New Reality: Out Of Money, China's Local Governments Mortgage Hospitals To Banks

Chinese local governments facing cash shortage, mortgage hospitals to banks, rising unpaid wages and bankruptcies, fueling growth in mainland China's legal industry, Chinese auto tycoon exposes severe internal over-competition in the industry, Hainan female official melts and recasts gold, conceals it inside treadmill, New Year's Eve initiatives emerging both domestically and internationally, experts warn of political shifts. It's all covered in today's China Truths. Chinese local governments facing cash shortage, mortgage hospitals to banks. The three-year prolonged pandemic pandemic in China has strained health insurance funds due to extensive nucleic acid testing. Patients at public hospitals are paying 30% of their bills out-of-pocket, with hospitals supposed to reimburse the remaining 70%. However, hospitals' advance payments have led to depleted funds, causing wage issues exemplified by the situation in Suiyan County, Shanqiu City, Hunan Province. On Jan. 25, Mr. Li, a local resident, told NTD television that financial difficulties have driven local governments to mortgage hospitals to banks. According to Mr. Li, banks are now collecting payments, resulting in unpaid doctors. With health insurance funds exhausted, hospitals are shouldering costs. Many, particularly farmers, are unable to afford health insurance, which has increased from 10 to 380 yuan annually. Without income, they cannot pay, and the Health Insurance Bureau lacks funds to support hospitals, leading to a financial crisis. Last year, netizens reported that certain local governments, unable to fulfill financial commitments like salaries and bank interest, have mortgaged assets including hospitals. Independent media disclosed that a county in Weifang, Shandong, mortgaged a public hospital's assets for financing. Mr. Li explained that local governments rely on land finance, buying land cheaply and selling it at higher prices to developers. The three-year pandemic and lockdowns have severely affected businesses, leading to financial hardships for both people and developers, and consequently a fiscal crisis. With industries and the government out of money, civil servant salaries are delayed, sometimes for months, and employees don't dare to protest for fear of dismissal. Mr. He, another resident from Weifang City, Shandong, disclosed financial difficulties in several local governments within Weifang's 12 counties and districts. Civil servants aren't being paid. Retirees haven't received heating fees. Some civil servants are forced to take loans, with the government guaranteeing and covering interest. Salaries have been delayed for three months in some cases, necessitating loans for wage payments. Since 2021, China has seen several collective wage protests in hospitals and among civil servants, who are facing frequent wage delays and multiple pay cuts, despite previously having secure jobs. Rising Unpaid Wages and Bankruptcies Fueling Growth in Mainland China's Legal Industry Currently, China's mainland economy is experiencing a downturn, marked by increasing instances of unpaid wages, unemployment, and bankruptcies. This rise in economic disputes has led to a relative boom in the legal profession. Nanjing lawyer Ms. Li reports a surge in lawyers and litigation, linked to these economic issues, but warns of unsustainable growth in the legal field amid worsening economic conditions. The Jiangsu High Court's data reflects this, showing a dramatic increase in commercial cases in 2022 to 753,000, up more than fivefold compared to previous years. The Economic Observer notes that, besides law firms, few industries have grown significantly in recent years. In Beijing and Shanghai, lawyers observe a pandemic-induced shift in legal focus, with fewer corporate transactions but more bankruptcy, liquidation, and labor dispute cases. Data from China Dissent Monitor highlights a record number of economic protests in 2023, with labor and housing issues predominating. These protests are a response to the economic strain and the difficulties of legal redress, indicating growing public discontent. The economic impact is acutely felt by small and medium-sized businesses, which faced massive closures during the pandemic. By late 2021, millions of these businesses had shut down, and the tech sector experienced significant layoffs. Post-pandemic recovery has been slow, with thousands of rural hospitality businesses closing by late 2023. The private sector, which provides 80 percent of China's jobs, demonstrates the country's declining economic dynamism. Lawyer Wang from Beijing said, the economic issues are linked to the three-year lockdowns. Many regular economic activities were interrupted, leading to problems like broken capital chains and rising economic disputes. The growing number of lawyers shows an increasing demand for legal services. Many around me are feeling the effects of the economic downturn. Lawyer Wu from Guangdong explained that the rise in people taking the bar exam isn't directly due to the economic slump and more disputes, but rather reflects the employment challenges in other sectors. Many are turning to law, as it, like food delivery or ride-hailing services, depends on individual effort. The legal field has become highly competitive, with lower fees and pricing than before. Rights defense activities frequently emerge online. Social media increasingly highlights wage disputes, layoff protests, and project completion demands in China. Data from the Hong Kong-based China Labor Bulletin, CLB, shows 1,199 protests for unpaid wages, mainly in construction