Chinas Local Authorities Seek to Claw Back Old Bonuses as Fiscal Crisis Deepens

China’s worsening local government finances are hitting public-sector workers, with some authorities demanding repayment of bonuses issued years ago, including pandemic-related compensation, according to insiders who spoke to The Epoch Times.The interviewees spoke on condition of anonymity out of fear of reprisal. They said that some local governments have begun reviewing bonuses, allowances, and other benefits paid over the past several years as they struggle to cover basic expenditures.Public-sector employees—including medical workers, civil servants, and teachers—have traditionally been viewed in China as having relatively stable incomes.Previously, some medical staff in parts of Beijing reported that public hospitals requested them to pay back performance bonuses.A Jiangsu provincial finance bureau employee, surnamed Hu, told The Epoch Times that the fiscal crisis that was once concentrated in poorer counties has spread more broadly.“Local government coffers are already scraped bare,” Hu said. “Land-sale revenue has gone to zero, while rigid expenditures simply cannot be cut.”The financial strain comes as local governments continue to face declines in traditional sources of revenue.Data released by China’s Ministry of Finance for the first half of 2026 showed continued weakness in local government revenue, with income from government-managed funds falling sharply year over year. Revenue from the sale of state-owned land-use rights, a major source of funding for local governments during China’s property boom, continued to decline by double digits.Authorities Revisit Past PaymentsInsiders familiar with the situation said that some local governments have recently begun reviewing performance bonuses, living allowances, and other benefits distributed by government agencies and public institutions over the past three to five years.A former volunteer during the COVID-19 pandemic, surnamed Jiang, told The Epoch Times that some pandemic-related payments to frontline workers were being reclaimed years after the COVID-19 lockdowns ended.“The lockdowns ended many years ago, and now some of the bonuses used to compensate frontline workers at the time are being recovered,” she said. “This is going too far. How can this country have become so poor?”In Guizhou Province, a civil servant surnamed Huang told The Epoch Times that officials were ordered to return performance bonuses paid two years ago.“At a meeting last week, the leaders conveyed an oral notice. There was no written document,” Huang said. “We were required to return the performance bonuses paid the year before last to a [bank] account designated by the agency within 10 days.”The agency also instructed employees not to photograph or record the meeting, he said.The alleged efforts to recover previously distributed funds illustrate how local governments are searching for increasingly limited sources of cash as their finances deteriorate.The effort to recover money has also expanded beyond government agencies to public schools.A staff member at a middle school in Guangdong Province, surnamed Sun, told The Epoch Times that financial security had long been one of the main reasons people sought jobs in China’s public sector. That sense of stability has increasingly eroded as local governments cut salaries, suspend performance bonuses, and reclaim previously distributed payments.Her school has experienced one salary reduction and two suspensions of performance-based pay since last year, she said.“Our salaries were already not high, and they were reduced by 10 percent,” Sun said. “Performance pay is actually part of our salary, and now they are suspending it as well. The good days ended after only a few years.”Ye Zilong contributed to this report.