In May of last year, Chinese Premier Li Keqiang stated in the government work report that governments at all levels must maintain a tight budget and the central government must take the lead to cut back 50 percent of non-essential expenses. Even though there is no further indication that the central government is taking any action, ordinary civil servants and teachers have been the first to take the hit.
Recently civil servants and school teachers in Henan, Jiangxi, and Guangdong provinces have received orders to give the performance bonuses they received back to the government. On July 7, the Water Authority of Nanchang City, Jiangxi Province issued a document stating that, according to relevant regulations, bonuses issued after June 7, 2021, must be returned within ten days. On the same day, the Dexing City Government required all teachers to return the merit bonuses they recently received. Teachers in Dexing City received 20,000 yuan (US$3,092) in the first quarter of this year. They expect to receive 80,000 yuan (US$12,367) in total bonuses this year plus a year-end bonus. These bonuses are usually higher than their annual salary.
Postings on Weibo showed that civil servants in Shanghai, Jiangxi, Henan, Shandong, Chongqing, Hubei and Guangdong provinces have also had their future bonuses suspended and they must return previously issued bonuses. On July 3, Chaozhou City, Guangdong Province, issued a notice that their housing subsidies and merit-based bonuses will be suspended. Three days later, Shanwei City followed suit. Meanwhile Shenzhen City is compiling reports on the income its employees received in recent years. For the first quarter this year, Shanghai also stopped giving out bonuses .
At present, most local level civil servants, and elementary and other school teachers make monthly salaries ranging from 2,000 to 4,000 yuan (US$309-618). Most of their childcare and mortgage expenses are paid from these various subsidies and performance bonuses. Many of them will have a hard time making their ends meet. Jiujiang Bank in Jiangxi Province even launched a bank loan to provide people who are not able to pay back the bonus they received.
In the first half of last year, China’s fiscal deficit went up by 30 percent and local municipal debt grew by 34 trillion yuan (US$5 trillion). Official reports showed that 30 out of the 31 provinces and cities in the country have a fiscal deficit. Shanghai is the only city with a fiscal surplus. Provinces such as Henan, Sichuan and Yunnan have deficits of more than 250 billion yuan (US$39 billion).
Source: Radio Free Asia, July 12, 2021