measures being implemented across the country.

💡Streamlining

Streamlining refers to the efforts to reduce the number of civil servants and government employees to cut costs. Various regions and provinces are implementing measures to downsize staff and reduce administrative expenses, reflecting the central government's push for financial austerity.

Highlights

On June 20th, China's military commission issued a document titled 'Measures on Insisting on Struggling Hardly and Building the Army Diligently and Thriftily' to improve the quality and efficiency of army construction.

The document emphasizes maintaining a mindset of living on a tight budget and careful budgeting to enhance the military system's effectiveness and the efficiency of using national defense resources.

The CCP's slogan of building a frugal military has been mentioned several times in recent years, but this is a clear public statement, indicating possible financial constraints.

Following the zero-COVID policy from 2020 to 2022, local finances were depleted, leading to widespread pay cuts for civil servants across almost all of China's provinces since mid-2021.

Many civil servants and retired senior citizens have experienced delays in their salaries and pensions, reflecting broader financial issues within the state sector, including the military.

Multiple veterans confirmed that many military subsidies are no longer available, and police officers are also experiencing pay cuts.

Salary cuts have also been reported in China's military research institutes, with reductions ranging from 5% to 50%.

The financial constraints have led to the military and police potentially 'lying flat' like the local bureaucracy, with the CCP possibly cutting down on military equipment procurement and training to save money.

The CCP's publicized military expenditure is often much smaller than the actual spending, with significant corruption reported in the military over the years.

From 1993 to 2012, CCP's military spending saw a significant increase, with rampant corruption during this period.

Xi Jinping's anti-corruption purge in the military led to the dismissal of at least 160 generals, but corruption persisted.

New military equipment introductions have provided opportunities for corruption, with significant portions of the military budget allegedly taken by corrupt officials.

Xi Jinping has increased investment in the military and raised military salaries multiple times, making military treatment better than that of local civil servants.

Local governments have tightened control over expenditures, including office supplies and public expenditures, reflecting the financial difficulties faced by the CCP.

Several jurisdictions have announced staff reductions and downsizing to cope with financial constraints, with reductions ranging from 2% to 5%.

The financial constraints have led to delayed or reduced salaries for civil servants in several economically important provinces, such as Jiangsu and Guangdong.

Local governments are facing revenue shortfalls due to the real estate crisis and reduced land sales, which previously accounted for a significant portion of their revenue.

Without the revenue from land sales, local governments rely on transfer payments from the central government, which is also struggling financially.

Wu Jjong, a general economist from Taiwan, explained that local governments' debt model and overbuilding have led to projects without fiscal returns, exacerbating financial difficulties.

