China Is Truly Out of Cash! PLA and Civil Servants Buckle, Troops Start Scrambling for Leftovers

People in China generally eat with chopsticks rather than their hands. The Chinese soldiers shown here are eating this way while rushing to film a propaganda video about avoiding food waste. The Chinese Communist Party, or CCP, has long treated military spending as one of its most protected priorities. But as the economy continues to weaken, the push to cut spending is reaching the military too. The Chinese military has recently stepped up its campaign to build a more frugal force. PLA Daily reported on October 24th that officers and soldiers attending a specialist training program at an Air Force unit received visibly used briefcases. Staff said no new bags would be issued. Everyone would use old ones and return them afterward for future use. The report said the unit buys the bags centrally, stores them together, issues them before meetings, then collects, cleans, disinfects, and reuses them. Every bag is recorded in an inventory, and discarding each one without permission is strictly prohibited. Another PLA Daily report, published October 26, said a detachment of the People's Armed Police in Henan was repairing and reusing old parts, even salvaging screws. It was strictly cutting non-combat spending. Teams were also sharing spare parts. Even military funds, reserved for essential needs, are now subject to cuts. Tang Jingyuan, a current affairs commentator based in the United States, said that the downturn had spread from party and government agencies to the military, whose funding had once been guaranteed. That, he said, explains the new emphasis on frugality. He called the worsening strain on government finances an undeniable result of the downturn and the main underlying cause. Corruption, he added, is another reason military funds are tight. Tong said fewer military members of the Central Committee attended the recently concluded Fifth Plenum because so many corrupt generals had been brought down. He said assets seized from any single general could easily exceed the entire budget for briefcases and similar supplies. In his view, collecting old briefcases is partly a political show. Official Chinese figures also offer some clues. A draft budget submitted by the Ministry of Finance to the National People's Congress in the first quarter put this year's military budget at about 1.9 trillion yuan. That's a 7% increase from a year earlier. Observers say military spending is still rising, but its growth had slowed over the past four years to its lowest rate since 2022. They attribute the slowdown mainly to a lower economic growth target and the People's Liberation Army's anti-corruption campaign. Premier Li Qiang previously announced that this year's GDP growth target would fall to 4.5%, down from about 5% last year. That would be the slowest growth in roughly 30 years. Annual increases in China's military budget fell to single digits in 2016, and have stayed there since. From 2016 through 2021, the increases were 7.6%, 7%, 8.1%, 7.5%, 6.6% and 6.8% respectively. Growth rose to 7.1% in 2022, then held at 7.2% from 2023 through 2025. Thank you very much. China is the world's second largest military spender, behind the United States. Its military budget this year is about one quarter of the American budget. Rising geopolitical risks, including escalating conflict in the Middle East and instability in the Taiwan Strait, has fueled expectations of a larger increase, but Chinese state media outlet Global Times said this year's 7% increase was in line with expectations. China's GDP figures have long faced serious questions from specialists. Officials recently reported third-quarter growth of 4.5 percent. But with the housing market still falling and consumer spending largely stalled, some Western research firms estimate full-year growth at just 3%. Some put it near zero. Analysts warn that economic statistics lack transparency, while controls on negative economic commentary and data are still tightening. That makes the economy harder to assess and could also affect policy decisions in Beijing. China's economy faces several pressures this year. The property market remains weak. Companies are caught in price wars, and households are reluctant to spend. Growth increasingly depends on exports. Beijing set a full-year growth target of 4.5 to 5 percent. On the 19th, officials reported third-quarter growth of 4.5 percent from a year earlier. That was slightly above the 4.4 percent market forecast and 0.1 percentage point higher than in the second quarter. It also reached the lower end of the official annual target range. Officials attributed the pickup mainly to export growth, while acknowledging that domestic demand remained weak. Some independent research firms believe domestic demand in China is far weaker than official figures suggest. Rhodium Group co-founder Daniel Rosen said he could find no comparable economy of this size with such serious problems in its overall economic data. Rhodium estimates growth of about 0% for all of 2026. It argues that 4.5% growth is impossible when retail sales are weak and fixed asset investment has fallen more than 7% from a year earlier. Rosen said the official numbers simply do not add up. In 2015, he published a comprehensive study of the reliability of Chinese economic statistics. At the time, he found that Beijing had understated its own growth. Research firm Capital Economics uses its own data and estimates China's third-quarter growth at just 2%. It attributes the weakness mainly to a slowdown in industrial activity, especially construction and petrochemicals. Its model uses hundreds of less prominent official data series, including intercity passenger traffic and industrial electricity use. The firm says those figures are harder to manipulate. Julian Evans Pritchard, a China specialist at Capital Economics, said the gap between its estimates and official figures widens when Beijing struggles to meet its growth targets. Similar gaps appeared during the 2008 global financial crisis, the 2014 property downturn, and the COVID pandemic. He said China still reported growth of 2 and 3 percent during pandemic lockdowns. He said China could improve trust in its economic statistics by dropping annual growth targets. That would remove an incentive for local officials to inflate numbers. When growth figures are closely tied to policy targets, he said, the objectivity of official data becomes easier to question. The reliability of China's economic data has long been questioned. Under CCP General Secretary Xi Jinping, the government has tightened controls on negative economic