The task force is headed by the district’s deputy mayor and includes the Ministry of Finance and the State Assets Inspectorate. According to the screenshot, it is part of a broader plan to monetize state assets announced earlier.
Calls to the district’s finance department went unanswered on Wednesday, but several media outlets in mainland China confirmed the initiative, citing unnamed government sources.
The Chongqing task force uses language reminiscent of the Great Leap Forward campaign of the late 1950s and early 1960s, when Chinese households were mobilized to literally melt their pots to contribute to the country’s steel production. The language was created after the phrase resurfaced in official narratives last year amid mounting debt pressures.
Li Yang, a senior government adviser and head of the Beijing-based National Institute of Finance and Development, had previously argued that while China’s debt had risen rapidly compared to other countries, the country had also created valuable assets to cover the debt.
Li is known for his research on China’s government balance sheet, in which his research team lists the specific value of the state’s assets and liabilities.
“The risk of debt depends on whether there are assets to deal with it in an emergency, and China undoubtedly has those assets,” said China’s 2020 balance sheet, a book he co-authored in 2021.
A report released by the Chongqing Municipal Development and Reform Commission in late June said the commission worked with other city departments last year to develop a comprehensive debt settlement plan and a strategy to “break iron pots and sell steel” to liquidate assets.
Several other regions have taken similar measures to reduce their debts. Zhuozi County in the Inner Mongolia Autonomous Region will liquidate assets worth 1.34 billion yuan ($188 million) in 2023 under an initiative of the same name, according to its government work report this year.
In Quangang district of Quanzhou, Fujian province, a plan to mitigate debt risks was discussed in the same way at a government meeting in May, according to a post on the government website.
“This rate is extreme, but it actually reflects the severe financial challenges facing local governments,” said Liu Zhiqin, a senior researcher at Renmin University’s Chongyang Institute for Financial Studies.
“It shows that the difficulties at the grassroots level are greater than publicly acknowledged.”
However, while the central government has encouraged asset liquidation to get debt under control, local governments are left to interpret and implement the instructions in their own way, he added.
In May 2022, the State Council, China’s cabinet, issued a guideline on revitalizing existing assets and promoting effective investment, urging regions with high debt ratios and high fiscal pressures to speed up asset liquidation to mitigate local governments’ debt risks.
The “stunning” efforts seem to have produced some results.
According to Chongqing’s Department of Finance, the city’s tax revenue rose only 2.8 percent to 80.1 billion yuan in the first half of the year compared with the same period last year. However, non-tax revenue jumped 31.2 percent to 50.6 billion yuan, mainly due to asset disposals.
The city’s half-yearly financial report stressed that efforts to liquidate state-owned assets such as buildings, land and major equipment would be intensified in order to maximize financial resources.
At the national level, revenues from other sources increased by 12 percent in the first seven months of the year and accounted for 18 percent of general public budget revenues, an increase of 2.4 percentage points over the previous year.