Liangzi Yueqian: Twilight of Empire–The Path of the CCP’s Financial Collapse – Dissecting the CCP (4)

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(1) An unprecedented ratio of officials to citizens

The population of Yongshun County in Xiangxi, Hunan is only 490,000, and there are 12,000 state officials (who eat imperial food), and the ratio of officials to citizens is as high as 1:40! That’s still two years ago, and it’s only going to be higher now. Since the CCP implements the “ universal” party-state system, the official system is roughly the same across the country, and the ratio of officials to citizens in Yongshun County also represents the ratio of officials to citizens across the country.

According to relevant historical data, the general situation of the ratio of officials to citizens in Chinese history is: the Western Han Dynasty was 1:7945, the Tang Dynasty was 1: 2927, the Yuan Dynasty was 1:2613, the Ming Dynasty was 1:2299, and the Qing Dynasty has reached 1:911. That is to say, in the Qing Dynasty, every 911 people had to support one official, and the burden on the people was already quite heavy. But in today’s China, the ratio of officials to citizens has reached an incredible historical limit of 1:40! Even so, this official-to-people ratio data is still conservative, because another set of statistics shows that the total number of Chinese people who eat financial meals (within the establishment) is as high as more than 70 million! Calculated based on a population of 1.4 billion, the ratio of officials to citizens is as high as 1:20, and based on a population of 800 million, it is even 1:11.4! Such a high ratio of officials to citizens is unprecedented in the history of ancient and modern China and foreign countries.

(2) Parasitic finance

Once a country’s finance is reduced to the point where it mainly supports the bureaucracy, it is parasitic finance, that is, “food finance” as the saying goes. Parasitic finance is a unique product of the CCP’s autocratic system: First, because of the CCP’s official standard system, the national treasury is inevitably tilted toward the bureaucratic system; second, due to the dictatorial nature of the CCP to lead everything, it determines the cost of monitoring the full coverage of society. financed by finances. Therefore, under the parasitic fiscal system, the two major functions of government finance to promote economic development and provide social welfare security (such as pensions) will be greatly weakened or even paralyzed, and the entire fiscal system will fall into the vicious “self-absorption” cycle.

The so-called “self-absorption” vicious circle is basically characterized by the two lines of fiscal revenue and expenditure: every year, the fiscal budget creates a huge expenditure To make up for the spending gap of the previous year, if the government wants to increase fiscal revenue, it will increase tax collection, which will increase the exploitation of the economy and cause widespread public grievances. In turn, it continued to expand the spending gap; in order to ease the increasing financial burden, it forced the government to further squeeze the whole society, thus arousing stronger resistance from the people; in order to maintain the stability of the regime, the government once again increased investment in “stability maintenance” , and then continue to expand the gap of fiscal expenditure in a continuous cycle… Obviously, the fiscal gap itself has become the driving force for continuing to expand the fiscal gap!

The impulse to run out of fiscal expansion is constantly circulating through this chain of advancement. Once this vicious circle is started, its powerful inertia will push it forward along the inherent track formed by the self-feedback mechanism . There is no way to stop it. It will continue to run until the collapse of the entire financial system. until.

(3) What is a financial collapse

No matter what kind of system, in a country’s government, finance is in a pivotal position. In the form of revenue and expenditure budget ( China needs the symbolic approval of the National People’s Congress), on the one hand, it undertakes the function of how much and how much the government collects (taxes, etc.) each year, and on the other hand, how much the government spends each year . Responsibility for money and how to spend (spend). Both of these aspects involve the ability and guarantee of the continued functioning of the government. Whether it is national defense, foreign affairs, medical care, education, social welfare, and the entire bureaucratic system and civil service system, the normal operation of it depends on financial security, ranging from individual wages and benefits to national governance, all of which are closely related to fiscal revenue and expenditure. In particular, the function of the finance on how to spend money and how much money is spent has formed strict rigid constraints on all government departments. Therefore, among all the rigid constraints of the government, fiscal constraints are the most important and decisive ones. It determines not only military spending, but also the wallet and welfare of every government employee.

The so-called “fiscal collapse” means: the sources of fiscal revenue have been exhausted, the government can not make ends meet, the government’s tax revenue has grown negatively for three consecutive years, the mechanism for the economy to supply blood to the fiscal system has been destroyed, the functions of fiscal support and social security have been paralyzed, and the two above-mentioned functions of the public finance have become impossible. I can’t collect any money for the performance, and I have no money to spend! In the vernacular, it means that the government’s money bag is empty, and there is no money to borrow or rob.