commentary and financial data. Some figures once available to researchers and investors are no longer published. The National Bureau of Statistics, for example, does not release detailed quarterly GDP breakdowns or monthly labor force participation rates. That makes it harder to cross-check official statistics against other indicators. Observers say widespread falsification of economic data means this year's stated 7% increase in military spending could also be far from accurate. They say information emerging from the military points to a serious shortage of funds, even in an institution the CCP heavily relies on. Public universities in China, including Peking University, have also issued notices demanding concrete spending cuts. Southern Weekly reported on October 28 that Peking University had issued austerity rules on September 1. They strictly ban departments from holding meetings at 21 scenic destinations, including Maowu Tai, Lake Tai, and Huangshan. They also prohibit publicly funded tourism disguised as training. Peking University student Yu Tong told the media that the austerity push was real. The student had heard that travel budgets had been cut and that the university might really be running short of money. Days later, the Planning and Finance Office at Beijing Forestry University issued its own spending cut guidelines. They included detailed rules, no flowers or plants at meetings, no custom backdrops, No fruit and no branded gifts or souvenirs. Staff should prioritize cheaper airline tickets. University meetings and training should generally take place on campus. Southern Weekly said the call for austerity was not new. The difference now is the push to enforce it. A doctoral student at Beihang University told the paper that faculty meetings used to be held in rented conference spaces at five-star hotels. Increasingly, they're held in offices near campus. An associate professor at a teacher training university in eastern China said staff gifts for National Day and the Mid-Autumn Festival were combined in 2026. Teachers received household supplies, including two rolls of toilet paper and a large handful of toothbrushes. There were so many toothbrushes that one teacher joked a single person would take forever to use them all. A report also said some universities are now openly discussing their funding problems. Wu Kai, head of logistics at Sichuan University in Jiangsu, said saving money was a matter of survival. Yang Hao, an associate professor at an elite university in western China, said research departments even expect teachers to use personal connections and their own money to cover funding gaps. The pressure now goes well beyond spending a little less. He and his colleagues can only cope with the search for funding while waiting to see what happens. Someone filmed discarded military training uniforms being collected for reuse at a weigh station at Qingdao Agricultural University. Online commentators criticized the practice. One said the uniforms cost a few dozen yuan, but were sold to new students for 100 to 200 yuan, with payment required in advance. Another said the pile represented parents' hard-earned money and questioned how a university could be so short of funds. Mr. Wang, a math teacher at a university in Guangdong, told the media, that the pandemic marked a turning point. Funding suddenly fell sharply in 2020. He added that universities across the country face the same problem, because public finances were now so tight. Mr. Wu, a source familiar with public spending in Linyi, Shandong, also described when conditions began to deteriorate. He said local government spending had worsened every year since 2022. At the local urban management center, he said, workers without permanent government-funded positions had gone unpaid for nearly a year. Many resigned, leaving a serious staffing gap as experienced workers left without replacements. Mr. Wu also said financial problems had left many facilities without the maintenance that a city government was supposed to fund. Problems such as street electrical cabinets with doors that could not close have been left unresolved for a long time. Fitch Ratings expects the official budget to show fiscal revenue falling by another 0.6 percentage points as a share of GDP, with local governments under the most pressure. It also expects Chinese government debt to rise to 75% of GDP. With weak revenue limiting public finances, Fitch puts China's fiscal deficit at 7.3% of GDP in 2026. Analysts say the downturn following China's property crisis has severely damaged government finances. They say the CCP has responded by seeking revenue and taxes from multiple sources. That includes reviewing wealthy people's tax records going back 20 years and stepping up taxation of their overseas assets. In their view, officials can no longer afford to worry about appearances. They see these measures as signs that the economic crisis is far worse than than it appears. The austerity push also extends to private businesses, including leading internet companies. On October 26, Business news outlet 36KR published an article by business commentary site Shenguangshanye. It said ByteDance planned to replace office chairs in stages. Human-scale chairs that once became standard and retailed for about 8,000 yuan would be replaced by Chinese-made models priced at 2,549 yuan. The company would also stop giving Chinese New Year cash gifts starting in in 2026. ByteDance employee Xu Yifan told a reporter that the company was cutting spending and replacing chairs with cheaper ones. Cash gifts had already been gone for several years, along with New Year gift boxes and benefits for other holidays. Fang Tao, who had worked at ByteDance for a year, told non-state media that even the toilet paper had become thinner. He had never received a cash gift because the benefit was cancelled before he joined. Free taxi rides were still available to encourage employees to work overtime. The Shenguang Shangye article also said leading drone manufacturer DJI stopped reimbursing late night taxi fares for overtime work in January 2025. It closed its gym and other facilities. Kuaishou, Tencent and Baidu have also cut spending on free meals, housing allowances and other benefits. Kuaishou's 2024 annual report showed administrative expenses falling 17% from a year year earlier, mainly because of reductions in employee benefits. The article said talent was Let me say this. A lot of people working at major tech companies are miserable. I cannot say 100%, but at least 90% are really struggling. I used to work at Maituan. My former classmates all work at big companies, including