1 Military delegate absences at the Two Sessions hint at unprecedented scale of probe
Xi addresses military delegates at the Two Sessions
March 7
Xi Jinping delivered a speech while attending a plenary meeting of the delegation of the People’s Liberation Army and the People’s Armed Police Force at the fourth session of the 14th National People’s Congress.
In his remarks, Xi stated that since the 18th Party Congress, Party Central has led the military to deepen political rectification and advance the principle of “building the military politically” with unprecedented determination and intensity, achieving major results. Xi emphasized that in the military, being the force that “holds the gun” (拿槍桿子的), there must never be individuals who are disloyal to the Party, nor may there be any place where corrupt elements can hide. The fight against corruption in the military must therefore be carried out with unwavering determination.
Xi also said strict supervisory rules must be established at the start of the 15th Five-Year Plan period:
- Closely monitor fund flows, the exercise of power, and quality control in key areas.
- Strengthen oversight of major military projects.
- Enhance supervision of military–civil integration.
- Ensure that military development and construction proceed under strict regulatory oversight.
- Advance reform of military budget management.
- Maintain a dynamic balance between military spending supply and demand.
- Strengthen full-chain oversight and performance evaluation of military expenditures, ensuring that every yuan is spent where it is most effective.
Xi further stressed the need to comprehensively strengthen Party leadership and Party-building within the PLA and to properly select and strengthen the top-level Party committees. He reiterated the principles of the Party commanding the military, the Party managing cadres, and the Party overseeing the relevant sectors. Xi also said that modernized weapons and equipment must be placed in the hands of revolutionary and politically loyal personnel (i.e. officers and soldiers who “listen to the Party and follow the Party.”)
Xi called for advancing the training of four categories of personnel:
- Joint operations command personnel.
- Personnel for new types of combat forces.
- High-level scientific and technological innovation talent.
- High-level strategic management professionals.
March 8
PRC state mouthpiece Xinhua published a special Two Sessions feature titled, “Uniting Strength to Advance National Defense and Military Modernization with Steady Progress — Chairman Xi Jinping’s Important Speech at the Plenary Meeting of the PLA and Armed Police Delegation Inspires the Entire Military to Forge Ahead on the Path of Building a Strong Army and Win Tough Battles.” The article said that Xi’s speech at the plenary meeting triggered (positive) “strong reactions” throughout the entire military.
Subsequently, the PLA Daily published commentary articles on consecutive days praising Xi’s speech.
Military personnel attendance at the Two Sessions
Footage from CCTV’s primetime program Xinwen Lianbo on March 7 showed only four active-duty full generals in attendance at the Two Sessions plenary meeting for military delegates:
- Zhang Shengmin, Central Military Commission vice chairman.
- Dong Jun, defense minister.
- Yang Zhibin, commander of the Eastern Theater Command.
- Han Shengyan, commander of the Central Theater Command.
Two retired full generals were also present:
- Fan Xiaojun (former political commissar of the Northern Theater Command), deputy director of the Education, Science, Culture and Public Health Committee of the NPC
- Yi Xiaoguang (former commander of the Central Theater Command), deputy director of the Social Development Committee of the NPC
Xinwen Lianbo gave Wang Xiaohong — a member of the CCP Secretariat, State Councilor, and minister of public security — a separate individual shot lasting about three seconds.
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PRC state media reports indicated that 243 PLA and PAP delegates were in attendance at the 2026 Two Sessions. This is compared with 281 delegates at the start of the 14th NPC in 2023 (down 13.5 percent). Of the delegates, the full general contingent dropped sharply from 26 in 2023 to just six in 2026.
The 20 missing generals include:
Former members of the CMC
- Zhang Youxia, former CMC vice chairman (officially investigated in January 2026).
- He Weidong, former CMC vice chairman (officially investigated in October 2025).
- Liu Zhenli, former CMC member and chief of the joint staff department (officially investigated in January 2026).
- Miao Hua, former CMC member and director of the Political Work Department (officially investigated in December 2024).
Generals removed or whose NPC deputy status was terminated
- Li Qiaoming, former commander of the PLA Ground Force.
- Shen Jinlong, former commander of the PLA Navy.
- Qin Shengxiang, former political commissar of the PLA Navy.
- Yu Zhongfu, former political commissar of the PLA Air Force.
- Li Wei, former political commissar of the Strategic Support Force.
Frontline commanders absent from the plenary meeting
- The following generals remain on the NPC delegate list but did not appear at the March 7 plenary meeting. The bulk of them have either been replaced at their job or are reportedly under investigation.
