China's New Officials: Beijing Asks People to Pay

Beijing needs money. The economy is stagnating, debt is rising dramatically and China’s civil-military industrial and technology policy is drawing large sums. In order to generate further income, the People's Republic is now expanding its tax authorities and public order offices like never before. According to the newspaper “Caixin”, the tax authorities alone are planning 24,013 new recruitments for the coming year. Tax officials account for a record 67 percent of all hiring of new civil servants for 2027. At the same time, the total number of planned official recruitments at 35,691 means a decline of six percent, citing the correspondingly recorded entrance exams. How badly the labour market in China is, underlines the influx on the official examinations. A record number of 3.7 million applicants passed the pre-selection for the exam, 2.8 million finally took the exam, reports “Caixin”. This meant that for every vacant civil service position, 74 test participants were included, the highest ratio for nine years. “Fiscal pressure is increasing” For political scientist Minxin Pei, who teaches at Claremont McKenna College in the USA, these are clear signs. Fiscal pressures are clearly increasing, which is reflected in China’s high and persistent budget deficits, Pei told F.A.Z. The recent announcement to collect tax back payments from people with capital gains from abroad is an example of this. To collect more taxes, the government needs more tax officials. By October 22, wealthy Chinese must have paid a new tax on their assets abroad. Otherwise, there are penalties. In some cities with many wealthy entrepreneurs, Einsatzgruppen have been created to track down assets transferred abroad. Probably for this reason, the other big wave of planned new recruitments of Chinese officials affects the area of “administrative enforcement authorities”. More than 28,000 civil servants will be recruited here for 2027. They should strengthen China’s internal stability, but their employers can also be the tax authorities themselves. “Increase in staff may not do much good” “We do not know what is meant by ‘implementation authorities’,” says political professor Pei. He suspects that this includes judges, clerks and employees who are not at the forefront of police work. This could be part of the same effort to strengthen enforcement on tax collection. Pei is skeptical about the measures: “A labor-intensive approach such as increasing law enforcement personnel may not do much for the money invested,” says Pei. What we should keep in mind is the use of advanced technologies in identifying defaulting taxpayers. I am sure that the government is working on this, but does not want to communicate this to the public. In China, meanwhile, it is said that increased recruitment replaces tax officials who retire after a wave of new recruitments in the 1980s. Many experts, on the other hand, are asking more and more openly how the requirements of the power apparatus for the expansion of industry, cutting-edge technology and the military can be met with conventional revenues. China’s tax system generates little revenue from direct taxation of private income compared to other developed countries. And almost every fourth industrial company in the People's Republic is now making losses, according to a study by the German China analysis house Merics. China’s economic policy is not market-oriented, but aims at global dominance and autonomy while foreign dependence on China. Dramatically increased Chinese public debt is now estimated at more than three hundred percent of annual economic output. Between 2013 and 2025, spending on interest payments on debt in the People's Republic increased by 341 percent, calculated the think tank CSIS. The situation of local governments is particularly serious. Interest payments on debt have risen by 16 percent annually since 2014, according to the conference board. Reports of missing or only partially paid salaries in the public sector are multiplied by numerous provinces that bear the bulk of China’s debt. Compared to these sums, Pei estimates the expected tax revenues low. "What the government can take through increased tax enforcement is likely to be insignificant and probably not even reach one percent of gross domestic product ($200 billion)," says Pei. So he does not believe that the government is betting on plugging its budget hole through tax enforcement, “even if this will certainly help”. This means that China’s political priorities – technology and national security – will continue to be funded from existing revenues. “In any case, Beijing has shown that it can put a lot of pressure on the civilian economy to achieve its priority goals,” Pei says. In this sense, despite debt, China is in an incomparably stronger budget than in the Mao era or the 1980s. In addition, Beijing can continue to enforce access to foreign markets through its supply chain dominance and thus generate further export revenues, which China is increasingly dependent on. How long can Beijing’s industrial policy and military technological expansion be sustained in this way? “I don’t think Chinese leaders themselves have a concrete idea of where and when to end or pause their current policies,” Pei responds. Beijing's goal is clear: China less vulnerable to..