To boost economy, China gives bureaucrats biggest pay rise in 10 years

Beijing. Millions of public workers across China received surprise pay increases this week, those affected reported, as Beijing tries to encourage spending to boost the economy.

Altogether, the immediate payment would mean a one-time injection to the economy of between 12 billion and 20 billion dollars if the 48 million people counted as public sector employees were paid under the terms described.

The last time China publicly announced a nationwide raise was in 2015, when the government raised the pay of local officials by more than 30 percent as part of an effort to combat corruption and raise consumers’ purchasing power. .

The State Council Information Office, which speaks on behalf of the Chinese government, did not immediately respond to a request for comment.

This time, the monthly income of bureaucrats increased by an average of about 500 yuan ($68.50), according to people contacted by Reuters or who posted it on social media during the New Year holiday. Some junior government workers reported monthly increases of around 300 yuan ($41).

In many cases, the pay hike was backdated to July and given in a single payment, similar to a bonus, people with knowledge of the matter said. Beijing’s strategy seems to consist of encouraging consumption among people most willing to spendsaid Xu Tianchen, chief economist at the Economist Intelligence Unit.

The widespread raises for teachers, police officers and civil servants were first reported by Bloomberg. The measure was not announced or detailed by Beijing. It was not immediately clear how the raise would be financed, what the total cost would be or the percentage increase in wages.

A teacher and a civil servant in southern China said they received a pay rise of about 10 percent. The amount also varied depending on the economic and fiscal situation of the provincial governments, explained another person familiar with the payments.

Growth goal

Chinese leaders agreed last month to increase the budget deficit to 4 percent of gross domestic product (GDP) this year. This would support efforts to achieve an economic growth target of around 5 percent during 2025 in the world’s second largest economy, despite the drag of a prolonged housing crisis, falling prices and the prospect of higher tariffs on exports to the United States.

Financing with Treasury bonds will increase

China will dramatically increase ultra-long-term Treasury bond financing in 2025 to stimulate business investment and consumer-building initiatives, a senior state planning official said yesterday, as Beijing steps up fiscal stimulus to revitalize the economy. economy.

Special Treasury bonds will be used to finance the two new initiatives, explained Yuan Da, deputy secretary general of the National Development and Reform Commission at a press conference.

The two new initiatives include a durable goods subsidy program, in which consumers can trade in old cars or appliances and buy new ones at a discount, and another that subsidizes large-scale equipment retrofits for businesses.

Households will also be able to choose to apply for subsidies to purchase three types of digital products this year, including mobile phones, tablets, smart watches and bracelets, Yuan said.

The government has approved projects for this year worth 100 billion in the context of major initiatives, he said.

The big programs concern building railways, airports and farmland and building security capacity in key areas, according to official documents.