- Chang Dingqiu, former PLA Air Force commander.
- Hu Zhongming, former PLA Navy commander.
- Wang Haijiang, former Western Theater Command commander.
- Lin Xiangyang, former Eastern Theater Command commander.
- Wang Renhua, former secretary of the CMC Political and Legal Affairs Commission (officially removed in December 2025).
- He Hongjun, former executive deputy director of the CMC Political Work Department (officially removed in December 2025).
- Chen Hui, former political commissar of the PLA Ground Force.
‘Second line’ or retired generals
- Yuan Yubai, vice chairman of the NPC Social Development Committee, former Southern Theater Command commander.
- Wang Jianwu, former Southern Theater Command political commissar.
- He Ping, NPC Standing Committee member and former Eastern Theater Command political commissar.
- Zheng Weiping, NPC Standing Committee member and former Strategic Support Force political commissar.
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In March 2026, three full generals saw their membership in the Chinese People’s Political Consultative Conference revoked:
- Han Weiguo, former commander of the PLA Ground Force.
- Gao Jin, former head of the CMC Logistics Support Department and former Strategic Support Force commander.
- Liu Lei, former political commissar of the PLA Ground Force.
Our take
1. Being a deputy to the NPC is not merely an honorary title in the CCP’s political system; it also serves as a barometer for assessing the political standing of different institutional groups and factions. This is especially true for the delegation representing the PLA and PAP at the NPC, whose members are all military elites vetted through multiple layers of political screening. The fact that 13.5 percent of those heavily scrutinized cadres failed to show up at a key CCP political conclave points to serious personnel trouble in the military’s upper echelons.
The significantly lower attendance figure of PLA/PAP delegates at the 2026 Two Sessions reflects the Xi Jinping leadership’s fierce “rectification” of the military apparatus in recent years. The 85 percent absentee rate of full generals at the conclave is particularly striking, and cannot be explained by routine retirement or regular personnel adjustments. Under typical circumstances, the absence of those generals from such a key meeting — where unity and loyalty are publicly displayed — is an indicator that their respective political careers are essentially finished. This is true even for those who retained their NPC deputy status and have not been officially placed under investigation.
Xi’s gutting of virtually the entire CMC and the removal of several senior commanders overseeing service branches or theater commands suggests that he is very dissatisfied with their political and operational performance. This is partly an indictment of Xi himself because he personally signed off on their appointments in the lead up to the 20th Party Congress, at least per the reporting of official CCP media. We see several plausible reasons why Xi believes that such a drastic purge and rebuilding of the top military command is necessary, including the uncovering of very serious corruption and “anti-Xi” factional activity, severe operational and milestone setbacks stemming from a compromised senior command cadre, and heightened paranoia on Xi’s part, be it him being misled by “anti-Xi” elements in the intelligence apparatus or a preemptive effort at forestalling a potential Wagner-style “coup” against his leadership.
2. Xi Jinping’s speech to the military delegation at the Two Sessions provided the official political rationale for the sweeping purge of the PLA. The speech served as a political manifesto against “traitors” (討賊檄文), provided political “guidance” on the issue of loyalty, and sought to infuse the current military leadership with a strong sense of political crisis.
i) In his speech, Xi stressed that “there must never be anyone in the military who harbors divided loyalty toward the Party” (軍中絕不能有對黨懷有二心之人).
Within CCP political discourse, “divided loyalty” (二心) is an extremely serious accusation that is far more severe than ordinary violations of discipline or law. By framing the problem in these terms, Xi signaled that the primary threat inside the military is not merely economic corruption, but rather political disloyalty. This suggests that the downfall of figures such as Zhang Youxia is likely not solely about corruption, but also about disagreements over major decisions or the emergence of hidden factions capable of challenging Xi’s absolute authority.
By invoking the concept of “divided loyalty,” Xi is signaling to the entire military establishment that any degree of political reservation towards his person or “false loyalty” (two-faced behavior) will be treated as betrayal.
ii) Xi also highlighted the need for “hard rules for strict supervision” (從嚴監管硬規矩) in his speech, emphasizing four key areas:
- The flow of funds.
- The exercise of power.
- Quality control.