Transcripts

on June 20th China's military commission

issued a document titled measures on

insisting on struggling hardly and

building the Army diligently and Thrifty

to improve the quality and efficiency of

army

construction it mentions that the

mindset of living on a typ budget is to

be maintained and careful budgeting is

to be done and that the military needs

to improve the effectiveness of the

military system and the efficiency of

making use of National Defense

resources the CCP has mentioned the

slogan of building a Frugal military or

living frugally a few times in recent

years this time however it is a clear

public statement which is often seen as

a sign that the government is running

out of money for the

military following the government's

Draconian policy of zero Co from 2020 to

2022 which emptied local finances a wave

of pay cuts for civil servants has swept

through almost all of China's provinces

since the second half of 2021 allowances

and bonuses have been canceled or

reduced at the end of 2022 when the

zeroc coov policy was lifted China's

economy continued to decline and

Recovery has been

difficult according to informed sources

the wave of pay cuts has spread from the

Civil Service to the military Mr H who

served in the military and went into

business after retiring from the

military said in an interview with

overseas media that everyone is now

broke many civil servants and retired

senior citizens have experienced delays

in their salaries and pensions because

payments can't be paid on time the delay

isn't that they don't get it but it's

paid half a month or a month later it's

the same in the state sector including

the Army and many of my comrades in the

military many of the subsidies are no

longer available it's been half a year

now and they haven't gotten any of their

benefits multiple veterans also

confirmed that many civil servants and

retirees are unable to receive their

salaries and pensions on time many

military subsidies are no longer

available and police officers are also

experiencing pay cuts the deputy

director of a police station in a

coastal city said that he had taken a

pay cut and that everyone else at the

police station took a pay cut too salary

Cuts have also been reported in China's

military research

institutes a post last edited on

December 18th 2023 on a Mainland social

media website read many research

institutes in Aerospace CLP power China

ship building Corporation and weaponry

have begun to reduce their salaries the

reduction ranges from 5% to

%. the previous posts about salary

reductions in military research

institutes have disappeared and the

detailed contents are

gone in April 2022 a nison anonymously

posted about the change of his salary

after he joined the number 41 Institute

of the sixth Academy of Aerospace

Science and Industry in 2020 from July

2020 to December 2020 his salary

averaged about

1,376 per month before tax from January

202 to June 2021 it was reduced to an

average pre-tax of 1100 from July 2021

to December 2021 the average is around

826 pre-tax plus yearend performance

wages are getting lower by the

year concerns have emerged that the

declining treatment of the military and

police reflects the ccp's Authority's

Financial constraints it may lead to the

military and police lying flat like the

local bureaucracy some analysts believe

that the CCP has to guarantee the

military expenditure so it doesn't dare

to cut down the salary of the military

personnel but to save money it may cut

down the funding for the procurement of

military equipment and the training of

the military speaking of military

expenditures we have to talk about the

prevalent corruption in the Chinese Army

the ccp's publicized military

expenditure is often much smaller than

the actual

spending from 1993 to 2002 the ccp's

military spending totaled about

2003 to 2012 it soared to about 4.3

times that of the previous 10 years

during these 20 years Jang Zine was in

control of the military and Corruption

was

rampant the first major corruption

offender to be investigated was guwen

Shan he was involved in more than 4.2

billion in crimes including 83 million

in verified corruption and bribes he

owned more than 300 properties and

maintained 23 Mistresses in addition the

gold seized in his residence amounted to

400 kg it's worth noting that guo was

only a lieutenant

general Shu Sao former Vice chairman of

the CCP military commission was

investigated in 2014 and the cash seiz

from the basement of his 2,000 s Mansion

weighed as much as 1

ton at that time there was a clear price

list for getting different ranking and

promotion in the CCP military 30,000 for

a company Commander 50,000 for a

battalion Commander 140,000 for a

regiment Commander 140 to 410,000 for a

division Commander 690,000 for a

military commander and up to 1.38

million for a major military region

Commander after Xi Jinping took power he

carried out a major Purge of the

military knocking out at least 160

Generals in the name of anti-corruption

however this hasn't changed the

corruption situation in the military a

terrible thing is that as new equipment

is introduced to the military with the

high military spending it gives generals

another opportunity to get rich for

example for the rocket Force missiles

like the dongfang 17 dongfang 21d

dongfang 26 and dongfang 41 missiles

have started to enter service in batches

a number of Navy destroyers and aircraft

carriers have also begun to enter

service it's reported that in the 10

years from 2013 to 2022 the ccp's

military spending totaled about

226.000 billion by a conservative

estimate 20% of it is taken by corrupt

officials in recent years in order to

achieve the goals of fighting corruption

and strengthening the military Xi

Jinping has significantly increased

investment in the military emphasizing

that in the future the income of

Military Officers will mainly rely on

