The “Yuekang Code” in Guangdong Province will be discontinued on February 16, 2023, but the three-year “clearing” has made the CCP’s local financial debt even heavier. The picture shows the Guangzhou subway staff removing the COVID-19 health code poster on December 7, 2022. (CNS/AFP)
[The Epoch Times, February 18, 2023](Comprehensive report by reporters Li Siqi and Wang Jiayi of the Epoch Times special department) The “Yuekang Code” used in Guangdong Province for epidemic control was suspended at 11:00 on February 16, but the local government The topic that the epidemic prevention expenditure in 2022 will be as high as 71.139 billion yuan (about 10.7 billion U.S. dollars) is still fermenting on the Internet. Political commentators believe that the implementation of the three-year “clearing” policy has made the already difficult CCP’s local financial debt even heavier.
The “Yuekang Code”, which has been compulsorily used as a “Guangdong Provincial Pass” for nearly three years since the beginning of 2020, officially ended on February 16. Some Chinese online self-media said that the “Yuekang Code” has been discontinued, but the cost of epidemic prevention in Guangdong in 2022 is so high. While “reversing the history”, we have to ask how much China spent on epidemic prevention and control in 2022 .
The 2023 financial budget report of Guangdong Province was released at the end of January, showing that the funds for epidemic prevention and control were 71.139 billion yuan; in contrast, the funds for people’s livelihood protection in Guangdong Province were 80.56 billion yuan (about 12 billion U.S. dollars), of which The investment in hospitals and improving medical and health service capabilities is only 4.708 billion yuan (about 700 million U.S. dollars), which is less than 7% of the epidemic prevention expenditure. Compared with the 45.376 billion yuan (about 6.8 billion U.S. dollars) in 2021, Guangdong’s 2022 epidemic prevention and control funds have increased by 25.763 billion yuan (about 3.9 billion U.S. dollars), an increase of nearly 40%.
According to the Chinese financial media “Caixin”, 17 of China’s 31 provinces, autonomous regions, and municipalities excluding Hong Kong and Macau have disclosed their epidemic prevention expenditures for 2022, but the statistics are not uniform. Second only to Guangdong Province are Zhejiang Province and Beijing, with epidemic prevention expenditures of 43.509 billion yuan (about 6.5 billion U.S. dollars) and nearly 30 billion yuan (about 4.5 billion U.S. dollars) in 2022, respectively.
Ou Kai, a political commentator living in Japan, told The Epoch Times on February 16: “The local government’s posting of the province’s epidemic prevention account itself has a sense of “passive resistance” by the provinces.”
He said: “After the local tax bureau was completely abolished in 2017, and all taxes were collected by the central government, the local financial power was greatly reduced, but the local general public expenditure items did not decrease at all. The debt problem of local governments is already very serious. By doing so, the government undoubtedly increased the debt burden of local governments.”
“In addition, the three-year ‘clearing’ policy has caused huge expenditures of local governments and social security funds. The transfer payment from the central government is urgently needed, but the central and local governments know that this is impossible. Now the CCP at all levels The operation of the government itself has started to have problems, and it is estimated that many local governments, especially the city/county governments in the central and western provinces, have actually gone bankrupt.”
China’s local government debt is high
The economic strength of Guangdong Province is at the forefront among Chinese provinces. As of 2022, the total GDP of Guangdong Province has ranked first among all provinces in China for 34 consecutive years. The balance of local government debt in Guangdong Province is currently also ranked first in China, and the official debt ratio (debt balance/comprehensive financial resources) has been It reached 116.8%, approaching the internationally accepted debt rate warning line of 120%.
The epidemic prevention expenditures of local governments of the Communist Party of China mainly come from general public budget expenditures and medical insurance funds, while general public budget revenues and government fund revenues are the main sources of income for local governments.
In the general public budget of Guangdong Province in 2022, the income item is 1.33 trillion yuan (about 0.20 trillion US dollars), an increase of 0.6% year-on-year, and the expenditure item is 1.85 trillion yuan (about 0.28 trillion US dollars), a year-on-year increase of 1.6% %. Subtracting the two gives Guangdong’s general public budget deficit of 523 billion yuan (about $78 billion) last year.