- Oversight of major projects
It is likely that Xi is thinking not just about future policy, but also about settling accounts for past failures. Various publicly available data and cases suggest that the PLA’s modernization drive has suffered major setbacks in recent years. In particular, corruption scandals within the PLA Rocket Force reportedly disrupted strategic weapons development and led to the leakage of sensitive data. Also, Xi’s claim in his speech that “every yuan must be spent where it counts” and that military spending must be subject to full-chain oversight indirectly confirms that a significant portion of modernization funds had been embezzled by senior officers or wasted on substandard “tofu-dreg” military projects.
Thus, another core motive behind Xi’s thorough purge of the PLA appears to be salvaging the military modernization program and clearing obstacles ahead of the upcoming 15th Five-Year Plan.
3. Xinwen Lianbo’s three-second close-up shot of Wang Xiaohong at the PLA/PAP plenary meeting is politically significant. For one, Wang belongs to the civilian public security system and is not the active-duty military. His presence at the meeting and the special camera treatment he received is therefore unusual and potentially offers some insight into how the Xi leadership handled the Zhang Youxia case.
Based on portfolio and ranking, Wang Xiaohong was the second-highest ranking official at the plenary meeting aside from Xi Jinping. With one CMC vice chairman removed (Zhang Youxia) and the sole remaining vice chairman (Zhang Shengmin) not a member of the Politburo, it is possible that Wang joined the meeting to act as chief political overseer in lieu of the usual options.
Wang’s presence at the military meeting could also hint at his personal involvement in tackling PLA corruption. Before serving as public security minister, Wang led the ministry’s special service bureau. The bureau is responsible for the protection and surveillance of senior officials below the vice-national level. It is possible that Xi tapped Wang and the special service bureau when he took out Zhang Youxia instead of relying on the military’s discipline commission and other internal enforcement organs to avoid complications in the event that the military units were loyal to Zhang and refused to carry out orders.
Assuming our inference is accurate, this would mean that Xi currently does not trust the PLA’s disciplinary and law enforcement bodies. Also, Wang Xiaohong continues to play the role of a crucial political enforcer in the Xi leadership, and has not been sidelined as some of the “Xi losing power” rumors have suggested.
4. In his speech, Xi Jinping introduced the idea that “modernized weapons and equipment must be placed in the hands of revolutionary and politically loyal personnel.” This concept reflects a coming major shift in the PLA’s personnel policy.
Over the past four decades, the PLA has worked to build a modern professional military. Xi’s call for “revolutionary and politically loyal personnel,” however, means that absolute loyalty to the Party and its leader is once again the defining trait expected of all officers and enlisted soldiers. This also implies a qualitative change in the criteria for military promotion. Officers with strong combat experience or technical expertise but insufficient political enthusiasm — or those with ties to purged generals and other political “undesirables” — will be marginalized going forward. These officers will then be replaced with younger officers who demonstrate strong performance in political rectification campaigns. While Xi proposed advancing the training of four categories of personnel (see above) that align with the requirements of modern warfare, the ongoing “revolutionization” of the military cadre means that those personnel will be subjected to strict political vetting. As during the Mao era, officers and soldiers will find it better to be “red” than “expert,” likely to the detriment of military modernization and professionalism.
Historically, excessive emphasis on political loyalty often undermines battlefield decision-making and innovation. The PLA’s combat effectiveness and warfighting capabilities will increasingly be called into question when its generals must prioritize “political correctness” before launching missiles or deciding on the best course of action in critical situations.
5. The current public signs of the ongoing PLA purge affirm our previous assessment that the Xi leadership is “taking a leaf out of Mao Zedong’s handling of the Lin Biao incident.”
After the Lin Biao incident in 1971, Mao subjected the PLA to a massive campaign of “criticizing Lin Biao and rectifying work styles.” Today, Xi Jinping is making the military undergo similar treatment, notably in him urging the need to “deepen political rectification,” “build the military politically,” and “properly select and strengthen the top-level Party committees.”
Mao purged nearly the entire top echelon of the PLA after the Lin Biao incident, including chiefs of the general staff, air force, and navy, as well as thousands of officers. Likewise, Xi has cleared out nearly the entire CMC and removed several senior commanders, while investigating an untold and likely sizable number of officers. Because Xi’s purge involves such a large number of officers, it is possible that his leadership is adopting a “batch processing” strategy where only a very small number of leading cadres will ultimately face criminal investigations while most of the others are quietly punished or prosecuted. While this approach preserves the PLA’s outward dignity even as its high command undergoes a radical reshuffling of personnel, it will have a destabilizing effect on military morale and operations in the short term (three to five years). This erodes the PRC’s military leverage and leaves Xi and the CCP vulnerable to external pressures during a period of heightened geopolitical turmoil.
