1 Beijing attempts to spur consumption with ‘special action plan’
Beijing issues consumption ‘special action plan’
March 16
The CCP General Office and the State Council General Office issued a “special action plan to boost consumption” (提振消費專案行動方案) and requested all regions and departments implement it in accordance with local conditions.
The Plan outlines 30 key tasks across eight focus areas. Notable parts of the plan include:
1. Actions to Increase Urban and Rural Household Income
- Promote growth in wage income.
- Expand channels for property income.
- Stabilize the stock market.
- Facilitate the entry of long-term capital.
- Diversify bond products suitable for individual investors.
- Increase farmers’ income.
- Revitalize rural housing and other assets.
- Address delayed payments.
- Strengthen local governments’ responsibility for overdue payments to businesses, especially small and micro enterprises, ensuring timely and full payments.
2. Actions to Support Consumption Capacity
- Enhance support for childbirth and child-rearing.
- Strengthen education support.
- Improve healthcare and elderly care guarantees.
- Ensure the basic living needs of key groups.
3. Actions to Improve Service Consumption and Public Benefits
- Optimize services for the elderly and children.
- Promote consumption in lifestyle services.
- Expand cultural, sports, and tourism consumption.
- Boost winter consumption (i.e. sports, tourism, etc.) and inbound tourism.
- Advance the opening-up of the service sector.
- Pilot opening-up measures in telecommunications, healthcare, and education.
4. Actions to Upgrade Durable Goods Consumption
- Implement trade-in programs for consumer goods.
- Promote the green and smart upgrading of durable goods such as automobiles, home appliances, and home furnishings.
Provide subsidies for digital product trade-ins to boost second-hand goods circulation.
- Support housing consumption.
- Ensure a stable real estate market, as well as renovate urban villages and dilapidated housing.
- Improve policies for the use of housing provident funds and loan support.
- Extend the automotive consumption chain.
5. Actions to Enhance Consumption Quality
- Strengthen consumer brands.
- Develop Chinese service brands.
- Support new types of consumption.
- Improve integration between domestic and foreign trade.
6. Actions to Improve the Consumption Environment
- Protect rights to rest and vacation.
- Strictly implement paid leave policies, encourage flexible and staggered vacations, and explore adjustments to school holiday arrangements.
- Improve urban and rural consumption infrastructure.
7. Actions to Optimize and Remove Restrictions
- Reduce consumption restrictions.
- Improve the business environment.
- Refine the negative list for market access, eliminate market entry barriers, and simplify approval processes.
8. Actions to Improve Support Policies
Weakening consumption
March 9
China’s national consumer price index (CPI) fell by 0.7 percent in February from a year ago, according to data released by the National Bureau of Statistics. The CPI for the January-February 2025 period fell by 0.1 percent compared to the same period in 2024.
March 17
China’s total retail sales of consumer goods increased by 4.0 percent year-on-year in the January-February 2025 period. In comparison, total retail sales of consumer goods grew by 5.5 percent from a year ago in the January-February 2024 period.
Meanwhile, retail sales of consumer goods excluding automobiles increased by 4.8 percent to 7.7 trillion yuan.
Gov’t bonds make up bulk of social financing
March 14
The People’s Bank of China released financial data for February 2025:
- Total social financing increased by 2.23 trillion yuan in February, compared to up 1.5 trillion yuan in the same period last year.
- Net government bond financing increased by 1.1 trillion yuan year-on-year, or 1.5 times the overall increase in social financing.
- Government bond financing reached 1.7 trillion yuan in February and accounted for 76.2 percent of the increase in total social financing that month.
- New renminbi loans in February amounted to 1.01 trillion yuan, or down from the 1.45 trillion yuan recorded in the same period in 2024. Meanwhile, credit growth was lower in February 2025 as compared to the previous year despite there being more working days that month due to the Chinese New Year holiday falling in January (whereas the holiday was in February in 2024).
- New medium and long-term loans to enterprises saw a sharp decline in February to 540 billion yuan, or less than the 1.29 trillion yuan recorded in the same period last year.
Beijing courts foreign investors
March 17
Reuters reported that dozens of foreign CEOs will attend the annual China Development Forum in Beijing from March 23 to March 24 and some are expected to meet with Xi Jinping, according to a draft agenda and three sources familiar with the matter.