and manufacturing, from July 2023 to January 2024. Additionally, 1,011 instances of worker assistance requests, largely for unpaid wages in the same sectors, were recorded. Analysts attribute the preference for protests over legal action in these disputes to the Chinese government's irresponsibility. Dong Baohua, a law professor at East China Normal University, noted that individuals choose online advocacy over legal routes due to high costs and uncertain benefits. This approach is less costly and often more effective than navigating China's time-consuming legal system for labor rights. Involuntarily unemployed individuals often forego claiming low and procedure-heavy government unemployment benefits, opting instead for higher company compensation. During the 2008-2009 financial crisis, unlike the significant U.S. unemployment benefits allocation, China saw a decrease in claims. Dong said that China's unemployment insurance didn't play a role in addressing the economic crisis. Human rights lawyer Yi Ning from Washington, D.C., described China's judicial system as bleak, leaving people feeling helpless and unable to afford high litigation costs. The public understands it is better to turn to public opinion, as China's dark forces fear exposure. Once exposed, they face higher accountability and may reveal significant issues. He added, some of China's labor rights protection laws increasingly favor business owners over workers. Even if legal procedures seem equal, actual rights aren't, and the laws under the CCP's ruling are inherently unequal. In 2024, is China bracing for hard times? Recent years have seen stringent regulation of nearly every civilian industry in China, from catering and tourism during lockdowns to real estate, finance, tech, education, healthcare, and gaming, resulting in widespread salary cuts, layoffs, unemployment, and bankruptcies. Mr. Qi, a Guangxi resident, owned a restaurant pre-pandemic, which shut down during the three-year outbreak, leaving him struggling for a livelihood. There are street stalls everywhere now, selling snacks, barbecues, fruits, and vegetables in abundance. Vendors scatter at the sight of urban management officers. This way of life is exhausting. His only family home has been repossessed by the bank for loan default, leading to its seizure and the freezing of all his bank accounts. Meanwhile, added legal, litigation, arbitration, enforcement, and breach of contract fees have inflated his debt from just over 160,000 yuan to more than 220,000 yuan, approximately US$31,000. He views this as pushing people to the brink. This year, major Chinese real estate firms like Evergrande and Country Garden faced ongoing financial turmoil, and the asset management titan Zhengjie Group declared bankruptcy. The collapse of the middle class, reliant on property and investments, coupled with foreign business withdrawals, led to widespread unemployment, especially among those over 40. A netizen observed that financial schemes target different income groups, from trust funds preying on those with assets over 2 million yuan, about 282,000 US dollars, to lotteries targeting those with just 2 yuan, about 28 cents, sparing no one. One resident namely expressed that most people she knows are gearing up for tough times. There's a prevailing reluctance to spend frivolously. 2023 feels slightly better than the lockdown period in 2022, but everyone is bracing themselves for a challenging 2024. Chinese auto tycoon exposes severe internal overcompetition in the industry. Recently, Zhu Huarong, chairman of Qiannan Automobile, made headlines by publicly calling out rampant and scrupulous competition in China's automotive industry. Speaking at the 2024 Global Partner Conference, Zhu criticized unnamed industry players, saying, this industry is fiercely competitive, leading to reckless statements and unprincipled product advertising. Zhu highlighted how exaggerated and false advertising, such as misrepresenting a car's speed or luxury, misleads consumers and breaches business ethics. Zhu expressed dismay at peers' inflating car values and questioned the industry's integrity. He sees the current competitive state as unsustainable, signaling a volatile future. Despite China's status as a leading market and producer of new energy vehicles, Zhu predicts major changes and is pessimistic about the industry's prospects. He notes that while production nears 10 million units with high market penetration, the sector is plagued by heavy losses and a few profitable brands, evidencing a widening wealth gap. From 2015 to 2018, significant CCP investment led to the emergence of numerous new car factories. However, due to poor quality, many of these vehicles were quickly discarded, leading to so-called electric car graveyards. Additionally, widespread subsidy fraud involving 72 companies and totaling over 9 billion yuan, approximately 1.255 billion U.S. dollars, was reported. Official reports state that the new energy vehicle sector lost several hundred billion yuan between 2018 and 2023, with 400 companies folding by August 2023. The industry struggles extend beyond sales to after-sales service, as evidenced by the closure of over 5,000 4S stores in three years and underperforming sales figures in January 2023. Apart from Zhu's revelations, the sector faces serious issues such as substandard manufacturing. At a recent industry conference, it was reported that 510,000 new energy vehicles and 24.4 GWH about 241,000 tons of power batteries were scrapped by the end of 2022. Among these, lithium-ion phosphate and ternary batteries made up 56.6% and 39.8%, respectively. Moreover, there have been numerous