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Caixin

Lights go on, but no one goes to work

How local governments are faking recovery from the coronavirus

Employees on an assembly line in Shanghai on Feb. 24: Not all companies are faking it, but many still fear spreading the deadly virus if they ask staff to get back to work.   © Reuters

Local companies and officials are fraudulently boosting electricity consumption and other metrics in order to meet tough new back-to-work targets as the spread of the new coronavirus in China wanes, a Caixin investigation has found.

As cases of COVID-19 in the country slowed in recent weeks, local governments in less-affected regions pushed offices and factories to get back to work, typically by assigning concrete targets to district officials. Company insiders and local civil servants told Caixin that being pressured to fulfill impossible quotas has forced them to cook the books.

Leaving lights and air conditioners on all day in empty offices, turning on equipment, faking staff rosters and even coaching factory workers to deceive inspectors are just some of the ways companies fabricate rosy statistics for local governments to report up the chain.

Electricity consumption data has regularly been used as a metric for the back-to-business rate when reporting to Beijing and the public.

The east China province of Zhejiang has been lauded as a prime example of the nation's industrial recovery from the coronavirus by China's top economic planning agency, which reported on Feb. 24 that the province's work-resumption rate was more than 90%.

Nevertheless, a district official in the provincial capital, Hangzhou, told Caixin that starting Saturday, factories were instructed to leave equipment idling for the entire day, while offices were told to keep computers and air conditioners running. This coincided with Beijing checking the resumption rate by examining energy figures.

Caixin has chosen not to name the district to protect the identity of the official, who could face repercussions for revealing the information. But one company insider in the district confirmed the official's statement, saying they saw such directives in multiple corporate WeChat groups.

Another employee claimed to have also received the order, but that operations had already started two weeks prior, and that production lines were operating normally by Feb. 29. However, one executive said his company had not received the electricity directive, and said they were running at about one-fifth normal capacity, with only a small proportion of machines in use.

Hangzhou's target was for corporate electricity consumption on Saturday to be 75% of that on Jan. 8, and hit at least 90% by March 10. The real resumption rate in one Hangzhou industrial park over the weekend was 40%, the district official estimated, far below the 75% target.

The official also said that China is subsidizing electricity as a way to incentivize businesses to get back to work, and said many companies would rather waste a small amount of money on power than irritate local officials.

Insiders told Caixin that in some cases, rather than giving companies targets, governments assigned quotas to district officials, who were then responsible for meeting them. The officials would regularly visit companies, prodding them to resume production as a way to express "care and support." That pressure is likely what drove companies to switch on machines.

Zhejiang Provincial Government Deputy Secretary-General Chen Guangsheng boasted to media on Feb. 24 that some factories in Zhejiang reported a work resumption rate of 98.6% and service enterprises 95.6%. More than 99% of companies in the province with annual exports above $10 million had resumed work, the provincial leader said.

A company in Wenzhou, a major commercial center in the same province, confirmed it had received a designated power consumption target equal to half that prior to the outbreak. It has been running air conditioners all day to meet the goal.

Zhejiang is not the only place where the reality on the ground is said to differ from government figures.

In the small industrial city of Botou 230 km south of Beijing, Caixin found factories reported by the local government to have reopened had not actually done so.

The head of one told Caixin that despite the directives, the local government's unwillingness to risk an outbreak meant the company had not actually restarted. "The government still forbids factories to actually resume work," the executive said. "We have returned to the offices, but production has not restarted at all."

He also said the Botou government asked him to falsely report the number of employees who had returned to work and even coached workers about how to lie if they received calls from inspectors.

The prolonged production halt has led to the loss of technicians and orders, he added, because some of the company's peers in other parts of China had restarted ahead of them.

Replying to Caixin's request for comment on Monday, the Botou government said at least 228 enterprises in the Botou area had resumed business. But some companies might have said they did not because, while they were registered as having restarted, they may not have been prepared to immediately commence production. They said companies were permitted to resume business after reporting to the local government, but could only begin normal operation after officials confirmed virus control measures were in place.

A source at a smaller enterprise in Botou told Caixin that companies have been allowed to resume production after meeting virus containment requirements, but face logistical issues as many rural roads remain blocked. Without a way to get materials in and products out, there is little point in businesses returning to production.

Baidu Maps shows traffic inside Botou over the weekend was still less than half the average of last year, after two weeks of gradual recovery starting Feb. 18.

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Read also the original story.

Caixinglobal.com is the English-language online news portal of Chinese financial and business news media group Caixin. Nikkei recently agreed with the company to exchange articles in English.

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