The chief executives attending include those of FedEx, Siemens, BMW, Mercedes-Benz, Qualcomm, AstraZeneca, Nestle, Saudi Aramco, Citadel, Rio Tinto, Estee Lauder, Standard Chartered, and KPMG. The chairman of Deutsche Bank is also expected to be in attendance.
Our take
1. The PRC’s latest official economic data indicates that consumption growth in China is weakening year by year and credit growth is increasingly driven by government bond issuance.
Weakening domestic consumption and the escalation of trade issues with the U.S. and other countries has likely heightened Beijing’s urgency to come up with a “special action plan” to boost consumption. Stimulating domestic consumption will help to absorb China’s excess capacity as exports decline due to trade wars. Meanwhile, Beijing is hoping that its “special action plan” and other economic policies can attract Western investments and inject much-needed capital into the economy.
2. Beijing’s “special action plan” to boost consumption appears to be primarily focused on promoting consumption without addressing the underlying issues behind weak consumption. The Chinese people are not consuming as much because they are unwilling to spend, but have fewer means to spend. In particular, incomes have fallen across the board amid steady economic deterioration and rising unemployment in recent years, the regime’s social safety net is inadequate, and the real estate crisis has turned many in the middle class into so-called “negative asset holders.” Domestic consumption in China is likely to decline as the business and economic environment worsens under Xi Jinping’s “Party leads everything” model, growing geopolitical tensions, shifting supply chains, and the exodus of foreign capital from the mainland.
Given that the “special action plan” does not target the fundamental issues behind weak consumption in China, it is more akin to “political performance” by the officials in economic departments designed to appease the Xi leadership rather than a tangible blueprint to deliver results. The CCP authorities could be wary of distributing cash directly to the public to spur consumption lest they put the money into savings or debt payments instead of spending on consumer goods.
Beijing has also indicated that improving social security benefits is a low priority. For instance, premier Li Qiang’s government work report emphasized investing and developing key technologies rather than spurring consumer spending and social security; nearly 12 trillion yuan of new government debt was announced, yet the minimum basic pension for urban and rural residents was only increased by 20 yuan.
3. Beijing’s recent economic policies suggest that it appears to be lacking in fresh ideas. Worse, the CCP’s own data indicate that its economic support measures are lacking in efficacy, possibly because the measures themselves do not adequately address the root cause of problems and are not being properly implemented.
The central government’s inability to provide local governments with clear, detailed, and executable economic plans will ensure that real economic improvements will be difficult to achieve.
2 Analyzing post-Two Sessions rumors concerning CCP elite politics
Rumors concerning CCP elite politics began circulating again shortly after the conclusion of the Two Sessions.
CMC vice chair probed?
March 13
Rumors circulating in overseas Chinese-speaking circles claim that Central Military Commission vice chairman He Weidong was taken away for investigation shortly after Two Sessions ended on March 11. He’s residences in Beijing and Shanghai were reportedly searched. Some overseas Chinese commentators suggest that He’s absence from a symposium on March 14 marking the 20th anniversary of the implementation of the PRC anti-secession law is evidence supporting the probe claim.
March 15
Rumors circulating in overseas Chinese-speaking circles claim that Zhao Keshi, a former CMC member, former head of the CMC General Logistics Department (now Logistics Support Department), and first head of the CMC Logistics Support Department, was taken away for investigation.
Concurrently, rumors claim that the deputy commander of the Western Theater Command, the commander of the Eastern Theater Command Navy, the deputy director of the CMC Science and Technology Commission, the director of the CMC General Office, and several military commanders that hail from Fujian Province were recently investigated or placed under some form of control.
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Some overseas Chinese commentators believe that the above rumors are further signs that Xi Jinping has “lost power.”
Xi rehabilitating Bo Xilai?
March 17
Yuan Hongbing, an Australia-based Chinese dissident and jurist, told overseas Chinese media outlet Kanzhongguo several political rumors pertaining to former Chongqing mayor and Jiang Zemin faction member Bo Xilai:
- Rumors “circulating wildly” in Beijing’s political circles claim that Bo Xilai, who is currently serving a life sentence in Qincheng Prison, submitted a petition to the Supreme People’s Court and Supreme People’s Procuratorate before the 2025 Two Sessions seeking a reversal of his conviction. The rumors add that Bo, who exercises and reads regularly, has the “mental sharpness and vigor” (精神矍鑠) of a 60-year-old despite being 76 this year.
