The Chinese government is out of money! Even the military and civil service start getting pay cuts.
Summary
TLDRThe 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
📉 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.
💸 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.
📊 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.
Mindmap
Keywords
💡Military Commission
💡Frugal Military
💡Zero-COVID Policy
💡Pay Cuts
💡Corruption
💡Military Spending
💡Xi Jinping
💡Economic Decline
💡Civil Service
💡Streamlining
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
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