SinoInsight 1
On July 24, the Harbin Social Insurance Bureau in Heilongjiang Province issued an official document on postponing pension payments to the local Industrial and Commercial Bank of China branch. The document, which was leaked on Chinese social media, requested that the bank delay July pensions. The document also instructed the bank not to disclose its contents to the public, and to inform pensioners of the situation verbally.
After the document was exposed, the Heilongjiang Social Insurance Bureau issued a clarification notice on July 25 claiming a “work mistake.”
OUR TAKE
1. The Harbin document and official reaction confirm our analysis that China’s economy is worsening and local governments are struggling to make revenue. The news also indicates that pension funds in the provinces are running deficits. Further, the news reveals the serious problems of Northeast China’s aging demographic.
2. With the escalation of the Sino-U.S. trade war, China’s debt crisis would become more severe. Economic woes would translate into a sharp rise in social conflicts on the mainland.
While China’s M2 money supply increasing by over 4 trillion yuan after the central bank’s recent injection via medium-term lending facilities (MLF), the increased liquidity should only bring temporary relief for a couple of months. And when the Chinese regime starts delaying wages to civil servants, it will have problems in safeguarding its rule.
