1 ‘Epic’ food delivery platform battle reflects difficult economic situation in China
Food delivery war
July 5
Chinese food delivery platform Meituan and e-commerce company Alibaba engaged in what observers have dubbed as an “epic” food delivery war. That evening, both companies issued a large number of so-called “no-threshold” discount coupons (Alibaba through platforms like Taobao Flash Sale and Ele.me) — offers like “21 yuan off on orders over 25 yuan,” 16 yuan off on order over 16 yuan” and even “zero-yuan purchases” — and sparked an explosion in order volumes.
Some noteworthy data from the “food delivery war” include:
- Meituan: As of 10:54 p.m. Beijing time on July 5, Meituan had processed over 120 million instant retail orders, 100 million of which were food orders (more than 80 percent of the total).
- Taobao Flash Sale and Ele.me: On the morning of July 7, the platforms announced that their combined daily order volume had surpassed 80 million, including over 13 million non-food orders. Their daily active users also shot over 200 million.
- Meituan’s app experienced server rate-limiting protection around 6 p.m. Beijing time on July 5, resulting in slow loading or inability to place orders in some regions. Food and beverage merchants saw order volumes spike, with some staff working up to 14 hours and inventories running out rapidly. However, actual revenue increases were limited. Some merchants complained about being “forced participants” in the discount campaign, with some even suffering losses.
- The food delivery discount war boosted consumer enthusiasm, and tea beverage stocks (e.g. Mixue Group and Guming) rose by 7 percent to 10 percent due to increased orders. However, Meituan and Alibaba stock prices came under pressure, with Meituan’s shares falling over 4 percent on July 5 (hitting a new low since September 2024) and Alibaba’s shares dropping 2 percent (losing tens of billions of yuan in market value) on the same day.
***
On May 13, the PRC State Administration for Market Regulation and four other ministries summoned representatives from Meituan, Alibaba, and JD.com for talks, according to state media. The CCP authorities demanded that those platforms curb the “involution-style” price wars, comply with the PRC’s e-commerce law, and protect the rights of consumers, merchants, and delivery workers.
Developing a ‘united national market’
July 1
Xi Jinping presided over the sixth meeting of the Central Financial and Economic Affairs Commission. The meeting focused on advancing the development of a unified national market and promoting high-quality growth of the marine economy.
The meeting laid out “five unifications and one openness” (五統一、一開放) framework for deepening the united national market:
- Unify foundational market institutions.
- Unify market infrastructure.
- Unify standards for government behavior.
- Unify market regulation and enforcement.
- Unify markets for factor resources.
- Continuously expand domestic and international openness
The meeting said that efforts must be made to target critical and difficult areas in deepening the united national market, including:
- Curb disorderly low-price competition among enterprises, and promote the orderly exit of outdated production capacity.
- Standardize government procurement and bidding processes.
- Regulate local government investment promotion practices.
- Integrate domestic and foreign trade, and streamline the transition from exports to domestic sales.
- Improve fiscal and tax systems, statistical accounting mechanisms, and credit systems that support market unification
- Refine the performance evaluation system for officials and enhance the metrics used for governance assessment.
Our take
The food delivery war between Meituan and Alibaba reflects a deepening of structural problems in China’s economy and governance.
1. Alibaba and Meituan are battling over shrinking market share as the Chinese economy continues to suffer from insufficient demand, overcapacity, and deflation. Deflationary pressures are reflected in the consumer price index, which fell by 0.1 percent year-on-year in May 2025 and increased slightly by 0.1 percent in June, and the producer price index, which dropped by 3.6 percent in June and saw an average decline of 2.8 percent during the January-June period. Meanwhile, overcapacity and weak domestic demand are reflected in the declining prices of production materials (e.g. coal mining: negative 21.8 percent, oil and natural gas: negative 12.6 percent) and consumer goods (e.g. durable goads: negative 2.7 percent) in May.
Meituan and Alibaba’s strategy of issuing coupons with steep discounts has led to increased consumption. But the move also further depresses price levels and exacerbates the deflationary spiral. Meanwhile, the fact that small and medium-sized merchants who have been pressed into participating in the discount war are seeing reduced profits or even operating at a loss indicates that the intense platform competition for existing market share is intensifying “involution” in the industry instead of addressing insufficient demand.
2. At a glance, the discount strategy used by Alibaba and Meituan entails significant short-term losses for the companies. But the strategy appears to be just one component of a broader financial game.
China’s e-commerce industry relies heavily on financial markets and the data economy to generate revenue. In other words, the core business model of food delivery platforms is not acting as service intermediaries, but leveraging user data and order volume to support mid-to-long term valuation and financial operations in the capital markets. By driving steep user growth in the short term with the discount strategy (Meituan: 120 million daily orders; Taobao Flash Sale and Ele.me: 80 million orders), the food delivery platforms are attempting to raise their valuation and paving the way for future financial market activities (IPOs, fundraising, etc.).
