Esoteric fines pile up as China’s provinces hunt for revenue

By Bloomberg News

A Shanghai restaurateur was fined 5,000 yuan ($702) this month for serving shredded cucumber without a licence, prompting outrage on China’s Twitter-like Weibo. In a post viewed 9.5 million times, one user wrote: “If they wanna fine you, even adding vinegar could be wrong.”

Truckers in central Henan province last month made headlines when they questioned the accuracy of government vehicle weighing machines, after being repeatedly fined for exceeding limits: one driver had received tickets totaling $38,000 in the past two years.

In Guangxi, one of China’s most indebted provinces, a state-backed company sparked anger in May for hiking parking fees, leading some commuters to rack up thousands of yuan in charges. After Weibo users questioned their legitimacy, the Nanning city mayor bowed and apolo- gized at a press conference.

These high-profile scandals represent a broader trend of local governments using fines to bolster their coffers. A State Council inspection last year found that in the wake of the pandemic and other economic difficulties, local government penalties had become stricter and more severe, according to an article in state media.

Guangxi alone made 13 billion yuan from fines last year, according to an analysis of government data by Caijing Industry Research Center—equivalent to about 14 percent of its tax income, rising from 9 percent in 2021.

“It is a sign of desperation,” said Victor Shih, an associate professor at the University of California, San Diego, who specializes in China’s banking policies. “Arbitrary fines and predatory behavior will drive businesses away, especially small and medium businesses without the political protection of large stateowned enterprises,” he added.

China’s local governments have suffered the dual blows of the pandemic and a property crackdown from Beijing in recent years, leaving them with too little income to spend on salaries and building roads, while at the same time paying their debt bills. Goldman Sachs Group Inc. estimates China’s total government debt is about $23 trillion, a figure that includes the hidden borrowing of thousands of financing companies set up by provinces and cities.

The central government reiterated this month that provinces have to fix hidden debt problems on their own, leaving local officials to get more creative to raise revenue for their day-to-day spending. Last year, a grocer in Shaanxi province was fined 66,000 yuan for selling 2.5 kilograms (5.5 pounds) of substandard celery, while in August, officials in Guangdong were found to have falsified evidence to fine trucks for suspected illegal dumping.

As such cases spark outrage on social media, government scrutiny