Huawei, Tencent, Alibaba, and ByteDance. They all complained to me that they wanted to quit. A vlogger who previously worked at a major tech company described the strain. Someone is always crying in the women's room at big internet companies. When I worked at one, I often heard muffled sobs from the stalls. Sometimes someone had just been scolded by a boss. Sometimes it was a bad performance review. Sometimes they had worked past midnight so often that they broke down. One minute, someone might be giving a normal presentation in a meeting. The next, she's locked in a restroom stall, crying. The sobbing is always quiet and restrained, as if she's trying to swallow her pain. We tend to think crying at work is unprofessional and embarrassing, so we keep our voices down. We don't want others to think we can't cope. Afterward, we wash our faces and touch up our makeup and hide our swollen eyes. Then we lower our heads, return to our desks, and keep working. It becomes absurd. The restroom ends up being the most honest place in the company. An industry insider said benefit cuts at major internet companies and public institutions show that the same crisis has spread from workers at small businesses to powerful companies at the state sector. He said they also show that officials have no effective response as the economy worsens. With party, government and military agencies and major companies all cutting back, he sees a sharp decline in spending power. In his view, the downturn is still roughly halfway through and far from its bottom. He warned that weaker consumption could deepen dependence on exports and worsen trade imbalances. If the United States and Europe impose higher tariffs on Chinese goods, excess output could be pushed back into the domestic market. That could deepen a deflationary spiral and trigger a larger social and economic crisis. The fiscal crisis is also affecting public sector employees, and anxiety is spreading among Chinese civil servants. A civil servant in Hebei said in a video. I recently got together with friends from state-owned companies, government agencies, and public institutions. We all felt that money had become tighter this year. In the past, we had only heard about financial problems and spending pressures at the county and township levels. We did not really feel them ourselves. This year, it has reached us. Transportation allowances, phone allowances, and holiday payments are gone. Tier-based bonuses and performance bonuses that used to be paid quarterly have been pushed back to year-end. The most upsetting part is that heating allowances have been cut in half. Over dinner, we accepted that this year would be difficult and wondered whether next year would improve. I happen to have just read an article by the Hebei Department of Finance in China State Finance. It explained clearly why the public sector is having to cut back. The article focused on three main issues, how to consolidate revenue, review spending, and operate with tighter budgets. The reform centers on bringing all revenue under one budgeting system. Every department's income must be must be included in its budget. Funds from other sources other than government allocations, along with existing cash reserves, must be used first. The vlogger compared public finances to a large family. The parent manages the main accounts, and the children ask for living expenses each year. The children also have their own income, but prefer to save it to improve their lives while spending the family's money. When money was plentiful, the parent did not bother checking. Now the rules are changing. A child asks for 10 million yuan. The parent points to 3 million yuan already saved and says to spend that first. Once it's gone, the child asks for 7 million yuan. The parent then counts the child's annual income of 1 million yuan and provides only 6 million yuan. In that comparison, the parents' money represents government allocations. The children's earnings represent income that agencies and public institutions receive from training fees, testing fees, renting out facilities, and other sources. Financial statistics from Hebei show that deposits held by government agencies and organizations increased by 55.1 billion yuan less in the first three quarters than in the same period last year. They also recorded zero growth for two consecutive quarters. The vlogger said this showed institutions were being forced to draw on their last reserves. The spending rule is to plan the work first, then assign the money. Projects outside the approved project database receive no budget. Previously, agencies would spend every yuan of the prior year's funding, then argue they were short of money, to secure a larger budget the next year. An agency that spent 10 million years last year might demand 11 million yuan this year, only deciding what to do after receiving the money. Now it first must explain what it plans to do, how it will do it, What it will cost and when it will finish. Projects enter the database only after strict review. Underdeveloped or non-urgent proposals may be rejected outright. Funding depends on this year's work, rather than last year's spending. That's zero-based budgeting. Budget execution figures also show the financial strain. Hebei province issued a budget report for January through August. When two-thirds of the year had already passed, provincial-level general public service spending had reached only 44% of its annual budget. This money covers the operating costs of government agencies and public institutions. Spending was clearly behind schedule. The finance department's article also set out how the cuts should work. It called for spending lists identifying prohibited and restricted items. Prohibited items receive no funding, while restricted items face strict controls. Departments will also be assessed on their cost-cutting efforts, with the results tied to their budgets. In other words, wasteful spending this year could mean a tighter budget next year. The vlogger concluded that austerity was becoming a lasting policy. Public sector employees, he said, should prepare for a long period of tighter budgets. Observers say the military is tied to the CCP's hold on power, and that its leaders rely on the principle that political power comes from an armed force. They argue that the military's public calls for austerity show how deeply the economic crisis and financial pressures are. With social tensions rising and relations between officials and the public worsening, they warned that instability within the military could undermine the coercive force the regime depends on. In their view, that could open the way to a sudden collapse.