The finances of the Chinese Communist government are rapidly deteriorating, prompting authorities to tighten their belts and prepare for tough times ahead. Recently, several provinces and cities have set up special task forces for “smashing pots and selling iron,” attracting public attention.
On August 28, a notice titled “Establishment of the ‘Smashing Pots and Selling Iron’ Task Force in Bishan District Government Office of Chongqing City” sparked discussion.
The notice indicates that the task force was established in accordance with the requirements of the “Plan for Promoting the Activation of State-owned Assets in Bishan District of Chongqing City” after research by the district government. The head of the task force is Tian Zhong, a member of the Standing Committee of the Bishan District Committee and Deputy District Mayor in charge of the district government office. The deputy heads are Hou Yongmei, Director of the District Finance Bureau, and Han Yan, Director of the District State-owned Assets Center.
Furthermore, the notice reveals that the task force office is located in the District Finance Bureau, responsible for coordinating the daily work of the task force. Personnel are drawn from various units such as the District Finance Bureau, District State-owned Assets Center, District Tax Bureau, and District Audit Bureau to work in the task force office, focusing solely on the “smashing pots and selling iron” work.
The task force is responsible for coordinating the “smashing pots and selling iron” work in the entire district, including formulating work plans, defining the scope of implementation, determining asset packages, establishing pricing mechanisms, improving reward and punishment measures, promoting project implementation, conducting policy propaganda, and other related work.
According to information obtained from the staff of Bishan District Finance Bureau by Hunan Daily, the “smashing pots and selling iron” task force has already begun operations.
Another document titled “Strict Implementation Plan for ‘Smashing Pots and Selling Iron’ Requirements” issued by Delingha City, Qinghai Province, has also garnered widespread attention in the market.
According to a report by Jiemian News, the document was published on the government website of Delingha City, Qinghai Province on August 1, 2023, emphasizing the need to ‘smash pots and sell iron’ to overcome difficulties and further tap into existing asset potential through various means.
Since 2023, local government meetings and documents have repeatedly mentioned the term “smashing pots and selling iron.”
The government of Zhuozi County, Wulanchabu City, Inner Mongolia Autonomous Region, mentioned in its 2024 government work report released in February of this year that Zhuozi County utilized “smashing pots and selling iron” to resolve debts in 2023.
Additionally, the government work report of Wuhai City, Inner Mongolia, also addressed the situation of using “smashing pots and selling iron” to resolve government debt risks when outlining the main tasks for 2024.
Regarding the establishment of “smashing pots and selling iron task forces” in various places, an article published by Netease on August 28 pointed out that the rationale behind smashing pots and selling iron lies in the symbolic gesture it conveys to superiors and subordinates, rather than the actual monetary gains. It also mentioned that the choice of smashing pots and selling iron may have cultural connotations that appeal to leadership preferences.
Another article titled “Debt Resolution through ‘Smashing Pots and Selling Iron’ – Whose Pots are Smashed?” explained that “smashing pots and selling iron” refers to smashing pots, selling scrap iron to raise money, which in official terms is known as “debt resolution,” involving raising funds to repay local debts.
The article further questioned whether the practice might lead to the misuse of high-quality state-owned assets under the guise of debt resolution.
As early as 2019, Chinese authorities have issued multiple notices instructing various levels of government to tighten their belts and prepare for tough times ahead. In March 2023, Liu Kun, Minister of Finance of the Chinese Communist government, emphasized that “government austerity is not a short-term measure but a long-term policy to be adhered to.”
In March this year, 14 finance directors from local governments of the Chinese Communist Party disclosed information regarding local debt resolution efforts. The Finance Bureau Director of Gansu Province mentioned the debt situation in the province and outlined measures for tightening spending and raising funds through “smashing pots and selling iron.”
Amid a significant decline in income from land sales for local governments and a faster growth in non-tax revenue, the Ministry of Finance of the Chinese Communist Party reported that national tax revenue showed a decline in the first half of 2024, while non-tax revenue increased by 11.7%. Non-tax revenue includes administrative service fees, fines, and other sources.
Moreover, last month, the Chinese Communist Party announced plans to deepen fiscal and tax reforms, expand local tax sources, and appropriately increase local tax revenue management authority. In response to this, a professor from the Moore School of Business at the University of South Carolina, Xie Tian, expressed concerns to Dajiyuan, stating that the empowerment of local governments might lead to significant tax increases, burdening the people and shifting pressure from the government’s deficit onto the citizens.