3. The intensification of the food delivery war despite earlier intervention by the CCP authorities suggests that platforms could be facing pressing financial difficulties or anticipate financial trouble down the road. Therefore, the platforms felt the need to roll out a discount campaign despite increased central government regulation to urgently consolidate or expand market share to sustain financing and avoid loan recalls or cutoffs by financial institutions.
Financial problems aside, it is curious that Meituan and Alibaba pressed ahead with their “involution-style” price war even after Beijing cautioned against it. Also, despite the central authorities’ call in the sixth meeting of the Central Financial and Economic Affairs Commission to curb disorderly low-price competition among enterprises, regulate local government investment promotions, and unify market regulation and enforcement, Alibaba and Meituan went ahead with a 50 billion yuan discount plan a day after the meeting.
We believe it is possible that the platforms could have the backing of powerful CCP political and business elites, and feel sufficiently secure in disregarding Beijing’s policies. If so, this reflects the persistence of the “orders not leaving Zhongnanhai” problem for the Xi Jinping leadership, as well as the continued tug-of-war between elite interests and central policies. Xi’s struggles with policy implementation and resistance by local interest groups could be a critical factor behind the Politburo’s recent effort to establish Central Committee decision-making, deliberation, and coordination bodies.
4. Should the food delivery war and unsustainable “involution-style” competition drag on, it could result in losses for multiple parties and further hinder China’s economic growth and recovery. The CCP authorities could also introduce even stricter measures to enforce constraints on competitive behavior; such measures, however, could be counterproductive and worsen problems for Beijing.
2 Why Xi skipped the BRICS Summit in Brazil–debunking speculation, assessing probable reasons
On June 25, the South China Morning Post reported that Xi Jinping would not attend the BRICS summit in Brazil from July 6 to July 7, the first time that Xi would miss the event. Citing officials familiar with the matter, the Post said that Xi had a “scheduling conflict” and PRC premier Li Qiang would attend in his stead. The Post also reported that one of the reasons for Xi’s absence was that he had already met with Brazilian president Luiz Inácio Lula da Silva two times in less than a year (G20 summit in November 2024 and at the China-Celac forum in Beijing in May 2025), citing Chinese involved in the preparations.
The PRC foreign minister subsequently confirmed that Li Qiang would go to Rio instead of Xi Jinping at a routine press conference on July 2.
Xi skipping the BRICS summit added more fuel to the intense speculation that he was “losing power.” Some overseas Chinese commentators cited the development as further proof that Xi was going to be replaced or already ousted, while others claimed that Party elders had forbidden Xi from traveling abroad.
Our take
1. We previously pointed out the problems with the Xi Jinping “losing power” narrative and the risks of buying into the speculation (see here and here). A review of Party propaganda, as well as the recent rhetoric of Xi Jinping’s political allies and Xi’s activities, indicates that it is very unlikely that Xi not attending the BRICS Summit in Brazil was due to his losing grip on power.
The claim that Xi Jinping did not go to Brazil because he is “losing power” can be more seriously considered if there were drastic changes in existing CCP propaganda and the policies being promoted by PRC officials. Drastic changes include the removal of all mentions to Xi in official media reports and documents, or the complete abandonment of Xi’s policies in favor of new or recycled political lines (i.e. promoting the “collective leadership” or Deng-style “reform”). But while there have been adjustments in how Xi and his policies are referenced (likely to refine propaganda and enhance indoctrination efforts), there are no drastic changes in CCP propaganda to date.
A review of propaganda and official remarks around the BRICS period shows that Xi continues to occupy the paramount position in the CCP regime. For propaganda, while People’s Daily had a report on premier Li Qiang’s activities and remarks at the BRICS Summit on each of its front page on the July 7, July 8, and July 9 edition of its print paper, articles about Xi, his policies, and his activities dominated the headlines and bulk of front pages. On the July 7 front page, for example, People’s Daily placed a Xinhua piece about the first volume of selected works of Xi Jinping on ecological civilization as the lead article, and at the top of the page, a report on Xi’s letter to teachers and students of the U.S. youth pickleball cultural exchange delegation from Montgomery County, Maryland to China. Meanwhile, a report about premier Li Qiang meeting with Brazilian president Lula was placed underneath the Xinhua report on the first volume of Xi’s selected works on ecological civilization.
