When a child throws a toy on the road and refuses to take it, it’s likely the parents, not the child, who will have to go back and get it.
Local government debt is the same.
After staring for so long, in the end, it’s still the central government that pays the bill!
The press conference by the finance minister yesterday made it very clear: a large-scale increase in the debt limit is planned, to replace the existing hidden debts of local governments, and to increase efforts to support local governments in resolving debt risks. Relevant policies will be explained in detail to the public after the relevant legal procedures are fulfilled. This policy is the most significant measure in recent years to support debt resolution. This is a timely rain that will greatly reduce the pressure on local governments, allowing them to free up more resources to support economic development and consolidate the grassroots “three guarantees.”
As for the amount, because it still needs to be approved by the National People’s Congress, it cannot be disclosed for the time being, but it will definitely be a large amount.
In addition, last year, 10.3 trillion was transferred to local governments, and this year it has already reached this figure.
But in any case, officials cannot be poor. The story of “a police officer extorting 100 yuan, almost begging” should be able to alleviate the situation.
It’s just that the people will suffer again.
Since some people are destined to be plucked, some people must be appeased to divide and conquer, so as to avoid unanimous opposition. Yesterday’s press conference said that this year, the minimum standards for basic old-age pensions for urban and rural residents will be further increased, the largest increase in history, and the overall level of retirement pensions will increase by about 3%.
Yesterday, the financial department informed me that the social security contribution base has been raised again, and the burden on enterprises has increased again.
Passing the burden, still passing the burden, making young people hate the elderly.
Think about before, people still hoped they would keep their word once.
For example, on March 5, 2018, Huang Shouhong, head of the drafting group of the “Government Work Report” and director of the State Research Office, said that local debts will adhere to the principle of “whoever’s child, take it away, the central government will not provide assistance.” Local governments must be responsible for their own debts and cannot have the illusion that the central government will provide assistance for local debts, especially those formed in violation of regulations and laws.
On January 9, 2023, Finance Minister Liu Kun said that he would adhere to the principle that the central government would not provide assistance, “whoever’s child, take it away,” and also said that he would break the expectation of government backing.
As a result, it’s another 180-degree U-turn!
Look at last year, the central government’s total revenue was 21.7 trillion, and local governments spent 23.6 trillion, directly causing a deficit of 5.3 trillion! I don’t know how much it will be after this round of debt resolution.
But the possibility of adding more taxes is really not very high. There is a proportion of the net assets of a government department to the wealth of society, which can be roughly referenced and should not be too far off:
If it really can’t be increased, then there’s only one last resort: releasing water to dilute it. It seems that this path is being taken.
Will this encourage local governments to continue borrowing and create a bigger hole?
Slightly rational local officials know what to do. In fact, in recent years, some southeastern cities have been doing similar things. Anyway, it’s the same to suffer and raise others, so it’s better to make yourself feel better. If it’s going to be over, let’s all go down together.
This kind of financial “big pot” system is a negative incentive.
So, the blue finance minister said that the problems of illegal and non-compliant borrowing will be severely investigated, held accountable, and rectified within a time limit. If any are found, they will be investigated, held accountable, and the risks of new hidden debts will be resolutely curbed.
There are also actions. On October 11, three ministerial-level officials who were investigated were announced, two of whom were suspected of illegal borrowing:
Qin Rupei, the former vice chairman of the Guangxi government, was accused of “illegal borrowing and concealing debts,” and Chen Yan, the former vice chairman of the Guizhou CPPCC, was accused of “making wrong decisions, abusing power, blindly introducing and promoting projects, causing major losses to national interests.”
Can killing a few people solve the problem? Haven’t such harsh words been said before?
A friend analyzed that once the new trick of using a large amount of long-term national bonds to relieve local finances is launched, local governments at all levels will join the competition to inflate debts, which is a bit like a pack of hyenas competing for carrion.
That’s right, we’ll just stare and watch to see what kind of bill they can finally report.
Although the people of the whole country will eventually pay the bill, the people of the economically strong provinces in the southeast will have to bear a heavier burden. This question will be deleted as soon as it is mentioned, so I can only shut up.
Pandora’s box will be opened, everything will be revealed, and those who are alive will witness history.
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