- Rumors claim that Bo’s appeal to the PRC’s highest judiciary and procuratorial authorities is “actually backed” by Xi Jinping. Xi allegedly intends to have Bo spearhead a leftist movement aimed at intimidating and deterring “anti-Xi” forces who oppose his bid to stay on in power at the 21st Party Congress. The “anti-Xi” forces, who are said to be “staunch supporters of Deng Xiaoping’s political path,” include Deng Pufang (Deng Xiaoping’s son), Chen Yuan (Chen Yun’s son), and former premier Wen Jiabao.
- After the Two Sessions, Politburo Standing Committee member Cai Qi allegedly proposed launching a rectification campaign to purge and crack down on the forces challenging Xi. The rumors claim that if Cai’s campaign is successful, Xi will have no need to “open the Pandora’s Box” by releasing the “chaos demon king” that is Bo Xilai.
Our take
1. Determining the accuracy of political rumors circulating in overseas Chinese-speaking circles is a very tricky business. Even the more reliable commentators with “sources inside the CCP” could unwittingly be disseminating disinformation or outright false information from various Party factions with different agendas. Commentators could also incorrectly frame the “insider information” they receive in spreading political rumors because they are unfamiliar with factional dynamics in the Party elite.
The truth of political rumors can be hard to independently verify. But their veracity can be somewhat discerned through observing official propaganda and Beijing’s actions, as well as assessing the internal logic of those rumors. An example of faulty internal logic concerns rumors that claim Xi Jinping has already been sidelined and that forces who oppose Xi (Party elders, etc.) are actually running China now. Those rumors never explain why the “anti-Xi” forces are still running policies that are entirely consistent with Xi’s agenda even though the person they oppose is supposedly no longer in charge.
Meanwhile, rumors claiming that Xi has “lost power” often provide very selective “evidence” from official propaganda and actions without considering the totality of what Beijing has put out or providing adequate context. For instance, some rumors claim that Cai Qi’s Central Leading Group for Party Building’s March 12 meeting promoting political indoctrination hints that Xi has been sidelined because Cai is acting on orders from a “Party Central” helmed by “Party elders” who supposedly displaced Xi and it was this “Xi-less Party Central” that ordered the “education initiative.” However, those rumors do not mention that the Xinhua report of the meeting stated that Xi “attached great importance” to the “education initiative,” as well as “personally planned and determined the theme of the study and education, delivered an important speech, and issued significant instructions.” Another “evidence” that is frequently cited to claim that Xi has “lost power” is the series of commentaries published in the People’s Liberation Army Daily in December 2024 that concern the promotion of “democratic centralism” and the “collective leadership.” We earlier analyzed that the commentaries in fact adhere to the Xi leadership’s campaign to promote “democratic centralism” and do not represent a challenge to Xi’s rule or signal that Xi is losing his grip over the military.
Political rumors circulating in overseas Chinese-speaking circles are often unreliable and are difficult to interpret. However, even the most unreliable of rumors are helpful in reflecting a little of what goes on inside the “black box” that is CCP elite politics. For instance, persistent rumors about Xi “losing power” show that the latter is immensely disliked and has few allies outside his leadership and the Xi camp. The rumors also reflect desperation on the part of “anti-Xi” elements as Xi’s grip on power appears to have strengthened with time rather than slacken.
2. We have not been able to independently verify that CMC vice chairman He Weidong is being investigated as rumored. Further, the CCP authorities have not released any obvious signs that suggest He is in trouble. For instance, official mainland media has not removed any references or reports about He Weidong at the time of writing.
The claim by overseas Chinese commentators that He is in trouble because he did not attend a symposium on March 14 marking the 20th anniversary of the implementation of the PRC anti-secession law is insufficient evidence. Notably, there does not appear to be a political requirement for the second-ranked CMC vice chair to attend the symposium. When the symposium to commemorate the 15th anniversary was held in May 2020, it was first-ranked CMC vice chair Xu Qiliang who showed up. If Xu had set a precedent, then current first-ranked CMC vice chairman Zhang Youxia should have attended the 20th anniversary symposium, not the second-ranked He Weidong. The attendance of CMC member Liu Zhenli suggests that there is no specific requirement that CMC vice chairs should go to the meeting.
