In a bold move to revitalize its slowing economy, the Chinese government has implemented surprise wage increases for millions of public-sector workers, including teachers, police, and civil servants. The move, which was not officially announced, represents a significant effort to stimulate domestic consumption and boost economic activity.

The wage adjustments, which amount to an average monthly increase of 500 yuan ($68.50), are expected to inject between $12 billion and $20 billion into the economy. Some junior workers reported smaller increases of around 300 yuan ($41) per month. Many recipients received backdated payments starting from July, distributed in lump sums akin to bonuses.

While some workers celebrated raises of up to 10%, the increases varied across regions based on provincial fiscal capacities. For instance, employees in economically stable provinces reported higher payouts compared to others. The disparity reflects ongoing financial challenges for some local governments, which have struggled to maintain consistent wages.

Economic experts believe the move aligns with Beijing's strategy to encourage spending among demographics likely to have a higher propensity to consume. Xu Tianchen, senior economist at the Economist Intelligence Unit, noted that "civil servants, with their robust social security benefits, are more likely to spend than private-sector employees."

This initiative follows other efforts, such as cash handouts to low-income groups, aimed at achieving China's targeted 5% GDP growth for 2025. The government has also raised its budget deficit target to 4% of GDP to support these measures amidst ongoing challenges, including a real estate downturn and declining export prospects.

The pay hikes sparked a wave of reactions on social media. While some expressed optimism about the potential to curb deflation, others criticized the focus on civil servants as a limited approach. “How come you stimulate consumption by targeting a small group of civil servants?” questioned one user from Hubei on Weibo.

Despite the criticism, the news has been welcomed by public-sector workers. A Beijing city worker described the pay increase as "helpful to boost consumption" and celebrated the announcement with colleagues at a restaurant.

The wage increase is expected to further fuel interest in civil service positions, which already attracted a record 3.4 million applicants last year. Job security and stable benefits have made these roles increasingly desirable amidst pressure on the private sector. However, the growing demand contrasts with ongoing fiscal constraints that have led some local governments to cut jobs or reduce pay.

While the exact cost and sustainability of the wage increases remain unclear, the immediate economic boost is a calculated move by Beijing to invigorate its slowing economy. Whether these measures will translate into long-term economic stability is a question that remains unanswered as China navigates its complex financial challenges.