Tea Leaf Nation

Nickled, Dimed, and Renminbi’ed

Nickled, Dimed, and Renminbi’ed

On March 5 at the National People’s Congress, an annual meeting of China’s legislature, Beijing announced it plans to spend $2.45 trillion in 2014. While it’s unknown how much of that goes to salaries (the budget is broken down by industries), the amount for top officials is likely surprisingly low.

Based on available information, if Chinese President Xi Jinping were to decide to buy a 100-square-meter (about 1,080-square-foot) two-bedroom apartment in central Beijing, it would set him back almost $1 million at current prices. That means Xi, who by all appearances draws a nominal annual salary of about $20,000, would have to toil for 50 years as China’s top leader to afford this modest property — assuming, that is, that he and his family didn’t pay for any other living expenses during that time. By contrast, if U.S. President Barack Obama were to do the same in the swankiest bits of Washington, D.C., he would have to pay about the same sum, but one amounting to a little over twice his annual salary of $400,000.

Of course, Xi would never need to worry about purchasing an apartment on his salary alone. He and his family live in the sprawling Zhongnanhai compound in the heart of Beijing. As a high-ranking official in China, his food, transport, and medical care are also covered by the state. And a Jan. 21 report by the International Consortium of Investigative Journalists shows Xi’s relatives have held corporate entities offshore in the Cook Islands or British Virgin Islands. That’s not illegal, but it’s a move that the entities’ owners often make to store or protect assets. Xi’s family is not exactly hurting.

The salaries of China’s top leaders are not public information, so details about them reaches the public in unintentional dribs and inferred drabs. In June 2011, while speaking to university students at a public event, Yu Zhengsheng, a member of China’s ultra-powerful Politburo, made the rare disclosure that his basic salary was approximately $1,700 a month based on salary standards for Politburo members, and he claimed that he had to "pay for his own cigarettes" and "buy clothes at market prices." Since Xi is also a Politburo member, Yu’s statement is a good baseline to gauge Xi’s salary. In April 2013, state-owned weekly magazine China Newsweek reached a similar number through deduction, calculating that the basic salary for China’s top leader was likely around $1,600 a month by examining the salary slips of ordinary civil servants and noting the incremental increase at each promotion.

If that’s correct, and Xi had to survive in Beijing on his basic salary — approximately twice the average salary of $850 per month in the city — he would not only be unable to afford an apartment, but he’d have to scrimp just to make ends meet. A popular infographic that made the rounds in October 2013 on Sina Weibo, China’s popular microblogging platform, calculates that someone living in Beijing on a salary just shy of Xi’s would be left with savings of $50 each month after deducting reasonable expenses, including approximately $500 a month for rent and $250 a month for food.

On March 5, 2014, China’s ambassador to the United States, Cui Tiankai, reportedly said at a public forum that newcomers filling slots in the foreign ministry — one of the most coveted jobs for new graduates in China — could not afford to rent an apartment in Beijing. But luckily for them, Chinese civil servants have long benefited from generous government subsidies to supplement their modest official incomes, and can sometimes count on gray income or even outright bribery. That’s one reason that over the past 10 years, the number of young Chinese college graduates taking the civil service exam has surged from approximately 120,000 in 2003 to more than 1.5 million in 2013, roughly an elevenfold increase. As housing prices in China’s major cities rose drastically in the first decade of the millennium, graduates and their parents began to favor the housing subsidies, retirement benefits, and other tangible perks that come with a civil servant position over nominally high salaries in the private sector that lack the same safety net. This preference has become controversial: Economist and Nobel laureate Edmund Phelps reportedly slammed the "frenzy" of competition for Chinese government posts as a "waste of talent."

The fever may now be cooling a little. As part of a crackdown on corruption, endemic in party ranks, Xi introduced the so-called "Eight Point Regulation" in December 2012 to rein in perks and gray income for civil servants. According to domestic media reports, junior civil servants were disproportionately affected, while their seniors largely carried on as before. The results of an anonymous survey of public servants by liberal outlet Beijing News, released Jan. 9, showed that 92 percent of participants reported that their "income from outside of work" had fallen over the past year. In 2014, wealthy Zhejiang province counted 25 percent fewer applicants to its civil service positions than in an analogous period the year before.

Top leaders like Xi will never have to worry about paying the bills, even as they spearhead crackdowns on nonessential perks. But civil servants in China, who likely make far less than the president, may want to start looking into more modest homes in Beijing’s vast suburbs.