reports of new energy vehicles spontaneously combusting across China, with several incidents already occurring in just January of this year. In the early hours of January 21, at a charging station near the intersection of Yong'an Road and Xiangrong Road in Haikou, Hainan Province, a new energy vehicle ignited while charging, impacting another taxi also charging nearby. Within half an hour, both vehicles were completely engulfed in flames, resulting in significant damage to the charging station. On January 19, social media shared footage of a zero-run C11 new energy vehicle spontaneously igniting on the road, with flames initially appearing from the rear tires and chassis, rapidly consuming the entire vehicle and leaving only its shell. On January 18, in a Walmart parking lot in Jiaxing, Zhejiang Province, a Xiaopeng electric car caught fire beside a charging station, burning down to its shell. A fire erupted on January 14 in a bus parking lot on Liaoning Road in Qingdao. The blaze destroyed eight buses, seven of which were burned down to shells, amid heavy smoke and high flames. Reports suggest the fire was caused by electromagnetic ignition. A year prior, on January 30, 2023, a significant fire broke out in an open area in Fenghuang Village, Tianya District, Sanya, Hainan, where new energy buses were parked. This incident resulted in the destruction of 67 new energy buses, covering an area of about 1,800 square meters. Data from the CCP's Ministry of Emergency Management indicates a 32 percent increase in new energy vehicle self-ignition incidents in the first quarter of 2023 alone, averaging eight fires a day. Xia Yifan, a Chinese social issues expert, said in response to the public revelation by the chairman of Chang'an Automobile about industry malpractices, that it goes against the expected market norms in China. The problems in the new energy vehicle sector are indicative of broader economic issues in the country, including poor manufacturing quality, low levels of technology and management, and cutthroat competition that all contribute to a grim industry outlook. Hainan female official melts and recasts gold, conceals it inside treadmill. On January 25, Hainan Television aired a special anti-corruption program that exposed the corrupt practices of several disgraced officials in Hainan province, including Sun Ying, the former director of the Hainan Provincial Market Supervision Bureau. The program revealed Sun's ownership of multiple properties. In one residence, investigators discovered gold bars that were made from brides she had melted down and recast, concealed inside what appeared to be an ordinary treadmill. This hidden stash was valued at about 6.66 million yuan, about 938,479 U.S. dollars, based on the current exchange rate. The program also shed light on Sun's illegal activities in Ding'an County in 2007, involving her ex-husband and her driver, where she engaged in corrupt practices. In total, Sun amassed illicit gains exceeding 64.6 million yuan, about 9.1 million U.S. dollars, and faced trial at the First Intermediate People's Court of Hainan in September 2023. The revelation of Sun hiding gold bars in her treadmill stirred lively discussions online, with netizens joking about the possibility of accidentally selling used treadmills containing hidden gold. There were also references to past incidents of officials concealing gold in air-conditioning units and water pipes. In another case, Cao Yu, the former president of Hainan Tropical Ocean University, was even bolder in his corrupt practices, storing over 10 million yuan, about 1.4 million U.S. dollars, in cash in his car. Investigators uncovered six large suitcases filled with cash totaling 10.09 million yuan in Cao's underground garage, highlighting the extent of corruption among high-ranking officials in China. New Year's Eve initiatives emerging both domestically and internationally, experts warn of political shifts. The CCP's decision to not recognize Chinese New Year's Eve as an official holiday this year has sparked widespread public dissatisfaction. Adding to the discontent, the Philippines declared February 9, 2024, Chinese New Year's Eve, as a special non-working day to celebrate the Chinese New Year. This move intensified the frustration among Chinese citizens, leading to comments like, it's ironic, even the Philippines has a holiday on Chinese New Year's Eve, and questions about why China doesn't do the same. There's public speculation that the CCP's reluctance to declare Chinese New Year's Eve a holiday is due to the phonetic similarity between New Year's Eve and removing Xi, both pronounced Chu-Xi in pinyin. A recent online report claimed that on February 9, 2024, the use of Chu-Xi in major media and online platforms for publication or commentary would be strictly prohibited. The report suggested that the term Chinese New Year's Eve would be replaced by New Year's Day in official communications. Netizens responded with wordplay in their comments, such as, every New Year's Eve, remove Xi, every family hosts a banquet, disliking Xi. The terms banquet and disliking Xi are phonetically similar in Chinese. There have also been calls for a widespread sharing of happy Chinese New Year's Eve messages on the day itself. Experts cited in the reports interpret these actions as a form of political artistic expression, reflecting public escalating dissatisfaction with Xi Jinping's policies and potentially indicating significant political shifts. Don't forget to leave a comment in the section below to share your opinions on today's topic with us. Make sure to like and subscribe to see more interesting topics from China Truths.