(4) The CCP’s financial resources have been exhausted

The main sources of the CCP’s fiscal revenue include four categories: A, taxes, B, national debt revenue, C, state-owned asset revenue, D, government charges (various royalties, fees, fines, etc.). Our breakdown by item:

A. Taxes. This is the largest source of the CCP’s fiscal revenue and accounts for the largest proportion. According to the data released by the CCP (Note: The CCP’s data is well-known for falsification, but since China is a big black box, it is difficult to find real data, we can only question the CCP’s data), government taxation has appeared since 2019. The inflection point of the sharp decline has plummeted from +8.3% in the previous year to +1%. By 2020, government tax revenue will experience a negative growth of -2.3% for the first time. It is very strange that by 2021, government tax revenue has soared to +11.9%, from 15.43 trillion in 2020 to 17.27 trillion, an increase of nearly 2 trillion! The official explanation is the recovery growth after the epidemic, but this is contrary to common sense. Where is such a high speed “recovery growth” ? This apparent falsification of data is to cover up the truth that tax revenue continues to grow negatively. According to economic inertia, the negative growth in 2021 should be even uglier than the negative growth data in 2020. As we all know, Xi Jinping’s “dynamic reset” from last year to this year has had a devastating blow to the economy many times more severe than in 2020. It can be asserted that the fiscal and tax revenue growth in 2022 will definitely be negative, and the negative growth rate must be above double digits. It is a foregone conclusion that the CCP’s fiscal and tax revenue has experienced negative growth for three consecutive years.

B, national debt income. The main purpose of the CCP’s issuance of national debt is to make up for the fiscal deficit. When the increase in tax revenue is not enough to fill the fiscal gap, the issuance of national debt has become an important tool. Since the CCP resumed issuing treasury bonds in January 1981, the stock of treasury bonds has risen year by year in the past 40 years, especially in the eight years from 2012 to 2020, the scale of the CCP’s treasury bonds has skyrocketed by 900%! In 2020, the government bonds (including central government bonds and local government bonds) issued by the CCP reached a staggering 13.46 trillion yuan, a year-on-year increase of 60.8%, and continued to issue an additional 14.2 trillion yuan in 2021. What is particularly terrifying is that most of the CCP’s local governments (county-level finance) are already insolvent and bankrupt, but they are still desperately issuing bonds. By the end of 2021, the balance of local government bonds nationwide has reached 30.31 trillion yuan. The most terrible thing is that the 30.31 trillion is only apparent debt, and there is a large amount of off-balance sheet (invisible) debt that cannot be counted. How big is the debt hole of local governments, God knows! In normal countries, the issuance of bonds is limited. Once the issuance of bonds exceeds the government’s ability to repay, the government will go bankrupt. The CCP’s government debt has long been out of control, and the space for bond issuance has been exhausted. The CCP will not let local governments go bankrupt, but will cover up the crisis and leave it for future outbreaks.

C. Income from state-owned assets. By the end of 2021, the total assets of Chinese state-owned enterprises (including central and local state-owned enterprises) have reached 259.3 trillion yuan, ranking first in the world. The share of SOEs in a country’s economy is an inverse indicator of the oppression of civil society. The stronger SOEs are, the harder it is for private enterprises. Under normal circumstances, the operation and income of state-owned enterprises should be a supplementary source of government finance, and the annual profits generated by state-owned enterprises should be turned over to the state finance. However, under the CCP’s rule, the entire state-owned enterprise system has been divided up by red and powerful families big and small, such as Jiang Zemin’s family’s communications, Zeng Qinghong’s family’s oil, Li Peng’s family’s water and electricity, Xi Jinping’s family’s medical care, and so on. The nature of state-owned enterprises has degenerated into private enterprises of the red elite. Therefore, the annual financial reports of state-owned enterprises in each industry do everything possible to make false accounts. It is obviously a hugely profitable industry, but it is necessary to make small profits, no profits, or even losses (such as three barrels of oil, highways), so as to pay as little or no profits as possible, and even Also get state financial subsidies! According to data from the Ministry of Finance, in 2021, the total amount of taxes and fees that the national state-owned enterprise system should pay to the government is 5.356 trillion yuan . . Not only are Chinese state-owned enterprises unable to help finances, but they are also drawing blood from finances.

D. Government charges. Government charges have always been a black account, and detailed bills for this income are not seen in the annual National People’s Congress budget and final accounts report. We only know that the CCP government’s exorbitant donations and miscellaneous fees are overwhelming. According to a data on the government website: In order to “reduce” the burden on the people, since 2013, 496 charges have been cancelled at the central level and 600 at the local level, adding up to 1096 It is estimated that it only accounts for less than 10% of the total charging items. It can be seen that the government charging items are as numerous as the stars in the sky. Fines are the most shameful bills in government charges. It was revealed that a camera in a high-speed area in the northeast took pictures of speeding violations, generating an income of 25 million yuan a year! It is not difficult to imagine how huge the amount of government fees turned over to the government every year. This type of project is essentially a severe exploitation of civil society. The people not only bear the heaviest taxes in the world, but also endure the cruel oppression of thousands of donations and miscellaneous expenses. Especially since 2019, as the CCP’s financial means cannot make ends meet, the CCP has delegated many law enforcement powers to the grassroots (such as traffic police, urban management, and street offices), allowing the grassroots to generate their own income. So the grassroots cruel officials tried their lives to loot the people, and the people of Limin were miserable. However, there is always an end to fishing when the water is exhausted. When the people’s fat and the people’s cream are exhausted, the CCP’s financial pipeline will be cut off.

