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Government/Politics

Financial Shortfall in China’s “Stability Maintenance” Budget: Bottom-Rung Stability Agents Facing Wage Delays

According to a social media report, the government of the Hanjiang District in Putian City, Fujian Province, has not paid grid workers their salaries for six months, and it has recently ceased deposits of workers’ social security contributions as well.

“Grid workers” (网格员) are the lowest level of stability maintenance forces in China. The term “grid worker” or “grid administrator” refers to individuals responsible for managing various subdivisions of neighborhoods within Chinese communities. They are tasked with collecting information on residents, promoting government policies, mediating conflicts, and other miscellaneous tasks. Recently, work conducted by grid workers in China has gone hand-in-hand with collection of big data use of artificial intelligence by the Chinese government. Grid workers played a significant role in enforcing the government’s COVID control measures by conducting inspections, information reporting, health monitoring, and monitoring of “key individuals.” China’s grid workers have been referred to as the ‘capillaries’ and ‘nerve endings’ of the Communist Party’s governance system, and “the most direct embodiment of Xi Jinping’s concept of ‘fine-tuned social management.'”

The social media post regarding the current grid worker budget shortfall in Putian City also revealed that Hanjiang District has around 700 to 800 grid workers, with a monthly salary of 2,200 yuan. A state-controlled media outlet confirmed the report: “on the morning of August 23, the district government coordinated and indeed issued one month’s salary to all grid workers who were owed wages, and efforts are being made to resolve the remaining wage arrears.” Similar issues of delayed wages to grid workers and social workers are reported in Linyi, Shandong. A Radio Free Asia report on this subject commented that “such a confirmation by Chinese state-run media is a rare occurrence.”

The reports indicate that Beijing is running short of stability maintenance funds.

According to 2020 census data, there is approximately one grid worker for every 600 citizens in the Hanjiang District. The ratio of grid workers to citizens is similar in Shenzhen.

Source: Radio Free Asia, August 26, 2024
https://www.rfa.org/mandarin/yataibaodao/meiti/jj-china-internet-control-08262024103632.html

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Stand News Editors Convicted of Sedition by Hong Kong Court, Marking Setback for Freedom of Press in Hong Kong

During the 2019 “Anti-Extradition” protests in Hong Kong, local media outlet Stand News featured extensive coverage of the events. On August 29 the Hong Kong District Court found the former and acting editors of the media outlet guilty of “conspiracy to publish seditious publications.” The judge delivered the verdict but postponed sentencing to September 26, allowing the defendants to be temporarily released on bail. This case marks the first time that senior members of a news organization in Hong Kong have been convicted of “sedition” since the city’s handover to China.

The Hong Kong Journalists Association condemned the ruling, stating that it represents a serious setback for freedom of the press.

In December 2021, Hong Kong’s National Security Department froze Stand News‘ assets, worth HKD 60 million (US$ 7.7 million), forcing the media outlet to cease operations.

Source: Radio Free Asia, August 29, 2024
https://www.rfa.org/mandarin/yataibaodao/gangtai/ec-hong-kong-court-sedition-conviction-08292024114316.html

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Tibetan Leaders Criticize CCP’s Tibet Policy Following CCP Media Report

On August 28, Chinese Communist Party (CCP) mouth-pieces CCTV and Xinhua News Agency released a nearly-3-minute video showcasing the “achievements of the 30th Anniversary of Paired Assistance (from Provinces and Institutions) to Tibet.” The end of the video included a quote from Xi Jinping regarding four “as long as” conditions regarding Tibet: “As long as we work together, as long as we promote ethnic unity, as long as we follow the CCP, and as long as we adhere to the path of socialism with Chinese characteristics, we will surely achieve the glorious goal of the great rejuvenation of the Chinese nation as planned.”

