Beijing Times
March 20, 2009

The government of Beijing's Daxing District rewarded businessmen for hiring locally by showering them with gifts, reported today's newspapers. Both the Beijing Times and The Beijing News featured large photos of a multi-million-yuan automobile on the front page today.

The Beijing News described the situation:

Yesterday, four entrepreneurs in Daxing District were rewarded by the district government with Audis for hiring local labor. The government stated that that the rewards were aimed to encourage other employers to provide more jobs to locals.

The grand prize was an Audi A8L6.0 worth 3.16 million yuan, and the three second-prize-winners received Audi A6L2.8 vehicles, worth 860,000 yuan.

The big winner was Li Jingyu, president of Beijing Zhonghuan Investment Management. Ninety percent of his company's 1,625 company employees — 1,332 of them — are from Daxing.

This year, the company plans to recruit another 100 to 200 new people. It also promised that it would make neither job nor salary cuts, and said that end-of-year bonuses would be paid as usual.

The district government has issued two policies to improve employment and will put up 50 million yuan to tackle unemployment.

The Beijing News
March 20, 2009

The report went on to specify one use for government funds: employers who recruit from among the local population will be subsidized between 500 yuan and 10,000 yuan per person per year, depending on the age of the hire.

Could this be a case of regional protectionism? Is Daxing trying to solve its local unemployment problem through local subsidies in order to boost its government performance record? In doing so, they aim to keep outsiders from stealing jobs from locals, but this could very well trigger a chain reaction among other regional governments who do not want to loose their own jobs, eventually making it difficult for Daxingers to find work outside of the district.

Logic aside, if the Daxing government wants to reward businesses, wouldn't it be more convenient to simply pay them in cash? Or perhaps there were financial incentives behind this arrangement: we can't rule out the possibility that the official in charge of the purchase got a handsome kickback. What else would explain the outrageous, conspicuously-displayed price for the A8L 6.0? Why, you could pick one up today for a cool 2.39 million yuan, haggle-free.