1 Senior officials’ praise of Xi at Two Sessions underscores his political position
March 5 to March 7
PRC state mouthpiece Xinhua reported that senior Party, government, and military officials expressed their support for Li Qiang’s 2025 government work report during group discussions at the Two Sessions.
The officials said China saw “extraordinary” development over the past year and achievements were “hard-won.” They added that Party Central with Comrade Xi Jinping at the core demonstrated strategic decision-making and composure in the face of multiple challenges and tests, leading the entire Party, military, and people of all ethnic groups in overcoming difficulties and striving forward. The officials said that they have a better understanding of the “decisive significance” of the “Two Establishes” and expressed their commitment to firmly uphold the “Two Safeguards.”
Noteworthy expressions of loyalty to Xi by the officials include:
Central Military Commission members
- Zhang Youxia, vice chairman of the Central Military Commission, said that the military must always align its thinking and actions with the decisions and deployments of Chairman Xi. He added that it is essentially to genuinely study, understand, believe in, and apply Xi Jinping Thought.
- He Weidong, CMC vice chairman, said that the entire military must deeply comprehend the decisive significance of the “Two Establishes,” resolutely implement the “Two Safeguards,” and adhere strictly to the “CMC Chairman Responsibility System.” He added that the military needs to continue deepening political training and rectification.
- Liu Zhenli, chief of staff of the CMC Joint Staff Department, noted that the “extraordinary” course of 2024 has made the military more deeply aware that the greater the turbulence, the more decisive the significance of the “Two Establishes” stands out.
- Zhang Shengmin, secretary of the CMC discipline inspection commission, said that military disciplinary and supervisory bodies must focus on implementing the “Two Safeguards” and strengthen political oversight in line with the “CMC Chairman Responsibility System.”
Politburo members
- Ma Xingrui, Party secretary of Xinjiang, said that the 2025 government work report was “uplifting and inspiring.” He added that Party Central with Comrade Xi at the core had steered the Chinese economy with “steady hands” and “injected strong momentum” over the past year.
- Wang Yi, director of the Central Foreign Affairs Office, said that the PRC’s achievements of the past year are fundamentally due to Xi’s leadership (or “steering the helm” [“領航掌舵”]).
- Yin Li, Party secretary of Beijing Municipality, affirmed Beijing’s support for the “Two Establishes” and commitment to the “Two Safeguards.” He added that the municipality will implement the decisions and deployments of Party Central.
- Shi Taifeng, head of the United Front Work Department, stressed the importance of deeply understanding the decisive significance of the “Two Establishes,” resolutely upholding the “Two Safeguards,” further elevating one’s political positioning, recognizing the overall situation, and aligning thoughts and actions with the scientific judgments of Party Central while maintaining strategic focus, confidence, and patience.
- Liu Guozhong, PRC vice premier, noted that 2025 marks the final year of the 14th Five-Year Plan, and officials need to align their thoughts and actions with Party Central’s scientific assessment of the situation and its strategic decisions to ensure creative and effective implementation (of Beijing’s policies).
- Li Ganjie, head of the Central Organization Department, said that the PRC’s development journey over the past year was “extraordinary,” and attributed the regime’s “impressive achievements” to Xi’s leadership and the scientific guidance of Xi Jinping Thought.
- Li Shulei, head of the Central Propaganda Department, noted the importance of understanding the “Two Establishes” and upholding the “Two Safeguards,” as well as using the Party’s innovative theories to guide action and inspire the people to unite and strive under the Party’s banner.
- Li Hongzhong, vice chairman of the Standing Committee of the National People’s Congress, said that Xi Jinping’s decisive leadership and timely decision-making have driven economic recovery and progress. Also, the development of Xi’s economic thought has kept pace with the times, providing strong theoretical and practical guidance for high-quality economic development. Further, this fully demonstrates that the “Two Establishes” have decisive, fundamental, and long-term significance for Chinese-style modernization to “ride the winds, break the waves, and sail steadily into the future.”
- Zhang Guoqing, PRC vice premier, said that “practice has once again proven” that firmly upholding the “Two Establishes” and resolutely achieving the “Two Safeguards” provide the greatest certainty and assurance in overcoming all challenges and uncertainties.
- Cheng Wenqing, secretary of the Central Political and Legal Affairs Commission, said “practice has proven” that Xi’s leadership is the fundamental guarantee for all victories. He also urged political and legal affairs institutions to resolutely uphold the “Two Establishes” and the “Two Safeguards.”
- Chen Jining, Shanghai Municipal Party secretary, said officials must more deeply comprehend the decisive significance of the “Two Establishes,” strengthen the “four consciousnesses,” firmly uphold the “four confidences,” and resolutely achieve the “Two Safeguards.”
