China Snippets – Collection #1

Some events from the last week.

View from China with an Austrian School of Economics Perspective

Here are a few events which took place in China last week which probably did not get much coverage in the West. It’s a fair guess that the first two are linked to the government’s empty coffers.

1) Guangzhou Mayor sacked for chopping down trees.

A Banyan tree

Now former Guangzhou Mayor Wen Guohui was removed from office, together with the local Party Secretary and a number of other staff. The alleged reason? They were faulted for having a patch of 100-year old banyan trees chopped down. While running a substantial deficit, the city of Guangzhou spent 40 million yuan to have 3000 trees cut down and replaced with younger, “more attractive” trees. Allegedly a group of enraged locals made their way to Beijing to complain. China has strict laws protecting trees. The government faulted the deposed officials for lacking respect for the environment, as well as for wasting state funds.

2) Several provinces notify civil servants of a 20-30% salary reduction.

Thanks to the economic damage created by the zero-Covid regime, money is tight. All Chinese provinces except Shanghai are running deficits. What easier way to save money than by simply slashing salaries? Several provinces, including Shanghai, Zhejiang, Fujian, Jiangsu and Guangdong have apparently done just that. They announced internally that the salaries of civil servants would be reduced by 20-30% with immediate effect. Most government offices are notoriously overstaffed, with many having little to do. It is no rarity to encounter cases where people continue to collect salaries decades after having stopped showing up at their government office. So is the government’s solution to get rid of this unnecessary overhead? Of course not. Far easier to simply cut all salaries by 20-30%.

3) 605,652 people quarantined in Shaoxing, Ningbo and Hangzhou.

Due to 200+ positive PCR test results, 605,652 people were quarantined for two weeks in three cities in Zhejiang Province. Of these, 62,409 were sent to hotels, 39,390 were quarantined at home, and 503,853 were subject to home quarantine light. The latter category means that you can leave your home, but not your housing compound.

The outbreak allegedly started at a funeral held near Shaoxing. This is an enormous number of people to pull out of the economy. Working from home might be fine for some white collar positions, but those working in manufacturing plants presumably won’t be able to accomplish much from home. Rumor has it that a number of government officials pointed out the economic damage caused by such measures.

4) Bitcoin mining contract declared invalid by a Beijing court.

A Beijing court denied a petition by a Beijing demanding payment of 278.16 bitcoins based on a contract with a company carrying out Bitcoin mining. As justification, the court asserted that the contract is void “because it undermines social and public interests.” The plaintiff had supplied significant financing to the operation. While one can argue that his lawyer made a poor decision to demand payment in crypto instead of in terms of goods, the decision sets an extremely bad precedent, since it completely lacks a legal basis. Does this now mean that courts only enforce contracts the government approves of?