Comments from Tibetan spiritual leader the Dalai Lama and from Kelsang Gyaltsen, the Central Tibetan Administration’s representative in Taiwan, outlined a critical view of the CCP’s policies for governing Tibet during Xi’s era, summarizing four main goals of the CCP:

  1. Completely remove the influence of the 14th Dalai Lama from the subconscious of Tibetans by searching their homes and personal phones.
  2. Treat Tibetan religious language and culture as a “tumor,” close privately run Tibetan language schools, and arrest intellectual elites who attempt to preserve Tibetan culture.
  3. Force Tibetan children to attend boarding school, leaving behind their parents and their culture. Compel the children to study Mandarin Chinese and Han Chinese culture under the framework of “forging a strong sense of community for the Chinese nation.”
  4. Fully implement the “Sinicization of religion” (i.e. the modification and watering down of religion to meet the requirements of the Chinese Communist Party)

Source: Radio Free Asia, August 29, 2024
https://www.rfa.org/mandarin/yataibaodao/shaoshuminzu/hx2-xi-jinping-tibet-08292024072621.html

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Public Questions China’s New Housing Pension System, Suspects Disguised Property Tax Program

China’s Vice Minister of Housing and Urban-Rural Development, Dong Jianguo, stated at a press conference on August 23 that the government is studying the establishment of a system for building inspections, housing pensions, and housing insurance. Currently, 22 cities, including Shanghai, are conducting trials. He stated that, when purchasing a property, homeowners will have already set up a personal account for payment into a public “residential special maintenance fund.” The focus of the trial is for the government to establish such a fund.

Netizens have widely discussed this “Housing Pension System” topic, speculating that the system could be a disguised form of property tax. The official “Construction Magazine” WeChat account of the Ministry of Housing and Urban-Rural Development published an editorial on August 26 stating that Vice Minister Dong’s original statement regarding the new pilot program mentioned that “the focus of the trial is for the government to establish a public account,” and that this public account does not require contributions from the public.

Mainland Chinese netizens are not convinced, however. Some have questioned why there is a rush to raise additional funds as there is already a “residential special maintenance fund” in place.

Source: Epoch Times, August 24, 2024
https://www.epochtimes.com/gb/24/8/26/n14317935.htm

Briefings | | |   Economy/Resources Government/Politics

RFI Chinese: PwC Expects Six-Month Business Ban from Chinese Authorities

Radio France Internationale (RFI) Chinese Edition recently reported that PwC China told clients it that expects Chinese authorities to impose a six-month business ban starting as early as September. This will be part of punitive measures imposed on PwC following a PwC audit of collapsed Chinese real estate developer Evergrande. China’s securities regulator said in March that Evergrande had reported an inflated revenue of nearly US$80 billion in Mainland China in the two years prior to defaulting on its debt in 2021. The regulators charged that PwC China’s audit of Evergrande’s accounting records had been improper.

PwC’s business ban and a potential hefty fine are probably the toughest action ever taken by Chinese regulators against a Big Four accounting firm. The Chinese government has stepped up scrutiny of the role of auditors in financial scandals, this time in the crisis-ridden real estate sector, which once contributed about a quarter of China’s GDP. PwC China was China’s highest-revenue accounting firm in 2022, with revenue reaching 7.9 billion yuan (around US$1.11 billion). PwC China’s rival Deloitte China was given a US$31 million fine last year for “serious audit deficiencies” related to Deloitte’s audit of China Huarong Asset Management. As part of the penalty imposed by Beijing, Deloitte China suspended operations for three months last year.

Many of PwC’s publicly listed Chinese clients have been banned for three years from cooperating with audit firms sanctioned by the authorities. This year, PwC China lost at least two-thirds of its accounting revenue from its Chinese-listed clients. That being said, Chinese-listed companies and state-owned enterprise clients account for only a minority of PwC China’s revenue; PwC is actively reassuring its largest internationally-listed clients, including internet giants Alibaba and Tencent, that it can complete their 2024 audits work.

Source: RFI Chinese, August 22, 2024
https://tinyurl.com/zdtten7b

Briefings | | |   Government/Politics US-China Relations

RFA: Shanghai and Shenzhen Stock Exchanges Adjust Information Disclosure Mechanism

Radio Free Asia (RFA) recently reported that the Shanghai and Shenzhen Stock Exchanges have adjusted their information disclosure mechanisms, ceasing publication of daily net trading volume data and other data starting from August 19. This has cut off information on the flow of foreign funds into China’s A-shares market through the Hong Kong markets. Thus, it is now impossible to calculate the flow of foreign capital in and out of Mainland China.

Under the new reporting mechanism, the Shanghai and Shenzhen exchanges will not let investors know the net buying and selling data of the overall northbound (direction of mainland) funds or the flows for the top ten active stocks on a given day. The Hong Kong Stock Connect program has been adjusted accordingly.