In terms of government funds, the income of Guangdong Province in 2022 fell by 38.8% year-on-year, mainly due to the sharp drop in income from land transfer fees. The government-managed funds accounted for a deficit of 339.1 billion yuan (about 51 billion U.S. dollars).
Therefore, it can be inferred from the official data released by the CCP that the fiscal deficit of Guangdong Province’s general public budget and government funds in 2022 will total 862.1 billion yuan (about 129 billion U.S. dollars).
At the end of 2022, the debt balance of Guangdong Province was about 2.51 trillion yuan (about 0.38 trillion U.S. dollars), and it was one of the four provinces with a debt balance of more than 2 trillion yuan (about 300 billion U.S. dollars). The remaining three provinces were Shandong, Jiangsu and Zhejiang.
The Budget Department of the Ministry of Finance of the Communist Party of China released the “Local Government Bond Issuance and Debt Balance in December 2022” on January 29, stating that by the end of December 2022, the debt balance of the local government of the Communist Party of China will be 35 trillion yuan (about 5.4 trillion U.S. dollars) ), the scale of interest payments increased by 20% year-on-year to 1.12 trillion yuan (about 168 billion U.S. dollars), surpassing the trillion mark for the first time. And the 35 trillion yuan debt balance is usually referred to as the explicit debt of local government debt, and does not include the implicit debt owed by local urban investment companies on behalf of local governments.
According to Yuekai Securities’ analysis of the financial situation of the CCP’s local governments in 2022, the financial resources of some local governments have been severely impacted by the epidemic, and their debt ratios have risen sharply. As of the end of 2022, the local government debt ratio of 17 provincial-level administrative regions has exceeded the warning line of 120%. Among them, Tianjin has the highest debt ratio at 295.7%, followed by 173.9% in Jilin Province and 171.9% in Yunnan Province.
“Clearing” the cost of epidemic prevention is huge
The Guangdong Provincial Finance Department once announced the use of funds for epidemic prevention and control in 2020, claiming that 615 million yuan (about 90 million U.S. dollars) of it was used for nucleic acid screening, fever clinic screening expenses, and treatment expenses for epidemic patients; 11.948 billion yuan (about 90 million U.S. dollars) 1.8 billion US dollars) for the supply of prevention and control materials during the epidemic; another 10.082 billion yuan (about 1.5 billion US dollars) is used for epidemic prevention research.
The report of the Guangdong provincial government on the implementation of the 2022 budget and the draft budget for 2023 has a brief description of the epidemic prevention expenses in 2022, but does not list the specific allocation of funds. Officials claim that 71.139 billion yuan will be used for necessary expenditures for epidemic prevention and control, such as vaccination, nucleic acid testing, and temporary work subsidies for medical personnel, to improve Guangdong’s ability to handle and prevent the epidemic, to support epidemic prevention in other provinces and cities, and other related epidemic prevention. cost.
While Guangdong Province and other local governments spend money on purchasing nucleic acid testing reagents and supporting consumables, companies related to nucleic acid testing and other epidemic prevention projects will become financial winners in 2022.
For example, the 2022 annual performance forecast released by Wuhan Mingde Biotechnology Co., Ltd. (002932) on January 31 shows that the net profit attributable to shareholders of listed companies has increased by as much as 225.50% to 253.80% year-on-year. The first two statements in the notice on the reasons for the performance change are that due to the outbreak of the epidemic in China, the number of nucleic acid tests for epidemic prevention and control in various places has increased, and the CCP officials have added antigen testing as a supplement to nucleic acid testing since March 2022.
The 2022 annual performance forecast of Guangzhou Wanfu Biotechnology Co., Ltd. (300482) shows that the net profit attributable to shareholders of listed companies will increase by 80% to 100% year-on-year. The first explanation for the sharp increase in performance is that in 2022, when the epidemic broke out in China, the market demand for antigen products in the domestic market and Hong Kong market will increase in stages.
In addition, Jiangsu Shuoshi Biotechnology Co., Ltd. (688399) announced a profit increase of 43.31% to 71.80% year-on-year, and Guangzhou Daan Gene Co., Ltd. (002030) a year-on-year increase of 40.95% to 60.30%.
Responsible editor: Lian Shuhua#