1 What mass casualty attacks about Chinese society and CCP rule
Yixing knife attack
A 21-year-old former student surnamed Xu went on a stabbing rampage at Wuxi Vocational College of Arts and Technology in Yixing City in Jiangsu Province at around 6:30 p.m. Beijing Time on Nov. 16. The attack killed eight people and injured 17, according to the police. The Yixin knife attack came barely a week after a deadly car attack in Zhuhai City of Guangdong Province.
Some students from the Wuxi Vocational College of Arts and Technology shared online that the actual number of casualties from the knife attack was higher than what the police reported. They also noted that their campus is large and crime scenes were set up in multiple locations, which made it unlikely that a single individual was behind such extensive harm.
A student told overseas Chinese language media Dajiyuan (The Epoch Times) in a report published on Nov. 17, “Another body was found this morning at the entrance of a dormitory. The person appeared to have been killed in the early hours of the morning. So there’s more than one perpetrator.” The student added that it would have been impossible for one person to simultaneously attack the bathroom, the parcel delivery station, and the dormitory entrance.
Attacker’s final letter
The Yixin Public Security Bureau said in a statement, “According to preliminary investigations, the suspect … attacked others after failing an exam and not receiving his graduation certificate, as well as being dissatisfied with his internship compensation.”
A suicide note that was alleged by the attacker circulated on Chinese social media. The note read, “When the avalanche comes, not a single snowflake is innocent.”
The attacker wrote in the note that he worked 16 hours a day at a factory during his internship without a single day off for an entire month. He accused the factory of malicious withholding his wages, refusing to pay overtime, denying him insurance, providing no compensation for work, and fining him when he took sick leave. The attacker wrote that he would rather die than continue to be exploited by the factory and expressed hope that his death would promote the advancement of labor laws.
The attacker also accused the Wuxi Vocational College of Arts and Technology of refusing to grant him a diploma and allowing him to graduate. He wrote, “You’ve bullied me too much. Everyone is bullying me. Don’t think I’m a pushover. Some scores must be settled.” He added, “I will fight with my life.”
In the note’s conclusion, the attacker wrote, “Victory to the people, victory to the workers, and victory to the proletariat!”
Other related reports and rumors
1. A copy of the attacker’s academic transcript was circulated on Chinese social media. The transcript showed that he scored 73 points in theory and 46 points in practical for a mid-level electrician exam on Dec. 1, 2023, or a “fail” grade.
2. A vocational school teacher from Jiangsu Province who identified himself as “Mr. Wang” told overseas Chinese media outlet New Tang Dynasty Television that the Wuxi Vocational College of Arts and Technology runs a three-year diploma program. He added that students there are required to complete a mandatory 180-day internship at designated factories in order to graduate.
“Mr. Wang” alleged that the college and factories had collaborated to exploit the students, paying them only a few hundred yuan a month during their internship. He added that the minimum hourly wage in Wuxi City per local labor laws is 24 yuan, and the attacker should have been paid over 10,000 yuan per month assuming he worked 16 hours per day with no off days.
3. One of the attacker’s classmates told Dajiyuan that he was a very honest person but collapsed under mounting pressure. “He saw no future. He was docked pay at the factory, had no rest days, and failed to get his diploma. This pushed him to the brink,” the classmate said.
4. Information circulating online claimed that the attacker had filed reports with the local education bureau, labor bureau, anti-“black” (triads) office, provincial complaints office, and the provincial discipline inspection commission regarding the college principal’s underpayment of interns and “black” involvement. However, none of the departments thoroughly investigated the attacker’s complaints. Meanwhile, the attacker had reportedly faced retaliatory actions at both the college and the factory where he interned at for his complaints, including his being dismissed from the factory and the school failing him for his exams.
The information added that the despaired attacker armed himself with a knife and returned to the college to confront the school administrators. When the administrators fled, the attacker went on a stabbing spree to enact extreme and indiscriminate revenge.
5. On Nov. 19, information circulating online claimed that there were four perpetrators in the Yixin knife attack. Of the four, one was shot dead, one was arrested, and two allegedly headed to Changzhou and Suzhou respectively to carry out more attacks, resulting in the death of a female student in either city.