- Chen Min’er, Tianjin Municipal Party secretary, said that the Party’s centralized and unified leadership under Xi is the essential guarantee for achieving success. Also, there is no obstacle to the PRC’s development that cannot be overcome when the entire nation is united to tackle challenges under the strong leadership of Party Central.
- Yuan Jiajun, Chongqing Municipal Party secretary, praised the government work report for fully embodying Xi Jinping Thought. He added that the report “raises the flag, builds consensus, inspires progress, and boosts confidence.”
- Huang Kunming, Guangdong Party secretary, said 2024 was “not an easy” and “extraordinary” year. He credited Xi Jinping’s firm strategic confidence, forward-looking judgment, and exceptional strategic planning for stabilizing the economic situation amidst complex and severe circumstances.
State councilors
- Wang Xiaohong, secretary of the Central Secretariat, said that “practice has once again proven” that the Party’s centralized and unified leadership under Xi Jinping is the essential guarantee for achieving all successes.
- Wu Zhenglong, secretary-general of the State Council, fully endorsed the government work report, claiming that it “summarizes achievements in the manner of ‘seeking truth from facts,’ analyzes the situation objectively and comprehensively, sets inspiring goals and tasks, provides precise and effective measures, unites hearts, inspires progress, and emphasizes practical action.” Also, “practice has once again proven” that Xi’s leadership and the centralized and unified leadership of Party Central are the fundamental guarantees for achieving all victories.
- Shen Yiqin, state councilor, reflected on the past year’s work and noted that Xi Jinping’s leadership is the most critical and decisive factor for “enabling the giant ship of China to ride the winds, break the waves, and sail steadily into the future” (i.e. see continued progress and stability).
Vice Chairpersons of the Standing Committee of the National People’s Congress
- Wang Dongming, chairman of the All-China Federation of Trade Unions, said that trade unions at all levels must firmly support the “Two Establishes,” resolutely uphold the “Two Safeguards,” and unite and guide hundreds of millions of workers to “unwaveringly listen to the Party and follow its lead” (聽黨話、跟黨走).
- Xiao Jie, vice chairman of the National People’s Congress Standing Committee (NPCSC), said that 2025 marks the final year of the 14th Five-Year Plan and it is essential to adhere to Xi Jinping Thought and fully implement Party Central’s decisions and deployments.
- Zheng Jianbang, chairman of the central committee of the revolutionary committee of the Chinese Kuomintang, said 2024 was a “milestone year” and credited Party Central with Comrade Xi at the core for its far-sighted and decisive decision-making, which has boosted social confidence and driven economic recovery.
- Ding Zhongli, NPCSC vice chairman, expressed full support for the government work report and praised the report for its “clear objectives, focused priorities, and ambitious vision.”
- Hao Mingjin, NPCSC vice chairman, called for even closer unity around Party Central with Comrade Xi at the core and the resolute implementation of its decisions and deployments.
- Cai Dafeng, NPCSC vice chairman, noted that 2025 was the final year of the 14th Five-Year Plan, and that it is vital to thoroughly study and implement Xi Jinping Thought, as well as firmly grasp the goals and central tasks of the new journey.
- He Wei, NPCSC vice chairman, said that the government work report fully demonstrates the need to steadfastly support the “Two Establishes” and uphold the “Two Safeguards.”
- Wu Weihua, NPCSC vice chairman, attributed the CCP authorities’ hard-won achievements of 2024 to the strong leadership of Party Central with Comrade Xi at the core and the scientific guidance of Xi Jinping Thought.
- Tie Ning, NPCSC vice chairman, praised the report for its “high political positioning” and added that the report reflects Xi’s important instructions and Party Central’s decisions while addressing public expectations and social concerns.
- Zhang Qingwei, NPCSC vice chairman, said that the “Two Establishes” provide officials with “the greatest certainty amid the greatest uncertainty, the greatest confidence, and the greatest assurance.”
- Shohrat Zakir, NPCSC vice chairman, said that officials must deeply understand the decisive significance of the “Two Establishes,” resolutely achieve the “Two Safeguards,” and earnestly understand, implement, and carry out the goals and tasks set by Party Central’s decisions and deployments as well as the government work report.
Vice chairpersons of the National Committee of the Chinese People’s Political Consultative Conference
- Xinhua reported that vice chairpersons of the CPPCC Hu Chunhua, Shen Yueyue, Wang Yong, Edmund Ho Hau-wah, Bagatur, Su Hui, Jiang Xinzhi, Zhu Yongxin, Mu Hong, Wang Dongfeng, He Baoxiang, and Wang Guangqian each “fully endorsed” the government work report during Two Sessions discussions with their respective sectors and attributed the PRC’s achievements over the past year to Xi’s leadership (“steering the helm”).
