‘South Gate’ of Beijing Suspends City Bus Services in a Sign of Growing Local Government Financial Crises

Buses are seen at a closed bus terminal in Wuhan, the epicentre of the novel coronavirus outbreak, Hubei province, China, on Feb. 24, 2020. (Stringer/Reuters)

Baoding, a Chinese city about 90 miles south of Beijing with a population of ten million, suspended several bus line services due to the financial crisis of municipal governments in the wake of three years of pandemic control under the communist party’s Zero-COVID policy.

In a question-and-answer section of local bus services, the authorities responded to a resident’s inquiry about when the suspended bus line will be resumed.

In the answer, the bus operators admitted that since the pandemic in early 2020, bus companies suffered a 70 percent loss of business, and many were forced to withdraw from the market.

Last November, eight local bus lines decided to temporarily halt their operations due to the declining passenger flow, plummeting revenue, dwindling funds, and high maintenance and operating costs with the severe impact of the pandemic.

In addition, nearly 900 vehicles were retired due to safety concerns and the expiration of maintenance, leading to a significant drop in local transportation capacity, said the bus operators.

Fiscal Woes

Various bus line suspensions throughout China reflect the financial difficulties of local governments.

In February, the only bus line in Shangqiu, a city in China’s central Henan province, announced its only bus line would halt service in March due to the impact of the pandemic control, loss of revenue, and declining financial subsidies.

Shangqiu Public Transportation Co. Ltd. couldn’t afford to pay salaries, social insurance contributions for its employees, electricity bills to charge its buses, or vehicle insurance.

Local authorities finally responded with a special team assigned to ensure the operation of the only city bus, according to the Chinese media report.

Slumped Real Estate Market

Baoding, the “South Gate” of the capital Beijing, also suffered from local fiscal revenue loss and debt like many other cities in China, due to the lockdown policy during the pandemic, and the expenditures of pandemic prevention that were pushed onto local governments.

To complicate the financial situation of local governments further, the slumped Chinese real estate market has further undermined the ability of the local governments to generate revenue. Local government revenues are highly dependent on land sales.

According to the 2022 data released by the Baoding Municipal Bureau of Statistics, the city’s general public budget revenue was 31.56 billion yuan, of which tax revenue was 14.92 billion yuan—a decrease of 21.1 percent. However, the general public budget expenditure reached 83.34 billion yuan, an annual increase of 5.3 percent.

The city’s finances suffered from the three years of pandemic prevention, on top of years of revenue and expenditure contradiction, the city admitted, said the Chinese report.

Multiple provinces have reported the suspension of bus services and the payment of drivers’ wages, including the northeastern provinces of Liaoning and Heilongjiang, the southwestern province of Yunnan, the coastal province of Guangdong, and more—fallout of the heavy expenditures from three years of pandemic control and prevention.

Some netizens expressed concern about the financial difficulties in public sectors—public transportation has taken the first hit. They questioned whether it will gradually affect education and the medical system.

Li Jing contributed to this report.