Recent surge in indiscriminate knife attacks
July 4, 2024: A 64-year-old man carried out a knife attack in Shenyang City, Liaoning Province, resulting in three deaths and one injury.
Sept. 30: A 37-year-old man randomly attacked people with a knife inside a Walmart at Luduo International Commercial Plaza in Shanghai, leaving three dead and 15 injured. Police said that the suspect was venting anger over personal financial disputes.
Oct. 8: A man in his sixties stabbed three people, two of whom were school students, at the entrance of an elementary school in Guangzhou’s Tianhe District.
Oct. 28: A 50-year-old man attacked people outside Zhongguancun Third Primary School in Beijing with a knife, injuring at least five people (including three children).
Car attack in Changde
On Nov. 19, a driver in an SUV hit students and pedestrians outside an elementary school in Changde City in Hunan Province. State media said that the incident left dozens of people injured, but none sustained life-threatening injuries. The police said in a statement that a 39-year-old male had been arrested in connection with the incident and investigations were continuing.
Information circulating on Chinese social media claimed that the driver enacted “revenge against society” because local officials and school authorities did nothing to help his 9-year-old son, who suffered a grievous genital injury after being beaten by four older school mates.
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There have been several indiscriminate car attacks over the past two years, including:
Jan. 11, 2023: A driver intentionally rammed into crowds multiple times in Guangzhou’s Tianhe District, causing six deaths and 29 injured.
March 19, 2024: A student at Taizhou Vocational and Technical College who failed to graduate carried out an indiscriminate car attack, resulting in three deaths and 16 injured.
Sept. 3, 2024: A bus driver crashed his school bus into a group of students in Tai’an City in Shandong Province, killing 11 and injuring more than 10.
Oct. 23, 2024: A cement mixer truck drove against traffic in Shandong’s Qingdao City, colliding with dozens of vehicles.
Nov. 11, 2024: An indiscriminate car attack at the Zhuhai Sports Center in Guangdong Province killed 35 people and injured 43. Information circulating online claims a much higher death toll than officially acknowledged.
Our take
The recent surge of violent attacks in China highlights a worsening of the “pressure-cooker” environment in the mainland amid deteriorating economic conditions. Societal pressures could move closer to a breaking point if Beijing is unable to turn around the economy and conditions worsen further following Donald Trump’s return to the White House.
There is now a real danger that mass casualty attacks are becoming a trend in China as mainland media reports on those attacks and inspires other desperate people to take “revenge against society.”
The Xi Jinping leadership will find it almost impossible to resolve deeply troubling social problems like indiscriminate knife attacks and other forms of “revenge against society” as long as it persists with the CCP authoritarian system. Some reasons include:
1. The CCP authoritarian system creates a small, entrenched privileged class and extreme wealth disparity. Instead of a pyramid, China’s population and wealth distribution resembles an inverted thumbtack with the vast majority of the population at the bottom struggling with poverty.
According to China International Capital Corporation’s “2023 China Wealth Report”:
- China’s top wealthy class comprises 4.6 million people (0.33 percent of the population) and controls 290 trillion yuan in wealth (67.44 percent of total wealth).
- China’s middle class comprises 99 million people (7.05 percent of the population) and owns 110 trillion yuan in wealth (25.58 percent of total wealth).
- China’s lower classes comprise 1.3 billion people (92.62 percent of the population) and own just 29.9 trillion yuan in wealth (6.98 percent of total wealth), with per capita assets of 23,000 yuan.
In recent years, social problems have grown in China as those in the middle and lower classes are impacted by economic decline. The bursting of the property bubble has been particularly bad for the masses as over 70 percent of Chinese household wealth is in real estate. The shrinking of personal wealth has led to reduced consumer spending, as well as business difficulties and widespread closures. The resulting deflationary spiral has also made life increasingly difficult for those at the bottom of society, fueling public discontent.
The combination of extreme wealth inequality and economic deterioration highlights the systemic risks of the CCP’s governance. Without significant economic improvement and reforms, social tensions are likely to continue escalating.
2. The CCP authoritarian system largely benefits a small group of elites while creating significant barriers to upward social mobility for the lower classes.
The Party vacillates between “openness” and “control” as it navigates various crises. The Mao era was largely characterized by “control” as the founding revolutionaries established the PRC regime and Mao Zedong experimented with advancing socialism while engaging in fierce factional struggles. Long periods of “control,” particularly during the “Great Leap Forward” and “Cultural Revolution,” impoverished the masses while minimally impacting the “red” elites.
