China’s cash-strapped local authorities are struggling to reduce headcount because of demands from Beijing for greater security and monitoring of its citizens.
Local authorities have in recent years hired millions of people to collect information on residents, identify security risks and communicate state policy as President Xi Jinping tries to tighten control on society.
These same authorities also reported the biggest decline in fiscal revenue in decades last year as Beijing’s zero-Covid policy stifled growth and forced them to pay for mass testing and quarantines.
Their income has been hit hard by a crash in the property market — land sales account for about a quarter of all revenue for local governments, which are responsible for everything from roads to healthcare and education.
As a result, local authorities are under pressure to reduce staff and cut costs. The State Council, China’s cabinet, unveiled plans last month to reduce its headcount by 5 per cent, a signal for cities and provinces to follow suit.
“There is a conflict between having fewer government employees and keeping every citizen under tighter watch,” said Ming Xia, a political science professor at the City University of New York.
Official data shows the number of government staff with full benefits was 46.5mn at the end of 2021, up 10 per cent from 2016. Government departments reported annual wage payments of Rmb6.3tn ($911bn) in 2020, up 37 per cent from 2016.
“Such expenditure is difficult to cut,” said the Chinese Academy of Fiscal Sciences, a think-tank under the Ministry of Finance, in a report this year.
China has in recent years gone to great lengths to put communities under government surveillance. The efforts gained urgency during the pandemic when harsh Covid-19 control measures, including frequent lockdowns and mass PCR testing, required significant manpower to implement.
“President Xi’s decision to strengthen grassroots governance means we need many more community workers despite a tight fiscal budget,” said a researcher at the CAFS.
Local governments have recruited more than 4.5mn “grid managers” and “community inspection liaison officers” since 2018, according to official statistics. These officials work on everything from gathering public opinion to reporting criminal and corruption activities in a given neighbourhood or even residential building.
“I keep the government and residents in my building informed of each other,” said a grid manager in the central city of Wuhan.
This grassroots governance overhaul has made it difficult for local authorities to axe people. “The authority doesn’t believe people can govern themselves,” said a Shanghai-based scholar and former official. “That forces the government to grow bigger so it can deal with an increasingly complex society.”
With that in mind, many cities have continued to expand their contract workforce despite their tight budget.
In south-western Chongqing’s Yongchuan district, where land sales dropped more than 10 per cent last year, the local authority this week posted 196 grid manager jobs in order to build “a modern governance system”.
“We are not in a position to reduce headcount despite a tight budget,” said an official in Yongchuan.
Some cities are so hard-pressed for cash they have had to cut staff. The north-eastern city of Harbin, where land sales fell 80 per cent last year following a 20 per cent drop in 2021, said in March it planned to get rid of contract workers in five years in order to “reduce administrative costs”.
The city of Shiyan in central Hubei province this month said it had laid off 9 per cent of government contractors, saving Rmb15m a year.
“We must implement the [central government’s] requirement on living a frugal life,” said the Shiyan Institutional Organisation Office in a statement.
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