Amid China’s recession, local governments across the country have been amassing significant debt. Since last year, there have been ongoing reports of salary cuts for civil servants in various regions. Now, local government debt has gotten out of control, with many even defaulting on their obligations. Starting from August 18, the Chinese Communist Party’s official media, Caixin, ran a series of cover stories on “How to Manage Local Debt.” Based on information from various official sources, the reports claimed that the CCP government is preparing to issue special refinancing bonds worth 1.5 trillion yuan in the second half of the year for 12 provinces in debt, including Tianjin, Guizhou, Yunnan, Shaanxi, and Chongqing.
The report highlighted that one southwestern province, which was allocated a substantial portion of the refinancing bonds, might need to cut its civil service staff by 20% as a trade-off. This implies that in addition to salary cuts, there will now be direct layoffs for civil servants. When this news broke, it triggered extensive public discussion. The “southwestern provinces” refer to Yunnan, Guizhou, and Sichuan. Based on previous reports, many netizens speculated that it could be the public employees in Yunnan or Guizhou who will lose their steady jobs, which they call their “iron rice bowls”
CHINA 🇨🇳 REAL ESTATE
IMPLOSION 💥 pic.twitter.com/XX4eERokfa— Win Smart, CFA (@WinfieldSmart) September 2, 2023