The Deng, Jiang, and Hu eras that followed Mao were marked by “openness” as Deng Xiaoping prioritized economic development over socialism. The substantial foreign investments that flowed into China during the early and middle stages of “reform and opening up” fueled prosperity and had a “rising tide lifts all boats” effect. The CCP elites become immensely rich with their control over the “commanding heights of the economy,” as well as their involvement in the financial sector and other lucrative sectors like real estate. Meanwhile, ordinary citizens found opportunities to improve their social standing during a prosperous period through hard work and education.
The CCP gradually swung back towards “control” under Xi Jinping as the latter sought to gain the upper hand in factional struggle and strengthen national security in anticipation of increased competition with the West. Xi’s focus on security over development, the introduction of policies like “zero-COVID” and the “three red lines,” and worsening relations between China and the West (resulting in supply chain migration, tariffs, sanctions, etc.) proved to be very disruptive to the Chinese economy. Ordinary citizens bore the brunt of receding prosperity in China. Business failures and relocating supply chains meant a sharp uptick in unemployment. Highly educated individuals without elite social connections or backgrounds found themselves delivering food and taking up other low-paying jobs with poor prospects of upward mobility.
Meanwhile, the Party elite continued to enjoy and flaunt their wealth amid tough times, much to the public’s chagrin and resentment. For instance, a Chinese person residing in France who is believed to be the offspring of a senior CCP official attracted public attention in early October 2024 for extravagant displays of wealth on Douyin (the Chinese version of TikTok). The person showed off a bank balance of 2.4 billion yuan and boasted about receiving 180 million yuan as a birthday gift from their grandmother. The person also posted “old photos” on his Douyin account, including one featuring his ancestor in military uniform with senior CCP officials like Marshal Zhu De and others showing documents issued by the State Council appointing his family members to official positions. One netizen remarked, “Poverty has limited my imagination.” Others commented, “The root cause of ordinary people’s suffering is clear now” and “we toil like oxen and horses so that the Zhao Family (i.e. CCP elites) can live in extravagance.”
3. The CCP’s long-term political indoctrination of the masses, including exposing them to Party culture and so-called “hate education” (仇恨教育, i.e. teaching people to hate Japan and America to strengthen nationalism), has fostered a society severely lacking in empathy and compassion. Individuals have also become inclined to “struggle” with others, engage in mutual harm, and assert their perceived social superiority by oppressing others.
Steeped in “hate education” and Party culture, individuals (particularly those from the lower classes) in China who face discrimination and have been subjected to injustices (both real and perceived) naturally become more prone to lash out with violent attacks and take “revenge against society” as they seek to regain a measure of “justice” and “fairness.”
In sum, we view the CCP — with the deficiencies of its authoritarian system and promotion of hatred and struggle — as largely to blame for the rise in mass violent attacks in China. The CCP authorities will likely attempt to deal with the rise in social instability through its usual high-pressure controls and propaganda. Such measures could produce some short term results, but will only deepen social contradictions further over the long run and create the conditions for even worse blowback.
2 Why Beijing’s export tax rebate adjustment is no favor to Trump
On Nov. 15, the PRC Ministry of Finance and State Taxation Administration issued an announcement on the adjusting of China’s export tax rebate policy (關於調整出口退稅政策的公告).
Key details of the adjustment, which will go into effect from Dec. 1, 2024, include:
- Tax rebates will no longer apply to products such as aluminum, copper, chemically modified oils, and fats derived from animals, plants, or micro-organisms. A total of 59 products will be affected by the adjustment.
- The tax rebate rate for certain refined petroleum products, photovoltaic products, batteries, and some non-metallic mineral products will be reduced from 13 percent to 9 percent. This will impact 209 products.
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Export tax rebate refers to the exemption from taxes on exported goods and the reimbursement of previously paid taxes. Per the World Trade Organization’s rules, importing countries should not impose anti-dumping or countervailing duties on goods from countries where the export tax rebate equals the tax applied to the product for domestic consumption.
Backdrop
President-elect Donald Trump has threatened to hike tariffs on Chinese products during this second term.
