The upcoming Fourth Plenary Session of the 20th Central Committee of the Chinese Communist Party (CCP) has drawn attention recently, with CCP state media hyping China’s economy as always maintaining “strong resilience and vitality.” An official working in a local finance department of the CCP exposed to the Epoch Times that local governments in China are facing a financial crisis and have become “dysfunctional.” He warned the public that China’s economy will face even more difficulties next year and advised early financial risk management.
In a recent interview with the Epoch Times, Yang Qing (pseudonym), an official in the finance system of a southern province of the CCP, stated that his province’s fiscal revenue ranks among the top in the country. However, over the past three years of the COVID-19 pandemic, the government’s fiscal funds have been nearly depleted, revealing many problems in the past two years.
Yang Qing pointed out the long-standing unfair distribution between the central government in Beijing and local governments. He described the central government’s allocation to local governments as a form of exploitative extraction. For example, out of 100 billion yuan of fiscal revenue, 52 billion yuan goes to the central government, and 48 billion yuan goes to the local government. This unequal distribution has now become a 50-50 split, but it is still insufficient for the local governments due to the heavy burden of various projects they undertake.
According to official CCP data, China’s national general public budget revenue in 2024 was 21.97 trillion yuan, a 1.3% increase from the previous year.
Yang Qing mentioned that while official fiscal revenue data has shown consistent growth over the years, the recent emphasis on the “Three Guarantees” (ensuring basic livelihoods, salaries, and operations) signals a crisis. He emphasized that the actual fiscal revenue figures are kept secret and not readily available to the public, making it a political black hole where public announcements cannot be trusted and are merely propaganda.
“Externally, the central government’s accounts are transparent, but internally there is a hidden ledger that only a few know about,” he said.
In recent years, signs of financial crisis have become increasingly apparent in various local CCP governments. Yang Qing stated that in his local government, a batch of project expenditures related to the “Three Guarantees” has been suspended since the end of July this year, including routine expenses like staff wages, office operational costs, and property management fees for government office buildings.
“Since July, there have been several intermittent suspensions. Projects such as urban waste collection, government official vehicles, and purchases of equipment for public security have all been suspended,” Yang Qing explained. The main reason is the lack of fiscal revenue, incomplete debt financing, resulting in the government’s inability to pay, leading to the suspension of several dozen projects. This situation means the basic responsibilities of the government have been suspended, indicating a state of dysfunction.
“If a society is going to have problems, it will first manifest in its finances; when there is a fiscal crisis, it means the society is slowly moving towards chaos,” he said.
Reports of salary reductions for civil servants have been circulating in recent years. Yang Qing mentioned that in terms of salaries, they have experienced three salary reductions in his local area since 2022, amounting to an overall reduction of around 25%. However, the salary cuts are not directly subtracted from the basic wages but are implemented through various means. For example, bonuses previously given out after a year of work have been reduced, and quarterly bonuses and year-end performance bonuses have also decreased.
Yang Qing believed that the CCP’s financial problems have truly been exposed since the onset of the COVID-19 pandemic. The deteriorating economy, along with the lockdown and control policies during the pandemic, are crucial factors, ultimately stemming from the communist party’s system.
This year marks the 76th anniversary of the CCP’s founding. As a finance professional, Yang Qing has a unique analysis of the economic governance and political direction since the CCP’s takeover.
Following the establishment of the CCP, Mao Zedong led China into famine and the Cultural Revolution, continuously disrupting the country. Deng Xiaoping’s so-called reform and opening up in 1978, after the collapse of the national economy, did not ensure prosperity for all citizens but selectively enriched the bureaucratic groups, who gained control over a large number of state-owned enterprises. The CCP fed on these state-owned enterprises, draining the blood of the Chinese people.
“By the time of Zhu Rongji, some state-owned enterprises were let go or sold off, but the major entities such as China Power, mobile companies, and coal remained firmly in the hands of the CCP. With Xi Jinping, he felt he already had enough wealth and couldn’t allow the people below to earn more, fearing it would endanger the CCP’s rule, so he turned left.”
Yang Qing claimed that the essence of the CCP is to suck all the blood from the Chinese people. Looking at the trajectory from 1949 until now, this essence hasn’t changed.
