“Policies come from above, counter-reactions from below” goes a proverb cited to explain the Chinese government’s opaque inner workings.

That phenomenon has been on open display at the annual session of the National People’s Congress, where a central government plan to tackle industrial overcapacity has met a chorus of complaints over who is to foot the bill.

For the past two weeks, Beijing has acknowledged that solving the problem will involve job losses — almost 6m, by some estimates. Beijing has proposed that central government should establish a Rmb100bn ($15bn) fund to retrain workers but specified that local governments and the companies must foot part of the bill. In return, banks would be expected to provide new loans.

“Enterprises should be the major actors, local governments should play a co-ordinating role and central government should provide due support, while the responsibility for making sure that overcapacity reductions happen in a locality will be on the relevant provincial-level government,” the finance ministry said in its annual report.

The problem with this cost-sharing solution is that local governments in coal, oil or steel-dependent regions are seeing their revenues hit as their local champions go broke. While apparently supportive of Premier Li Keqiang’s plan, regional representatives have been using the NPC to suggest Beijing should be shouldering more of the burden.

Lu Hao, governor of resource-dependent Heilongjiang province on the border with Siberia, is one of them. In the past two years the province has weathered protests by unpaid teachers and angry pensioners of China National Petroleum Corp, the national oil company. In October, state-owned Longmay Coal announced it would have to lay off 100,000 of its 248,000 workers.

Longmay’s wage bill was equivalent to a third of Heilongjiang’s revenues, Mr Lu pointed out in a provincial NPC session. The drop in oil prices meant Rmb10bn less in taxes, while central-government mandated minimum grain prices cost the province Rmb12bn out of its Rmb116.5bn budget, he said.

Other coal-dependent provinces were more blunt. The Shaanxi provincial work report paid lip service to Mr Li’s idea of addressing “zombie companies” that are in effect bankrupt. Its solution — “central government subsidies”.

Fiscal reforms are supposed to increase local government’s share of tax revenue but the plans to shut debt-laden production lines and officially recognise workers who have not been paid in months as unemployed are increasing the strain on local coffers.

Zhang Jie, of the National Academy of Development and Strategy at Renmin University in Beijing, said local governments with a dwindling revenue base might not have the money for over-capacity reduction plans. “To tackle the great obstacles facing the overcapacity reduction efforts in these regions from both local interests and existing economic development challenges, it’s necessary for the central government to directly set up funds,” he said.

Meanwhile, regions with a smaller state-owned enterprise lobby are balking at bailing out state companies at all.

“There’s no need to pay a lot of money to compensate companies for shutting down their equipment,” argued Xie Chaoying, director of the Economic and Information Commission of the southern province of Hunan. “The government’s duty is to effectively serve the workers laid off from the overcapacity reduction so that those who can still get another job get the training needed, those who are unemployable get unemployment insurance, and those whose situations are worse get social benefits.”