In the current economic environment, the tension of local finances is becoming increasingly prominent, and many places are forced to tighten their belts to live. Although this kind of fiscal austerity policy can help control spending and reduce risks in the short term, the ripple effects and effects of this policy cannot be ignored in the long run. In this article, I will briefly analyze the possible impact of such a policy from three aspects.
First, the pace of infrastructure construction has slowed down, and the pulse of the economy has been blocked
As fiscal pressure mounts, the state will take back the right to approve infrastructure projects in some areas, and these regions will no longer have the power to build new local projects. It is reported that in order to control local fiscal expenditures, the state will withdraw the right to approve infrastructure construction in 12 provinces with high debt risks, including the three northeastern provinces and the three southwestern provinces, namely Guangxi, Guizhou and Yunnan, the three northwestern provinces, Gansu, Qinghai, Ningxia, Inner Mongolia, and the two municipalities directly under the central government of Tianjin and Chongqing. In the future, these places will no longer be allowed to build new local projects, such as interprovincial highways, railway stations, subways, power plants, etc., and can only undertake specific infrastructure projects granted by the state.
This not only means that the relevant industrial chain will be impacted, but more importantly, the role of these infrastructure projects in stimulating the local economy will be greatly weakened. A large infrastructure project can often drive hundreds of millions or even billions of investment, creating a lot of jobs and tax revenues for the local area. However, under fiscal austerity, these opportunities and tax revenues may disappear with them, which is undoubtedly a huge blow to regions that rely on infrastructure to drive their economies.
Second, the adjustment within the system, the service capacity is facing a test
In order to alleviate the financial pressure, many localities** have begun to reduce the establishment of the system, including the elimination of non-staff personnel, the reduction of career establishments, and the streamlining of the civil service. Since the beginning of this year, Heilongjiang, Hubei, Hunan, and other localities have successively reported that they will carry out the work of removing non-staff personnel, and Harbin has demanded that the municipal organs remove 20 percent of the non-staff personnel every year and complete the dismissal within five years. Yongzhou Daoxian County, Hunan Province, reported that a total of 1,038 non-staff personnel who had been dismissed in the county were re-employed, and the efforts were very large.
Also starting this year, a number of provinces across the country have started experimenting with the reform and abolition of public institutions with small populations, that is, public institutions with a population of less than 100,000. For example, Heilongjiang reported that in the next year, 2,735 public institutions will be streamlined, and 8 institutions will be recovered30,000, along with Heilongjiang into the pilot provinces of Qinghai, Shanxi, Hunan, Anhui and other provinces.
Although this measure can reduce fiscal spending in the short term, in the long run, it may lead to a decline in service capacity. The removal of non-staff personnel may affect the normal operation of the ** department; The abolition of the establishment of undertakings may weaken the capacity of public services in certain areas; The downsizing of the civil service may reduce the administrative efficiency of the civil service. These changes may have a negative impact on the image and credibility of **.
Third, public welfare has shrunk and people's livelihood and well-being have been damaged
Another obvious effect of austerity is the decline in public welfare. In the case of limited fiscal revenue, local governments may prioritize basic public services, such as pensions and health insurance, while reducing investment for some marginal benefits for which local governments are responsible.
For example, the operation of the public transport system, which is an important part of the city's infrastructure, often requires local financial support. However, in the case of financial constraints, the quality of service of the bus system may be affected or even suspended. According to the first statistics, the bus suspension events in the past two years have been staged all over the country, from Zhoukou in Henan, Huludao in Liaoning, to Huangshi in Hubei, Hengshan in Hunan, without exception is not an area with greater financial pressure. This will not only affect the mobility of citizens, but may also have a negative impact on the image and development of the city.
In the face of the wave of Chinese young people fleeing big cities and buying houses in small and medium-sized cities such as Hegang in the past two years, I can only remind you that the infrastructure of many small and medium-sized cities looks perfect and livable, and it may only be because the wave of infrastructure in our country has just gradually stopped, and in a few years, the consequences of aging infrastructure may slowly appear, and in the end, it may be the helpless choice of Chinese young people to flee back to Tokyo like Japanese young people.
Summary and outlook
From the impact of the infrastructure economy to the reduction of the establishment of the system, to the decline of social and public welfare, these all reflect the difficult choices of local governments under the fiscal austerity policy. We have also seen that some places have taken a range of measures to deal with fiscal pressures. For example, some places** have begun to explore innovative solutions, such as adopting more market-based mechanisms to provide public services and bringing in private capital to participate in infrastructure construction. These measures will help to reduce the financial burden and improve the level and quality of public services.
In addition, we should also recognize that fiscal pressures cannot be explained by a single factor. It is affected by a variety of factors, such as slowing economic growth, aging population, environmental pollution, etc. Therefore, we need to comprehensively consider various factors and formulate comprehensive and scientific policies to promote the sustainable development of local finances and the stable growth of social economy.