their wages and there should be no other

gray incomes in 2014 2018 and 2021 XI

jingping raised military salaries three

times in particular the 2021 Rays

adjusted the level of military pay to

20% higher than that of civil servants

making the military treatment generally

better than that of local civil servants

since October 2023 the government has

formally implemented the tenative

provisions on the treatment and

protection of Civilian Personnel in the

military further improving the treatment

of Civilian Personnel in the

military a former retired servicemen

pointed out that military personnel

salaries were paid by the state through

earmarked funds while other subsidies

were supposed to be provided by the

local governments which are now unable

to pay for such

subsidies at the same time the Communist

party and government departments have

also frequently mentioned the principle

of tightening the belt at the two

sessions in March 2024 the government

work report clearly stated that

governments at all levels should get

used to tightening their belts

subsequently all regions have tightened

their control over three public

expenditures that's meals transportation

and travel and cut back on General

expend atures it has reflected the

financial difficulties faced by the

CCP according to official media three

jurisdictions including inner Mongolia

Hunan and Beijing have introduced

specific measures to tighten the belt

for example office desks and chairs

computers and official Vehicles should

continue to be used as long as they can

be repaired or

utilized according to an announcement on

the official website of the national

government offices Administration

Beijing was the first place to introduce

these measures the Beijing Municipal

Bureau announced 19 specific measures in

February including to utilize the public

warehouses to coordinate resources and

strive to increase efficiency by more

than 50% year on-year the paper reported

on June 7th that several jurisdictions

have announced the percentage of the

latest round of downsizing ranging from

2 to

5% early last year the central

government released the program for the

reform of party and state

institutions it clearly set out the goal

of stream stre lining the Staffing

establishment of Central State organs by

5% and required localities to streamline

as well local party and government

organizations are required to streamline

their Staffing establishment and there

is no requirement for streamlining at

the level of County and Township local

governments have been following in the

footsteps of the central government na

Jang city shishan province released a

document to cut 3% of its staff loo City

Hernan Province adopted an across the

board approach reducing 3% % of the

staff with a total of 54 posts

eliminated Gansu Province put out a

policy document too to reduce 5% of its

employees in February 2024 Shan XI TV

station reported that the reform won't

increase the number of departments and

bureaus and will gradually reduce the

administrative establishment of civil

servants by 3% at the provincial level

and at least 2% at the municipal level

it has been reported that the financial

constraints of the central government

have led to the salary rears or

reductions in the pay of civil servants

in several economically important

provinces such as Jong Su and Guangdong

as their Financial Resources deplete in

Guangdong for example Miss Hong told

overseas Chinese media that her father

who was in his 90s is a retired official

at the vice directorate level with an

original pension of about us 4100

recently his unit informed him that his

pension would be reduced by us 690 per

month from January 1st 2024 and that it

would be required to pay back the

overpayment of his pension over the past

2 years by deducting us 690 per month

for a total reduction of us

16,500 miss Hong believes that this

reflects the severity of China's

Financial constraints informed sources

from a department in guangong revealed

that things are changing nowadays it's

lucky if one's regular salary or pension

is paid as yearend bonuses are cancelled

and Enterprise subsidies are in AAR

Enterprises applying for government

subsidies even if approved the the funds

don't get dispersed promptly due to

financial

constraints informed sources also said

that Guangdong is dominated by private

and foreign Enterprises due to factors

such as the trade War orders have been

diverted to Southeast Asia and South

Asia and business activities in Shenzhen

and Dong Guang have decreased the 2022

Russia Ukraine war further aggravated

the problem resulting in fewer orders

for China's manufacturing sector it has

seriously affected local

revenues Wu jong a general economists

from Taiwan said there's a serious

financial crisis from the central to

local in China they are out of money and

it can't be covered up anymore that's

why civil servants are told to tighten

their belts Mr Woo also explained why

the Chinese government is running out of

money in the past local governments

borrowed money to build infrastructure

in order to get attention and promotion

from their superiors and this debt model

and overbuilt has resulted in

construction projects that look

beautiful but lack fiscal returns a

typical example is the construction of

many highways and bridges in the

mountainous areas of gu Joo Province

without fiscal returns these projects

have become liabilities and require

extra money for

maintenance especially after the real

estate crisis local governments have

lost Revenue through selling land which

used to account for about 40% of total

revenue now local governments have to

cut civil servants salaries and bonuses

to make up for this shortfall without

the revenue from land sales local

governments can only rely on transfer

payments from the central government

which is struggling itself thus a

financial crisis is seen in China

[Music]