The RFA quoted a scholar saying that data on foreign investment in China are critical long-term indicators that play an important role in observing the Chinese economy. The Chinese government understands that making the data regarding the country’s stock market more opaque will only lead to faster withdrawal of foreign capital from China, yet it has still taken this step, showing that there must not be much foreign investment left in the Chinese stock market. It seems that China is preparing measures to prevent the further withdrawal of foreign capital. This is just like how China stopped disclosing unemployment data when the unemployment rate was rising sharply.

The new disclosure mechanism makes it easier for the government to fabricate market data in accordance with its political and economic needs, influencing retail investors who do not have a full picture of the market.

Source: RFA, August 19, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/ec-stockmarket-foreigncapitalwithdraws-08192024053127.html

Briefings | | |   Economy/Resources Government/Politics

The Impact of China’s Consumption Tax Reform

According to a Decision reached during the Third Plenary Session of the 20th Central Committee of the Chinese Communist Party, China will “move the collection stage of the country’s consumption tax to later stages,” and will also “gradually  allocate revenue from consumption tax to local governments.” Chinese media outlet The Paper reported that this decision to “delay the collection stage of the consumption tax” is meant to shift the tax source and collection point from the place of production to the place of consumption, meaning that a great part of tax revenue will be collected in the jurisdiction of the end consumer.

This policy change will have two main impacts. First, the base price for the consumption tax will increase from the factory price to the wholesale or retail price, which means that the Chinese government will collect more revenue from consumption tax. Second, the tax source will shift from the place of production to the place of consumption, resulting in a decrease in tax revenue for major production provinces (e.g. Shanghai, Guizhou, Yunnan, Hubei, Hunan) and an increase in tax revenue for provinces with large populations and large amounts of consumption (e.g. Guangdong, Shandong, Henan, Zhejiang, Sichuan).

“Allocating to local governments” means that the central government of China will no longer be the sole beneficiary of such consumption taxes; consumption tax revenue will now be shared with local governments. The northeastern, central, and western regions of China are likely to receive greater consumption tax than the eastern regions.

Sources:
1. The Paper, July 19, 2024
https://www.thepaper.cn/newsDetail_forward_28110425
2. Radio Free Asia, July 22, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/lu-china-third-plenum-tax-policy-07222024155434.html

Briefings | | |   Economy/Resources Government/Politics

Leaked Documents Reveal CCP Plan to “Eliminate” Falun Gong, Escalating Persecution

The Falun Dafa Information Center has reportedly obtained information from insiders in China’s Ministry of Public Security’s (MPS) regarding the organization’s new plan to “dismantle Falun Gong worldwide,” including in the United States. Falun Gong (also called Falun Dafa) “is an ancient spiritual practice in the Buddhist tradition.” The Chinese Communist Party (CCP) started persecuting Falun Gong in 1999 and has continued its persecution of the practice until today. The CCP has also targeted the Shen Yun performing arts group, which showcases traditional Chinese culture and religious beliefs and aims to raise awareness about the CCP’s persecution of Falun Gong.

The Falun Dafa Information Center’s report stated that “it is abundantly clear both from sources inside China as well as from observable attacks (on Falun Gong and Shen Yun) over the past few months that these escalations against Falun Gong have already begun and are trending into uncharted territory. The internal documents explicitly state that the regime’s aim is to ‘eliminate Falun Gong worldwide.’”

The MPS’ new plan has five tactics:

  1. “Coordinated propaganda attacks against Shen Yun, Falun Gong”
  2. “Inciting conflict between Falun Gong and the U.S. Government”
    The MPS indicates it will deploy a two-pronged strategy:

    1. Incite Falun Gong practitioners to distrust and even protest the U.S. government.
    2. Provoke the U.S. government to investigate Shen Yun Performing Arts and other organizations founded by Falun Gong practitioners.
  3. “Cutting communication channels that expose persecution inside China,” blocking Falun Gong practitioners in China from contacting their overseas supporters
  4. “Manipulating search engines and disseminating content in multiple formats” as a means to “carry out the offensive” against Falun Gong.
  5. “Provoking distrust and internal divisions within the Falun Gong community”

Source: Falun Dafa Information Center website
https://faluninfo.net/weaponizing-social-media/

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