Thursday, 28 June 2012

Penny-Pinching Officials

Grab yourself a government car at cut rate prices
We know the Chinese economy is slowing down, but by how much?

The latest reports are that officials in the county and provincial levels are fudging their numbers to try to make it look like China is not experiencing a hard landing, but one of the more reliable indicators is electricity usage and for the most part there are record-setting amounts of coal stocked up which is used to make power. Electricity production and consumption are pretty good indicators of where China's economy is at.

And now there is another good indicator -- car sales.

Turns out cash-strapped local governments are auctioning off fleets of official cars to keep the books from spilling with red ink.

This past weekend, Wenzhou, a southeastern coastal city that was hit by the cooling economy, sold 215 cars for 10.6 million RMB ($1.7 million). The municipality is planning to sell 1,300 cars -- or a whopping 80 percent of its fleet -- by the end of the year. Did it really need all those cars in the first place? Or has the city really fallen on bad times?

About a year ago businessmen in Wenzhou were skipping town or in a handful of cases committing suicide because they could not pay back their mounting debts.

Many other cities across the country are also tightening their belts, from Datong in the north to Kunming in the south. Officials are cutting back on lavish banquets, curbing trips and the numbers of luxury cars that are the assumed entitlement of bureaucrats.

Apparently government car auctions are nothing new, but the fact that they are happening more often and a greater number of cars up for grabs indicates these governments are trying to do all they can to stay afloat.

Thankfully they have been instructed not to sell vehicles like ambulances and police cars, but definitely frivolous wheels that do not belong to a government trying to set a good example of relative austerity.

The economic downturn has directly affected land sales, where officials used to get most of their coffers. Fiscal growth is 20 percentage points lower than last year.

The Financial Times is reporting China spends about 100 billion RMB on official cars every year, though it's hard to know for sure as the government refuses to release figures on exactly how many cars are for government use to avoid stoking public anger.

And surely these governments are selling these cars at cut-rate prices to get the cash. So why not own a "pre-loved" black Audi, the favourite car of officials and look like a hot shot. Apparently one in every five Audis in China is a government car.

Perhaps officials themselves are taking this opportunity to own their own car at cheap prices and doing their civic duty at the same time...

In any event it shows the Communist Party's pragmatism when it comes to money. They are willing to sell off their excess to generate some income.

One wonders what the citizens think of officials selling government cars at fire sale prices when they used taxpayer money to buy them in the first place.

So with fewer cars, less lavish banquets and trips, perhaps this means Chinese officials will lose weight and exercise more.

In other words, be like every other person in China?

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