Our take
1. The CCP authorities’ export tax rebate adjustments would raise the prices of certain Chinese goods and manufacturers’ costs. The South China Morning Post, citing insiders, said the move was meant to discourage “vicious low-price competition and excessive expansion of the industry.” The insiders added that the adjustments could help “manage losses amid a potential sudden collapse of external demand, such as in the case of a second trade war being launched by the United States.”
The Post also said that the PRC’s lowering tax rebates for certain products could ease international concerns about overcapacity, particularly new energy sector-related products like batteries and photovoltaics. At a glance, it seems that Beijing was taking some responsibility in the trade arena and could even be signaling goodwill towards Washington before Donald Trump is inaugurated in January 2025. By proactively addressing some overcapacity issues, the Xi leadership could be sending an “olive branch” to the second Trump administration in the hopes of lessening potential trade pressure on China.
The export tax rebate adjustments, however, only disadvantage Chinese companies marginally without affecting China’s global competitiveness.
- Copper: The export volume of copper products subjected to rebate cancellation from January to September 2024 totaled 521,200 tons, or just 3.2 percent of China’s total copper output during the same period.
- Aluminum: The canceled rebates cover most of China’s primary aluminum products, including profiles, sheets, strips, and rods. In 2023, China’s aluminum exports (5.287 million tons) accounted for only 8.4 percent of total production.
- Photovoltaics: Products affected by the rebate reduction include silicon wafers, cells, and modules. Exports of those products from January to September 2024 reached $26.357 billion. Following the tax rebate adjustment, the export rebate for those products will be reduced by 4 percent ($1.054 billion).
- Refined petroleum: Exports of refined petroleum products are managed using a quota system and have consistently accounted for less than 10 percent of China’s total production since 2022.
If anything, China retains an advantage after the export tax rebate adjustments:
- Aluminum and copper: China is the world’s largest exporter of these metals, which are critical for manufacturing, construction, and the auto industry. The removal of export rebates for aluminum and copper could even lead to higher prices for importing countries, including Japan, South Korea, and the United States.
- Photovoltaics and batteries: As a global leader in manufacturing of these products, China retains a significant competitive advantage even with reduced rebates.
- The export tax rebate adjustments would weed out low-cost competition and enhance the bargaining power and profitability of leading companies. Additionally, the adjustments will strengthen the competitiveness of leading enterprises that have already relocated part of their production overseas.
In the near term, companies outside of China will still struggle to compete with Chinese companies even after the export tax rebate adjustments. The price increases of products stemming from the adjustments could potentially drive inflation in the U.S. and somewhat temper the pace and scale of the second Trump administration’s planned China tariffs. All in all, Trump’s agenda to revive U.S. manufacturing and decouple from China could be momentarily hindered.
Beijing’s export tax rebate adjustments could also help it alleviate some fiscal pressure. China’s export tax rebate from January to October 2024 reached 1.7 trillion yuan (a year-on-year increase of 9.9 percent) and accounted for 11.3 percent of the total national revenue (15.1 trillion yuan). A 1-percent reduction in export tax rebates could increase the annual fiscal revenue by about 200 billion yuan.
2. The second Trump administration is likely to see through Beijing’s various trade tricks and could be more aggressive in pursuing its agenda to resolve trade issues (including overcapacity) with China.
Trump and his advisers would no doubt have recognized that the U.S.-China trade deficit still stands in China’s favor and Beijing failed to meet its “phase one” trade deal commitments. The Peterson Institute for International Economics found that by the deal’s expiration in January 2022, China bought just 58 percent of the U.S. exports it had pledged to purchase under the trade agreement and none of the extra $200 billion of U.S. exports it had promised to buy. Meanwhile, data released by the U.S. Commerce Department on Nov. 5, 2024 showed that U.S. imports from China reached $44.9 billion in September, a nearly 13 percent increase from the previous month. The U.S. trade deficit with China also stood at $35.6 billion, or over 80 percent of the total U.S. trade deficit with other nations.
We believe that the new Trump administration will likely learn from its previous experience of dealing with China and become more inclined to adopt tougher measures to compel the PRC to make concessions and honor its commitments. U.S. demands and tariffs could prove very disruptive to the already weakened Chinese economy and greatly heighten the political risks facing Xi Jinping and the CCP.
