The Chinese authorities have issued multiple notices in the past, demanding all levels of government to “tighten their belts and live frugally.” Recently, the Department of Human Resources and Social Security of Shandong Province, together with 10 other departments, jointly issued a notice officially launching a comprehensive reform for state-owned units to transform into enterprises.
According to official reports, this measure in Shandong Province aims to thoroughly address the issues of the original state employees’ status and lighten the financial burden. This reform, with a wide-ranging scope, is expected to see over 100,000 state personnel transition into employees of enterprises.
In this reform initiated by Shandong Province, the original staff will be removed from the real-name list of the provincial establishment office and will sign labor contracts with the newly established enterprises, becoming employees of the enterprises.
This news has sparked attention and discussions among netizens, with many Weibo users commenting: “Transitioning from state-owned to enterprise ownership, does this mean units will now have to be self-sufficient financially?” “Not all restructuring efforts are successful, there will definitely be differentiation. The only certainty is reducing fiscal expenses.”
“The Red Cross should be transformed into an enterprise, taking responsibility for profits and losses, to eliminate financial withdrawals.” “This is outrageous, making the Gaokao in Shandong harder, and state-owned units doomed.” “Does this mean the leeks (common people) can no longer be exploited? So they can’t make ends meet anymore.”
In the past year, several regions in China began a large-scale cleaning of extra staff in government and state-owned institutions, drawing broad attention from society.
Reported by China News Weekly, the Office of the Manpower Establishment Committee in Harbin, Heilongjiang Province, issued a notice on the standardization of personnel cleaning in city-level government agencies and state-owned units.
The focus of this special rectification action is existing employees, specialized personnel, workers, and self-hired personnel (collectively referred to as “extra personnel”) in city-level government agencies and state-owned units of Harbin.
“Extra staff” are in contrast to in-house staff. In-house personnel are those whose expenses are funded by the government, individuals, or certain special institutions at all levels, such as institutions, state-owned units, and some special organizations.
Public reports indicate that, in addition to Harbin, cities like Tongcheng in Anhui Province, Fangxian and Jianli in Hubei Province, and Wanning in Hainan Province have previously started clearing extra personnel.
What signals are being sent by the cleaning of extra staff in various regions? Nie Huihua, a professor at Renmin University of China, believes that the two are closely related. After cleaning extra staff, further reductions in in-house staff may follow; secondly, local finances are tight, with the pandemic lasting three years and the economy declining, increasing financial expenditures has led to the cleaning of extra staff to reduce the financial burden.
In fact, as early as the second year of the US-China trade war, in 2019, the Chinese authorities repeatedly issued notices requiring all levels of government to “tighten their belts” and prepare for “living frugally.”
Liu Kun, the Minister of Finance of the Communist Party of China, emphasized at a press conference, “Adhering to the firm principle of the Party and government’s frugal living,” stating that “living frugally is not a short-term response but a long-term policy that should be adhered to.” Regarding local debts, Beijing has criticized that “each locality needs to bear its own debts.” In reality, the local government debts of the Communist Party of China have exceeded 35 trillion RMB.
In June last year, the Guangxi government announced plans to cut ties with debts of state-owned enterprises, requiring state-owned and state-controlled enterprises to take responsibility for their debts, with local governments not bearing the debt repayment responsibility.
This implies that if state personnel transition into enterprise employees, even when entering state-owned enterprises, they will face the risk of bearing profits and losses, with local governments being “in no way responsible.”