With the continuous deterioration of the Chinese economic environment, since the beginning of 2025, reports of salary cuts have once again surfaced in government institutions and state-owned enterprises in Beijing, Zhejiang, and other regions, affecting civil servants, white-collar workers of central enterprises, and even employees of private enterprises. Almost every household is tightening their belts. The income reduction has spread from the office to the market, sparking a chain reaction of collapsing consumer confidence. Analysts believe that a deep-seated economic and social trust crisis is emerging.
Recently, news of salary cuts for civil servants and employees of state-owned enterprises has emerged in many parts of China, indicating that economic pressures have permeated the system. According to Radio Free Asia, Mr. Li, a grassroots employee of a central enterprise in Beijing, lamented in an interview on June 16: “I used to earn six thousand yuan (RMB) a month, now I only have five thousand left, some allowances have also been cut. In my wife’s company (a private enterprise), some people have taken pay cuts, and some have received layoff notices, effective until the end of July.”
Mr. Ma, another employee working in a state-owned enterprise in Beijing, revealed that since 2023, the company has undergone two rounds of salary cuts and layoffs. “The basic salary has been reduced, the company has also canceled meal subsidies and transportation allowances. This year, the actual salary cuts range from 5% to 20% depending on the position. What used to be a job for two or three people, now has to be done by one person, and everyone is extremely busy.”
To cope with spending pressures, some employees have had to take on additional jobs to make ends meet.
In Qingdao, Shandong, salaries of local civil servants have been significantly reduced, with some town officials receiving only 70% of their salaries and experiencing delays in payment. Benefits for police officers in local police stations have also been reduced. A legal professional in Guangdong revealed that the annual salary of local police officers has dropped from 300,000 yuan in the previous year to 200,000 yuan. A middle-level executive at a state-owned bank in Dongguan stated that salaries have decreased by 30% over the past two years, with almost no performance bonuses.
Since 2025, central enterprises such as CITIC Securities and China Development Bank have successively implemented “optimization measures” to reduce costs. According to Caixin, 27 central financial enterprises in China have begun implementing salary limits, aiming to cap annual salaries at 1 million yuan, with the possibility of cutting the salaries of senior management personnel by half. An employee at CITIC Securities confirmed that almost all employees in the building have had their salaries reduced, with larger cuts for senior management.
Mr. Zheng from Zhuji, Zhejiang, pointed out that civil servants in the province are generally experiencing salary reductions again, with ordinary civil servants seeing a decrease of five to six thousand yuan a year, while those at higher ranks have reductions ranging from eight to ten thousand yuan, and top-level officials even experiencing cuts of around fifteen thousand yuan. This marks yet another round of salary reductions following those from the previous year.
The salary reduction trend is a result of the ongoing deterioration of local finances. Last year, budget data from the Zhejiang Provincial Finance Department showed a 25% decrease in income from state-owned land transfers, leading to significant cuts in administrative expenditures, a financial tension that has spread nationwide.
Jiangsu economist Wu Qinxue analyzed that salary reductions in state-owned enterprises, closures of private businesses, and malicious competition among businesses reflect the continued deterioration of local finances, resulting in the government having “no money to manage people” and the people having “no willingness to spend money.” He believes that from salary cuts within the system to the collapse of consumer confidence among the general public, the entire society is forming a top-down “tightening chain.”
Wu Qinxue warned that salary reductions for civil servants are just the beginning, and the real problem lies in “the loss of consumer motivation in the private sector, companies losing development confidence, and the economic imagination of society contracting.” He emphasized that if “tightening our belts” is only a slogan, it can be tolerated, but if it becomes the norm or even “no days to live by,” the social resilience and confidence will face the ultimate test, indicating the emergence of a deep-seated economic and social trust crisis.