China Power

China’s Christmas Spending Binge

Government agencies in China still have hundreds of billions to spend this year. How will they do it?

There are two things I want to talk about that have recently been being talked about a lot in China. The first is the wave of young people that have been taking the country’s civil service examinations. The second is the fact various provincial governments have to spend an estimated 3.5 trillion yuan ($550 billion) by the end of this year.

In November and December each year, various state organizations hold their civil service exams. There has been a surge in applications this year, with one “office staff” position in the customs office apparently attracting more than a thousand applicants per vacancy.

I spoke to one government analyst who explained why that might be. According to him, certain civil service jobs are seen as having a higher status than others, and although the salary might not be high in a particular position, there are often other perks, such as housing (something that has become increasingly attractive with the soaring property prices in some areas). The second reason for the jump in applications is that civil service jobs are seen as relatively “relaxed,” with fewer constraints, which in turn provides opportunities for side incomes. And finally, many of China’s private enterprises are starting to struggle. With state-run enterprises difficult to get into, civil service jobs therefore seem like the answer to many young people.

But I’ve also been hearing a lot of criticism of the civil service exams. One of the main ones is the differing standards among government organizations. Another complaint has been that almost every administrative department in the various ministries also requires their staff to be members of the Chinese Communist Party (CCP) or the CCP’s youth wing. In addition, they want applicants to possess very specialized skills, such as accounting or weather forecasting.

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Yet even if young people are unhappy about these “criteria,” they can’t be too picky – if they don’t apply, hundreds of others will. The problem now is that many young people are more interested in the position than the work that their department does, which surely doesn’t bode well for the future.

Tied to this issue of civil service applications is that issue other issue I mentioned. Various government-linked media have been reporting that government bodies still need to spend a total of about 3.5 trillion of their budgets by the end of the year. With this in mind, many young people are hoping that these agencies will decide to use some of this spare cash on benefits for employees. One local government in the southwest of the country, for example, forked out for trench coats for its employees.

Spending money isn’t a crime (well, usually). And many of the European countries currently embroiled in the financial crisis there would no doubt love to be in a position where they feel obliged to spend more. But there seems something wrong with a system that incentivizes wasteful spending by cutting budgets for those departments that don’t spend everything in a given year, rather than saving it.

Still, if you’re a civil servant, it must be hard to resist these temptations.