While there is currently no evidence from publicly available official information that He Weidong is being investigated, that does not mean that the development should be ruled out. As the direct superior of the purged CMC Political Work Department director Miao Hua, it is possible that He, the CMC vice chairman who oversees political work, was implicated in the probe into Miao. Another overlapping possibility is that Xi has become more paranoid and distrustful of his loyalists, and has decided to move in on He as part of a broader effort to reshuffle his senior military officials. Regardless, an investigation of He Weidong would represent another major blow to Xi’s “quan wei” because the latter oversaw the “rocket” promotion of He from Eastern Theater commander to CMC vice chair at the 20th Party Congress despite He having not served as a CMC member previously.
3. Like the rumor of He Weidong, we have not been able to independently corroborate the rumor that former CMC member Zhao Keshi is being probed. However, an investigation of Zhao is more likely than an investigation of He because the former rose up the ranks during the Jiang faction’s era of dominance and once helmed the Jiang faction-controlled and highly corrupt General Logistics Department. Aside from Xi clearing out the remnant Jiang faction, Zhao could have simply been implicated in the sweeping anti-corruption drive in the military that kicked off after the downfall of former defense minister Li Shangfu in mid-2023.
Typically, a retired senior official like Zhao Keshi would not be investigated unless he is suspected of committing serious offenses. Zhao was not touched by Xi’s earlier anti-corruption efforts in the PLA and frequently appeared at the annual Chinese New Year gala for retired military cadres. But the current anti-corruption effort is likely to more closely scrutinize the logistic department given its involvement with PLA Rocket Force corruption and other procurement matters. The General Logistics Department during the Jiang era also played a critical role in CCP’s illicit organ harvesting operations. This leaves Zhao Keshi open to being targeted for both political and governance reasons.
4. The rumor that Xi Jinping is planning to rehabilitate Bo Xilai does not align with the dynamics of factional struggle in the CCP elite and CCP political operations. Xi gains no strategic advantage whatsoever in freeing the top lieutenant of the most influential of the factions that are opposed to him. If anything, any attempt to rehabilitate Bo would weaken Xi’s “quan wei” because the latter would be seen as being incapable of cleaning up his own “mess.”
A rehabilitated Bo would also be unable to help Xi in targeting “anti-Xi” forces. Bo would not be able to participate in politics if CCP political norms are adhered to, and he would not have the political capital or influence to pose any real threat to Xi’s remaining factional enemies. Xi could of course vest Bo with political power in this hypothetical scenario, but this would be tantamount to political suicide for Xi to boost a rival and be completely self-defeating.
The “Xi rehabilitates Bo” rumor appears to be aligned with the arguments and logic behind the “Objective Evaluation of Xi Jinping” article from early 2022. We analyzed at the time that the “Objective Evaluation” appears to be an “unofficial Jiang faction counter to Xi Jinping’s ‘historical resolution’” that glorifies Bo Xilai while disparaging Xi. It cannot be ruled out that the “Xi rehabilitates Bo” rumor is an attempt (albeit a half-hearted one) by “anti-Xi” forces to sow confusion in the public discourse and cast Xi as being politically inept and mentally unstable. The “anti-Xi” forces could also be looking to shift public resentment towards Bo over his having started a leftist movement (during his tenure in Chongqing) onto Xi.
5. Some observers have argued that Xi Jinping’s grip on power is clearly slipping if he is going after both allies and enemies as rumored. However, we believe that the purges, if accurate, are signs that Xi is consolidating even more power.
Xi appears to be paving the way to take a fourth term at the 21st Party Congress in 2027. Propaganda and indoctrination efforts aside, it would be in Xi’s interest to initiate pre-emptive purges to eliminate any official who shows even the slightest signs of disloyalty and dissatisfaction towards him. Xi would then replace those officials with younger ones who owe the bulk of their career progression to him and have greater motivation to unswervingly defend the “Xi core.” This analysis is predicated on the rumors of Xi targeting various officials being true; we believe that Xi might not make drastic personnel adjustments if he is less paranoid than is sometimes claimed and more inclined to prioritize political stability.