Supreme People’s Court and Supreme People’s Procuratorate
- Zhang Jun, president of the Supreme People’s Court, affirmed the court’s commitment to fully implement Xi Jinping Thought on the rule of law and the overall national security concept.
- Ying Yong, procurator-general of the Supreme People’s Procuratorate, emphasized that the “Two Establishes” and the “Two Safeguards” provide the greatest certainty, confidence, and guarantee for overcoming difficulties and addressing uncertainties.
Big picture
1. China’s economy performed worse in 2024 than in 2023, with persistent deflationary pressures and weak domestic demand. While Beijing introduced a series of economic support measures from the end of September, those measures did not appear to have done much to stimulate the economy or halt the real estate sector’s decline.
2. Since the Third Plenum of the 20th Central Committee in 2024, rumors have continuously circulated in overseas Chinese-speaking circles about how Xi Jinping has supposedly “lost power” or is losing authority (大權旁落). Some of the rumors claim that some Party elders are reportedly in control now and the military is effectively under the command of CMC vice chair Zhang Youxia.
Our take
1. The senior Party, government, and military officials listed in the Xinhua report who expressed loyalty to Xi Jinping are all at the deputy national level. State media had previously reported the praise of Xi’s achievements and demonstrations of loyalty to him by deputy national level officials, but not in such concentration.
The senior officials unanimously “endorsed” the 2025 government work report and credited Xi’s political theories, leadership, and decision-making for “stabilizing the economic situation” in an “extraordinary” 2024. The officials then used Xi’s “accomplishments” to justify supporting him via upholding the “Two Establishes” and the “Two Safeguards.” And consistent with the CCP’s long-standing practice of “spinning tragedy into victory” and only reporting “positive” things, the senior officials cite little actual data or achievements in urging the officialdom to follow the Xi leadership and work to hit the 2025 targets and goals.
2. On the one hand, the overwhelming display of loyalty towards Xi Jinping is a sign that his paramount status in the regime is intact and he retains a firm grip on power. In particular, the remarks from members of the CMC directly refute rumors over the past year that Xi has “lost control” over the military. We have repeatedly debunked the rumors and speculation about Xi having “lost power” or having his control over the military weakened.
On the other hand, Xinhua’s concentrated coverage of senior officials’ lauding Xi suggests that the Xi leadership could be aware of the circulating rumors in overseas Chinese-speaking circles and is uneasy about the situation. Therefore, state media could have been tasked to convey through reporting of senior officials proclaiming loyalty to Xi that the latter’s grip on power is firm and the Party is fully behind the “centralized and unified leadership” of “Party Central with Comrade Xi at the core.”
3. The flipside of senior officials praising Xi Jinping and his “achievements” in an over-the-top fashion is that Xi’s risk of being trapped inside an information bubble will increase.
With no one in the senior ranks daring to make negative remarks or sound off on serious problems facing the regime, Xi could become overconfident and prone to overestimating the PRC’s capabilities. This could lead to the Xi leadership making policy decisions that are detached from economic and geopolitical realities, exacerbating China’s economic crisis and diplomatic challenges.
2 China’s cooling imports and exports foreshadow growth challenges
China’s trade figures dim at start of 2025
March 7
The PRC General Administration of Customs released trade data for the first two months of 2025.
Trade in the January-February period
- Total trade volume decreased by 2.4 percent year-on-year to $910 billion (the growth rate was down 2.3 percent when compared with official PRC data for 2024).
- Exports increased by 2.3 percent year-on-year to $540 billion (no difference in growth rate when compared with official PRC data for 2024). This was the slowest growth since May 2024 and well below the 4.5 percent growth forecasted by economists polled by The Wall Street Journal.
- Imports decreased by 8.4 percent year-on-year to $370 billion (the growth rate was down 8.3 percent when compared with official PRC data for 2024). This was the lowest level of growth since August 2023.
- Trade surplus increased by 36.2 percent year-on-year to $170.52 billion.
- China’s trade surplus with the European Union increased by 7.3 percent year-on-year to $42.15 billion.
- China’s trade surplus with the United States increased by 3.7 percent year-on-year to $49.05 billion.
- China’s trade surplus with ASEAN increased by 19.2 percent year-on-year to $30.61 billion.
China’s exports to key trade partners in January-February
- EU: Up 0.6 percent.
- US: Up 2.3 percent.
- ASEAN: Up 5.7 percent.
- Russia: Down 10.9 percent.
- Latin America: Up 3.2 percent.
