Starved of cash, China watches silently as biting cold freezes life in north

Post zero-Covid days have not proved to be good for a majority of Chinese nationals who aspired to regain the momentum of life with money and employment in their Lunar New Year. In fact, with a substantial number of local governments in China’s provinces almost cash strapped because of three years of lockdowns and travel restrictions which were strictly followed under the zero-Covid policy, a large number of people are either without jobs or waiting for wages for months.


In North China’s small towns and rural areas people are in the throes of an unprecedented winter induced crisis. With the region facing a blistering cold spell, while strong winds and sub-zero temperatures continue to pulverise normal life, short supply in natural gas is leaving people in rural areas to fend for themselves, said the South China Morning Post. The Hong Kong-based daily said purchasing restrictions in northern China have left thousands of rural residents without heat in the freezing conditions, as local government authorities have no money to place enough orders with gas suppliers to meet demand.


Increasing number of local governments in China are finding it hard to fill the hole in their budgets created by the collapse of the property market, slowing down of economic activities and excessive spending on Covid-related care in the past three years. For this, CNBC cites the declining of China’s overall economic health as the prime reason. According to the news outlet, China faces nearly 1 trillion funding gaps due to the real estate crisis, tax rebates and widespread lockdowns, impacting sharply the government’s ability to generate revenue for the country.


Shedding more lights into the coffers of local governments in China, Reuters said in the first eight months of last year alone, the country’s 31 provincial governments reported a gap between general public revenue and expenditure totalling $948 billion. Populous provinces of Sichuan, Henan, Hunan, and Guangdong suffered the largest shortfalls in revenue, Reuters said.


Earlier, any shortfall in revenue generation by provincial governments in China used to be compensated by transfer of funds from the central government. But this time Beijing is itself in the midst of fiscal stress, forcing local governments to resort to desperate measures like cutting salaries, reducing headcounts, lowering subsidies and others to offset challenges.


It has, however, led to suffering of people of low-and-middle-income groups. Particularly during the winter season when the northern part of the country remains in the grip of freezing cold, people living in lower-tier cities and rural areas are finding themselves caught between monetary crisis and restrictive or no supply of gases at subsidized rate to heat themselves up or cook food. Condition of people in Hebei province’s towns and rural areas are the worst as they have to spend their nights in the cold with temperatures remaining consistently below freezing points, said, several media reports.


According to the South China Morning Post, in many provinces of China, people have switched from coal to gas under the government’s direction but still there are


several others who simply cannot afford the gas for heating and cooking. Then it is like being caught between a rock and a hard place. Even those who managed to switch from coal to gas are not getting gas supply regularly.


Caixin, a Chinese media outlet quoted a senior official of gas supplier, Shandong Gas as stating that continuous financial losses and shortage of cash have limited the company’s ability to purchase gas at premium prices. In China’s provinces after provinces gas is supplied to people at a heavily discounted price and for this, funding is done by local governments.


Between January and October last year, demand for gas in China, as per Spanish financial services company BBVA, was 299.9 billion even as imports of liquified natural gas in the country fell by 21%. Drop in imports of gas is attributed to China’s battered economy which, as per the country’s National Bureau of Statistics, grew 3% in 2022.


Analysts feel that China will see further decline in gas imports in the coming days before picking up in the latter half of the current year when growth in the economy is expected to jump from April-May onwards. Still, it is in the realm of speculation as China is not out of Covid’s deadly grip. Several media reports suggest a considerable number of Covid-triggered deaths in the country’s rural regions, as the virus has spread from big cities to more remote areas.

A few days ago, China reported 13,000 Covid-related deaths just a week after the country reported 60,000 deaths since December 2022. The country’s leading epidemiologist Wu Zunyou was recently quoted by BBC as saying that some 80% of the population—more than a billion people—have been infected since it withdrew zero-Covid policy-related restrictions.


In this background, analysts have put their fingers crossed on China’s economic performance. With this, they are not sure whether the country will be able to go past its current situation and fulfil people’s demand for jobs, wages, and subsidies on essential goods. More than this, China’s people living in the country’s northern part, especially in small towns and rural areas, are in dire need of gas to save their souls from freezing cold.


President Xi Jinping-led administration is under huge pressure to provide them immediate relief, but with not enough money to transfer it into local governments’ accounts, both sick and elderly people in the villages and small towns are going to face challenges in the ongoing winter season, according to several media reports.

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