One of Xi Jinping’s likely primary goals for the unprecedented military purge is the removal of obstacles to extending his tenure at the 21st Party Congress. However, the nonstop churn of senior officers being constantly replaced by those from a younger batch inevitably disrupts the chain of command and affects the PLA’s ability to carry out complex operations (such as the invasion of Taiwan) in the short to medium term. Further, recurring purges create a long-term trust deficit within the military, pushing decision-making toward caution and rigidity.
While Xi might eventually get a military that is mostly loyal to him with a “self-revolution” campaign that is “always on the road,” the effectiveness of such a “revolutionized” military to advance the CCP’s various milestones and objectives is very much in doubt.
6. In sum, Xi Jinping’s speech to the military delegation at the Two Sessions and the absence of generals indicate that the PLA is being subjected to a painful restructuring. While the purge will likely strengthen Xi’s grip on the Party’s “gun,” it also creates structural risks for the military; notably, a “revolutionized” military risks sacrificing professional competence and combat effectiveness by prioritizing political loyalty above all. The aftershocks of this “political earthquake” that is shaking the PLA will continue to shape the direction of CCP politics and the global security landscape for years to come.
2 China’s Jan-Feb 2026 data reveal a structural paradox in the economy
On March 10, the PRC customs authorities released China’s trade data for January–February 2026.
- Total trade (imports + exports): Up 21.0 percent year-on-year to $1.0995 trillion.
- Total exports: Up 21.8 percent year-on-year to $656.58 billion; exports surged 39.6 percent year-on-year in February 2026.
- Total imports: Up 19.8 percent year-on-year to $442.96 billion; imports rose 13.8 percent year-on-year in February 2026.
- Trade surplus: $213.62 billion, a record high.
Structural transformation in exports
- China’s export surge in 2026 was mainly driven by high-tech products.
- Semiconductors: Exports jumped 73 percent year-on-year, reflecting strong global demand for chips driven by AI applications.
- Automobiles: Exports rose 67 percent year-on-year, with new energy vehicles continuing to gain overseas market share.
- Electromechanical products: Overall growth of 27 percent, accounting for nearly 60 percent of total exports.
Shifting trade partners
- Trade flows show a clear trend toward decentralization.
- Association of Southeast Asian Nations (ASEAN): Remained China’s largest trading partner, with bilateral trade increasing 20.3 percent.
- European Union: Trade grew 19.9 percent despite subsidy investigations, indicating continued strong economic ties.
- United States: Total China–U.S. trade fell about 16.9 percent, affected by tariff policies under Donald Trump and supply-chain shifts. China’s exports to the U.S. fell 11 percent while imports fell 27 percent.
- Belt and Road Initiative and Africa: Exports to Africa surged 49.9 percent, with trade with Belt and Road partner countries continuing to rise as a share of China’s total trade.
Our take
1. The PRC’s official figures reflected impressive trade growth in the first two months of 2026. The export data outstripped market expectations by a substantial amount (21.8 percent versus 7.1 percent) and was far higher than the 6.6 percent growth recorded in December 2025. Imports and the trade surplus also performed strongly, with total imports and exports in the January-February 2026 period amounting to roughly $1.12 trillion.
Behind these figures, however, lie several complex structural drivers.
First there is the base effect factor. Global supply chain restructuring and weakened demand in some regions saw China’s import growth contract by 8.4 percent during the January-February period in 2025. The low base provided the objective conditions for the double-digit rebound seen in 2026. Second, while the extension of the 2026 Chinese New Year holiday disrupted production to some extent, it also stimulated demand for certain imported consumer goods.
Meanwhile, China’s export flows in early 2026 reflect a clear geopolitical realignment. The data shows exports to the U.S. falling 11 percent, while exports to ASEAN and the EU increased 29.4 percent and 27.8 percent, respectively. This structural shift reflects both efforts to avoid escalating U.S. trade barriers and the proactive attempt by Chinese firms to diversify export markets. Notably, the 50 percent growth rate in the African market — though its total volume still trails behind the U.S. and Europe — highlights its rising status as a key recipient of China’s excess capacity.
Customs data further reveals that electromechanical products dominated exports in the first two months of 2026 (reaching approximately $418.8 billion, a 24.3 percent increase) and accounted for 62.5 percent of the total export value. Among these products, the “new three things” (新三樣) — electric vehicles, lithium batteries, and solar cells — remain the star performers:
- Integrated circuits: Value grew by 72.9 percent, driven by the semiconductor demand of the AI investment wave.