Key imports with significant declines in January-February
- Key commodities that saw a reduction in import value exceeding $1 billion include:
- Iron ore and concentrates: Import value down $8.17 billion (down 30 percent); import volume down 8.4 percent.
- Crude oil: Import value down $5.43 billion (down 10.5 percent); import volume down 5 percent.
- Grain: Import value down $4.13 billion (down 35.6 percent); import volume down 35.2 percent.
- Automobiles (including chassis): Import value down $3.04 billion (down 50.3 percent); import volume down 45.8 percent.
- Natural gas: Import value down $1.56 billion (down 13.8 percent); import volume down 7.7 percent.
- Coal and lignite: Import value down $1.47 billion (down 18.5 percent); import volume up 2.1 percent.
- Soybeans: Import value down $1.10 billion (down 14.8 percent); import volume up 4.4 percent.
Walmart asks Chinese suppliers for steep price cuts
March 6
Bloomberg News reported that Walmart has asked some Chinese suppliers to lower their prices by as much as 10 percent per round of tariffs, or “essentially shouldering the full cost of Trump’s duties,” citing people familiar with the matter. The people added that few suppliers have agreed to slashing prices thus far because their margins are already razor thin
The people said that some Chinese suppliers would make a loss on price reductions greater than 2 percent. Other suppliers have seen their own upstream vendors reject requests to cut prices more than 3 percent, which forces manufacturers to consider purchasing some parts from Vietnam. The people said that the move has caused concerns that product quality will be affected by lower prices.
Backdrop
Since taking office in January 2025, President Donald Trump has increased tariffs on all Chinese products by 20 percent. U.S. tariffs on China are now about 45 percent, including tariffs from Trump’s first term.
Our take
1. The slowdown in China’s trade in the first two months of 2025, particularly when compared with growth near the end of 2024, suggests that the rush by U.S. importers to frontload goods ahead of escalations in the Sino-U.S. trade war is trickling down. The impact of President Trump’s recent tariffs on Chinese exports is likely to surface in subsequent months.
2. China’s export figures to major trading partners and its trade surplus indicate that it is still heavily reliant on the European and American markets to absorb its excess production capacity.
Separately, much of China’s exports to ASEAN are likely re-exports to the United States. With Trump continuing to impose additional tariffs on China and closing export loopholes, China’s exports are likely to shrink further in the future. U.S. importers like Walmart demanding that Chinese suppliers slash prices would place additional strain on manufacturers. As Chinese exporters become increasingly unprofitable, China could see a rise in factory closures, worker layoffs, and a contraction in both domestic consumption and production demand. This would in turn further exacerbate deflationary pressures in China and worsen China’s economic deterioration.
3. The sharp decline in China’s imports reflects several important signals:
i) A reduction in imports portends a reduction in future export demand and worsening economic growth. In particular, the drop in iron ore and crude oil exports indicates reduced demand for raw materials and hints at lower production activity.
ii) The steep drop in grain imports in the first two months of 2025 is suspicious given China’s long reliance on such imports to boost domestic harvest and supplies. While the CCP authorities typically claim that China has “bumper harvests,” the claim is especially weak in 2024 when the outbreak of several natural disasters affected 10.8941 million hectares of crops. We believe that recent sharp drop-off in grain imports could reflect a corresponding drop in China’s population, likely during the COVID-19 pandemic years and after.
At first glance, population decline in recent years might not seem like an adequate explanation for the drop in grain imports this year. Per official figures, grain imports were up in the past three years:
- January – February 2022: Grain import volume increased by 0.6 percent and import value increased by 28.4 percent. (Note that grain prices were affected by global fluctuations, peaking when the Russia-Ukraine war broke out in 2022 and dropping in subsequent years.)
- January – February 2023: Grain import volume increased by 7 percent and import value by 21.0 percent.
- January – February 2024: Grain import volume increased by 10.9 percent and import value decreased by 3.0 percent.
However, the official data corresponds to the lengthy cycle of food distribution and circumstances at the time. The PRC likely purchased more grain in 2023 and 2024 to hoard after the Russia-Ukraine war broke out and the geopolitical situation increasingly grew tense. Meanwhile, pandemic-related deaths would take time to be reflected in society and could still surface even after the end of “zero-COVID” at the end of 2022. Therefore, the lower demand for grain due to likely significant population decline is only reflected in the grain import data in early 2025 and not earlier.
4. China’s poor export figures suggest that Beijing will find it difficult to hit its growth target of 5 percent in actuality even after increasing the scale of government debt issuance and pushing production investment and infrastructure development. Instead, Beijing would almost certainly have to rely on the National Bureau of Statistics’ usual data manipulation to meet its growth objectives.
