In 2021, a remote coal town in northeastern China was forced to undergo an unprecedented financial restructuring. Its struggles since are an ominous sign for Chinese President Xi Jinping as other heavily indebted municipalities look set to follow suit.

Hegang, a city with nearly a million people near the Russian border, had debt of more than double its fiscal income when it hit the headlines almost 18 months ago. It was the first time a city administration had taken official emergency steps since the State Council unveiled rules in 2016 on how local governments, from counties to provinces, should deal with debt risks.

Hegang’s residents are now feeling the brunt of the fiscal clampdown. During a recent visit to the city, locals complained about a lack of indoor heating in freezing winter temperatures, and taxi drivers said they were being slapped with more traffic fines. Public school teachers worried about rumored job cuts, and street cleaners endured two-month delays to their salaries.