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China’s Austerity Drive: Provinces Implement “Belt Tightening” Measures

China’s economic slowdown has adversely impacted government fiscal revenues. According to Taiwan’s Central News Agency, there are reports of salary cuts and clawbacks of government allowances. Starting in February, Inner Mongolia, Hunan, and Beijing successively introduced concrete “belt tightening” measures. These measures dictate that, when possible, old office furniture, computers, official vehicles, and other items should be repaired for continued use rather than being replaced.

Beijing took the lead in implementing such measures, announcing 19 initiatives in February. The measures include a directive to fully utilize public property warehouses for resource allocation, aiming to achieve a 50% year-on-year increase in quantity and transfer of stockpiled assets. Other directives include optimizing the use of relocated housing and land as well as improving the efficiency of official vehicle usage.

On March 8th, Hunan province announced 10 specific belt-tightening measures covering office space, official vehicles, receptions, and energy conservation by public institutions. Notably, the measures include a 40% reduction in office maintenance fees, capping property service costs at national standards and budgeted amounts. Additionally, official vehicles can only be replaced after 8 years of use and over 250,000 km driven (provided they remain serviceable).

In mid-March, Inner Mongolia unveiled a multi-part belt-tightening plan including measures for strict budget enforcement, regulation of government procurement, control over certain expenditure categories, lowering of operating costs, promotion institutional frugality, and strengthening of fixed asset management. Projects with favorable performance evaluations are to receive priority funding, while underperforming projects may face budget cuts. The plan emphasizes repair and reuse of office equipment when possible as well as a 20% reduction in external rentals by the local government.

China’s annual central economic meeting in December 2023 called on party and government bodies to “get used to belt tightening.” The Chinese Finance Minister underscored the necessity of fully implementing this requirement, stating “Any money that can be saved should be saved, and not a single cent should be spent unnecessarily. Financial resources should be concentrated on major undertakings.”

Source: Central News Agency (Taiwan), March 24, 2024