(5) The CCP’s financial collapse has arrived

From the second half of last year to the first half of this year, Xi Jinping pushed the ” dynamic clearing” nonsense, giving the CCP’s economy, especially the national leader, the Yangtze River Delta economy, a fatal blow! The CCP’s economy, which was already weak, was hit hard by this, and immediately entered a state of dying, thus accelerating the arrival of financial collapse:

1. Local finances plummeted sharply. Among the top ten provinces in terms of fiscal revenue from January to May 2022 , all have negative growth, among which Guangdong fell -13.40%, Jiangsu fell -17.60%, and Shanghai fell -16.80%. These are the most prosperous provinces in China. Provinces outside the top ten are even worse. Another statistic, “The Fiscal Income Decline of Major Cities in April”, shows that Shenzhen has dropped by 44.28%, Suzhou has dropped by 49.64%, and Tianjin has dropped by 51.92%. These wealthy cities have all halved.

2. The central finance itself cannot be guaranteed. According to the data of the Ministry of Finance, the national general public budget revenue from January to May was 8.674 trillion yuan, a decrease of -10.1% according to the natural caliber ; while the national general public budget revenue in May, according to the natural caliber, dropped an astonishing -32.5%! Like central government finance, a drop of one percentage point is a huge gap, not to mention a double-digit drop. The central finance has empty pockets, and its basic function of adjusting local finances through “transfer payments” has been paralyzed .

3. In order to fill the central and local financial holes, there is only one last way to print money! The local government does not have the right to print money, and it cannot fill the hole by printing money, but the local government maintains social stability, and it can use this to coerce the central government to provide relief. When all other blood vessels are blocked, the central finance can only rely on printing money (excessive issuance of money) to stop leaks everywhere. However, printing money is drinking poison to quench thirst. Although large-scale printing of money will delay the outbreak of the debt crisis, it will lead to hyperinflation and a sharp depreciation of the currency, which will eventually lead to ” Venezuelaization”. So this is a dead end.

(6) Consequence effects of fiscal collapse

A government is like a running train, when the power (financial) is strong, the train runs briskly and smoothly, and problems are masked by the speed of advance. When a train loses power, its own weight becomes a heavy burden, not to mention the cargo it carries. Therefore, no matter how powerful a government is, its financial status is its lifeblood and determines its qi. Once the fiscal revenue dries up and it can no longer make up for the ever-expanding fiscal deficit, the fiscal deficit will get out of control. This loss of control will inevitably lead to the failure of the rigid fiscal constraints. Once the rigid constraints fail, fiscal collapse will come, and the direct consequence of fiscal collapse is The government faces shutdown or even disintegration, and the entire society will fall into a state of total disorder, thus triggering an irreversible domino effect.

As the floods of the CCP’s financial collapse come, the crisis level will rise higher and higher. In the eyes of the CCP ruling group, the middle-level and below are all sandbags for flood control, and the general public is a price that can be sacrificed at will. Therefore, starting from the lowest level of the Limin people, the CCP desperately scavenged the people’s blood and various resources to protect the Zhao family’s regime. The current crisis level has already submerged the CCP’s grass-roots organizations, so there has been a “cooking dog” model in which civil servants in various places have drastically reduced their salaries and cleaned up the ill-gotten wealth of the village party secretary. When the owner of the Zhao family ran out of food, he would cook and kill the lackeys for food. The cycle of dynasties for more than two thousand years is all like this. As the crisis water level rises further, it will soon be submerged at the feet of the middle-level bureaucrats and the middle class. The closer the water level is to the upper level, the bloodier the plunder.

Due to the CCP’s nature of harming others and benefiting itself, it always meets its own needs by harming the interests of others. When a crisis comes, in order to protect the political power, any stratum and individual except the ruling group will follow the order of bottom-basic-middle level. for the sacrifice. In the end, all the strata that supplied blood to the CCP ruling group were sacrificed, and the collapse of the whole society was transformed into a social revolution caused by great turmoil. From this we can clearly see that this evil regime is going through a path of disintegration layer by layer from bottom to top.

There is no doubt that the financial collapse is devastating to the foundation of the CCP’s rule. It brings together various crises and erupts at the same time, thus delivering the final fatal blow to this precarious empire!

by Liangzi Yueqian

Written on 2022.7.8