Chinese rust belt city falls victim to squeeze on local government spending

The authorities in Hegang, a former mining city in Heilongjiang, have been forced to stop recruiting after being hit by plunging revenues and growing debts

The city’s problems highlight the growing pressure on local governments to balance their books as Beijing becomes increasingly concerned about risky debts

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Hegang in Heilongjiang has been forced to suspend recruitment for jobs in local government. Photo: Wendy Wu

Published: 8:00pm, 26 Dec 2021

The economic slowdown in what was once China’s industrial heartland and a squeeze on local government debt has claimed its latest victim after a former coal-mining city in the northeast was forced to freeze its hiring process.

Hegang, once a coal-rich city in northern Heilongjiang, has been battling an economic slowdown and dwindling population in recent years, problems that have, in turn, hit government revenues.

The city hit the headlines in 2019 when it attracted house-hunters after data from real estate agencies showed it was among the 100 cheapest property markets in China.

On Thursday a statement by the city’s human resources department said it had been forced to “cancel plans to hire grass-roots employees for government departments”, citing “the Hegang government’s implementation of fiscal readjustment and major changes in the fiscal situation”.

The local government withdrew the notice from its official website on Saturday after the statement went viral online.

One Weibo user commenting on the city’s problems, said Hegang was “so poor, and young people are unwilling to stay amid the sluggish outlook”.

The central government in Beijing has been putting pressure on local governments to tackle their debt levels, which are widely regarded as a risk to the economy, and its guidelines recommend that authorities looking to make budget cuts target civil service jobs and subsidies.