He said, “China’s previous so-called rapid economic growth was unsustainable, sacrificing the people’s health and living environment in exchange for massive profits for the CCP. The CCP also understands that this system is unsustainable in the long run, resulting in tight finances in recent years, triggering intense efforts to extract money from the people by any means necessary.”
For example, there is a town where a science and technology innovation center accrued debts of 30 billion yuan. While it should have only cost around 1.1 billion yuan to build, the remaining 29.1 billion yuan found its way into corrupt officials’ pockets. “Every township wants to establish a science and technology innovation center. Isn’t this absurd? Where does all this innovation capability come from? Even if there is innovation capability, there is no need for so many science and technology innovation centers. It’s a tactic to boost the real estate market employed by the CCP.”
Similar incidents occurred in Guangzhou, where multiple Chinese media outlets reported on July 15 this year that the “Bay Area Wisdom Park” project near the Chentian Garden in Baiyun District was razed within ten days after the construction of seven buildings within an 80-day construction period. The project was designated as a key state-owned scientific and technological innovation project for the district. Officially, the buildings were demolished due to uncompleted administrative procedures.
Yang Qing mentioned that the capability of CCP officials to line their pockets has reached an extreme level, surpassing outsiders’ imagination.
Recently, an article in the CCP’s People’s Daily under the section “China’s Economy: Special Discussions Guided by Xi Jinping’s Economic Thought” stated, “We cannot deny the overall economic situation just because some market entities are not feeling well. We must not focus solely on individual instances while neglecting the bigger picture.”
Yang Qing pointed out that in their region, where there were many migrant workers before, after numerous factories closed down, these workers returned home, resulting in the closure of numerous physical stores. People refrain from spending money when possible, avoid treating others, and cut back on purchasing clothes. Many turn to roadside vendors for lower prices, sacrificing quality.
“As the Spring River warms up, ducks are the first to know. The majority of people believe that the economy is not doing well; it’s a sign that there are economic issues,” he said.
Yang Qing expressed concerns as a technical bureaucrat that their professional knowledge and capabilities have become obsolete after years in the bureaucratic system. If suddenly left without a job, they wouldn’t know what to do. With university graduates struggling to find opportunities, middle-aged individuals have even fewer prospects.
He mentioned that many government officials are considering their options, such as leaving the country, and some have already made public declarations through the Epoch Times’ Quit the Party website under pseudonyms to disassociate from the CCP.
Currently, the CCP has tightened control over officials. It is reported that discussing the current political and economic situation, especially expressing dissatisfaction with Xi Jinping’s policies, even in coded language like referring to him as “steamed buns” or “200 catties,” can lead to being summoned for questioning.
“Each unit has internet commentators, often known as the fifty-cent army, who monitor internally and report anything potentially suspicious among colleagues to the secretary,” Yang Qing explained.
He noted that the government’s investments are based on borrowing, continuously issuing debt. Eventually, when the debts reach a certain size, they will collapse; it’s merely a matter of time. Going forward, the CCP might reduce the income of grassroots civil servants and village cadres, redirecting funds towards surveillance to maintain basic stability, particularly investing in the military to ensure the implementation of terror and repression.
Despite the CCP officially promoting the “bright economic theory,” social media in China reveals that many factory owners have shut down their businesses and fled during an extended holiday period. Several bloggers have been discussing China’s economic predicament, warning people to “tighten their belts and prepare for hard times!”
Yang Qing stated that the increasing economic difficulties in China are a trend and an inevitable law. “The current situation resembles the late Ming Dynasty Chongzhen period, with crises erupting in every aspect: politics, military, and, most importantly, financially, which can lead to social turmoil. The situation in 2026 will undoubtedly be more challenging than 2025, with a worsening outlook.”
He warned that if the current situation persists, a financial crisis among the Chinese people is inevitable. “To reduce financial losses, avoid keeping all your money in the bank as it is unreliable. The Renminbi will eventually turn into worthless paper, so exchange some for cash in dollars and keep it close by. Since the financial crisis has already erupted on all fronts, it’s not a matter of it about to happen; it’s already happened,” he emphasized.