Li Qiang’s speech to the BRICS Summit on July 6 saw him champion Xi’s foreign policies and theories. In his opening remarks, Li said that “transformations unseen in a century are accelerating in the world,” an extension of the “tremendous changes unseen in a century” theory that Central Party History and Documentation Research Institute dean Qu Qingshan cited as one of three reasons why the CCP had to adhere to the “Two Establishes” (a political theory upholding the importance of the Xi “core” and his political thought to the CCP). Li then promoted Xi’s “global governance vision of extensive consultation and joint contribution for shared benefit,” along with other rhetoric associated with the Xi leadership. Nothing in Li’s speech suggested that Xi was being marginalized, and instead affirmed the centrality of Xi, his political thought, and his policies.
Finally, Politburo Standing Committee member and Xi confidant Cai Qi made several remarks that promote Xi’s “core” leadership and his policies in a speech at a ceremony in Beijing to commemorate the 88th anniversary of the “nationwide resistance against Japanese aggression” (i.e. the Marco Polo Bridge Incident) on July 7. Cai called for:
- Fully grasping the decisive significance of the “Two Establishes” and resolutely carry out the “Two Safeguards”;
- Steadily advancing Chinese-style modernization;
- Uniting more closely around the Party Central with Xi Jinping at its core;
- Fully implementing Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era.
2. Xi Jinping is very unlikely to be “losing power” in the manner that external commentators have speculated. But while his paramount position does not appear to be under immediate threat, Xi still has to safeguard and bolster his “quan wei” (authority and prestige) to ensure that he stays on top and minimize his political risks. We believe that Xi’s “quan wei” considerations were a factor behind his decision to skip the BRICS Summit in Brazil.
On the home front, Xi sought to improve his “quan wei” by playing the nationalism card. The CCP held several activities to mark the 88th anniversary of the “nationwide resistance against Japanese aggression” around the period of the BRICS summit. From July 7 to July 8, Xi himself visited an exhibition hall dedicated to the CCP’s Hundred Regiments Offensive during his inspection trip to Shanxi Province. The Hundred Regiments Offensive was one of the Chinese communists’ few military operations against the Imperial Japanese Army during World War II. While the background and importance of the Offensive are debatable and the subject of controversy, it has long been a focal point in propaganda glorifying the CCP. With domestic sentiment souring on Xi and the CCP owing to various governance failures in recent years, Xi would understandably want to come across as being “patriotic” and looking out for China first by choosing to personally commemorate one of the Party’s nationalistic contributions to repelling invaders instead of mingling with foreign leaders in Brazil.
Externally, Xi could have been looking to preserve his “quan wei” by keeping some distance from BRICS at a time when the U.S. and its allies are adopting an increasingly antagonistic attitude towards that grouping of nations. Previously, Xi saw benefit to his “quan wei” by consistently attending BRICS meetings, advocating for “multipolarism,” positioning the PRC as the leader of developing nations, and promoting the PRC’s “governance model” as one that countries in the Global South can copy to advance their development. But Xi likely saw a risk with taking too high-profile a role with BRICS as the U.S. started to sour on the bloc. In particular, President Donald Trump has criticized BRICS and its plan to challenge the dollar’s role as the world’s reserve currency (“de-dollarization”). On July 6, Trump posted on Truth Social that any country that aligns itself with the “anti-American” policies of BRICS would be charged with an additional 10 percent tariff without exception. Trump repeated his threat in a cabinet meeting on July 8.
Had Xi attended the BRICS summit in Brazil, he would have been forced to act tough towards the U.S. following Trump’s tariff threat lest he and the PRC see their “quan wei” eroded for being unable to stand up to Trump and defend their positions on “multipolarism” and other geopolitical ideals. But since Li Qiang went to Brazil instead, Xi was able to have the CCP continue to promote his geopolitical theories at the BRICS gathering and not downgrade the significance it places on the group. Moreover, Xi was not obligated to respond to Trump’s tariff threat since he was not personally at the summit, hence avoiding the need for personal action or remarks that could potentially jeopardize U.S.-China trade negotiations and further strain the bilateral relationship.
3. Preserving “quan wei” aside, there are several other plausible reasons as to why Xi Jinping skipped the BRICS summit in Brazil:
- Xi could be prioritizing urgent domestic matters outside of commemorating China’s World War II resistance to the Japanese invasion, hence his “scheduling conflict” as reported by the South China Morning Post.
- As the South China Morning Post reported, Xi already met with Lula twice over the past year and sees no need to meet him again.
- Vladimir Putin, Xi’s closest ally in BRICS, was unable to attend the summit in person due to Brazil being a signatory to the International Criminal Court and being obligated to arrest Putin on a court charge alleging war crimes in Ukraine. Without Putin’s presence, the spotlight could shift to India and other newer BRICS nations, a development that would risk upstaging Xi.