- Automobiles (including chassis): Shipments grew by 67.1 percent. Domestic saturation is forcing automakers to push into overseas markets with low pricing.
- Electromechanical products (overall): Increased by 24.3 percent, showcasing the comprehensive competitiveness of the manufacturing supply chain.
- Steel: Volume fell by 8.1 percent to 15.59 million tons, reflecting the initial impact of international anti-dumping measures.
- Rare earths: Volume grew by 23.0 percent, illustrating the global high-tech industry’s continued reliance on critical minerals.
The roughly 73 percent surge in the value of semiconductor exports is a noteworthy signal. It is linked not only to the global wave of AI infrastructure construction but also to the rapid release of China’s production capacity in mature-node chips. Conversely, the 67 percent increase in automobile exports has been largely accompanied by an extension of price wars, sparking international debate over the PRC’s “dumping.”
2. Despite the “booming” export data at the start of 2026, the manufacturing purchasing managers’ index for February 2026 presents a much more pessimistic picture. China’s PMI fell to 49.0, a 0.3 percentage point decline from January. The PMI remained in contraction territory for consecutive months and indicates a cooling of manufacturing sentiment.
Breakdown of PMI sub-indices
- Production index: 49.6; down 1.0 percentage point, indicating slowing output.
- New orders index: 48.6; down 0.6 percentage point, indicating shrinking demand.
- New export orders: 45.0; reflecting potential stalling pressure on future export growth.
- Employment index: 48.0; shows a slight pullback in hiring sentiment.
What worries economists most is the divergence between enterprise sizes. Large enterprises posted a PMI of 51.5, showcasing their advantage in policy support and credit access. In contrast, medium-sized (47.5) and small enterprises (44.8) are mired in difficulty, with the small enterprise PMI dropping by a sharp 2.6 percentage points. This divergence exposes a deep-seated issue. While national pillar industries and “champion” firms maintain expansion, the small and medium-sized enterprises that serve as the backbone of employment are facing severe demand shortages and liquidity pressures.
Analyzing the 21.8 percent export growth alongside the 48.6 percent new orders index reveals that, in the absence of domestic demand (new orders), Chinese manufacturers are forced to pivot their capacity toward overseas markets to stay afloat. This shift is not entirely profit-driven; it is more of a survival strategy to maintain factory operations and cash flow. According to reports from the International Monetary Fund, the proportion of loss-making entities among Chinese industrial firms has reached 30 percent. These “zombie enterprises” survive on subsidies and low-price competition, effectively exporting domestic price-cutting pressures to the global market.
This phenomenon is most extreme in the automotive industry. Driven by severe domestic “involution,” major automakers launched a brutal price war between late 2025 and early 2026, with some models seeing price cuts as high as 30 percent. When the domestic market cannot absorb the surplus generated by these discounts, low-priced goods flood overseas like a deluge.
3. China’s import and export trade in the first two months of this year appears strong on the surface. However, the crisis in its core industries reflects a different picture of the economy. Automobiles and smartphones were once the two primary engines supporting China’s “high-quality” economic growth. Both sectors, however, showed significant signs of stalling in early 2026
i) In February 2026, the Chinese auto market endured an exceptionally cold winter on the sales front. Market leader BYD saw sales of approximately 190,000 units (a 41.1 percent year-on-year decrease), marking its largest single-month drop since the start of the pandemic in February 2020. Also, BYD’s domestic sales plummeted by 65 percent, leading Geely Auto to surpass BYD for two consecutive months as the domestic sales champion. The sales problem was not unique to BYD. Traditional giants like Geely (down 23.6 percent month-on-month), SAIC, Chery, and Great Wall, as well as new players like Xiaomi (down 48.7 percent month-on-month), NIO, and Leapmotor, all saw significant month-on-month or year-on-year declines in February.
This downturn was not merely due to the Chinese New Year holiday. The deeper causes lie in policy tapering and the exhaustion of consumer confidence. In January 2026, Beijing raised the purchase tax on EVs from 0 percent to 5 percent (a 50 percent reduction of the standard 10 percent rate), directly suppressing demand. Furthermore, long-term aggressive discounting has fostered a “wait-and-see” mentality among consumers, who are holding out for even deeper price cuts post-holiday.
ii) According to data from the China Academy of Information and Communications Technology (CAICT), smartphone shipments in the domestic market reached 22.866 million units in January 2026, a 16.1 percent year-on-year decline. Shipments of 5G phones fell by 15.9 percent to 19.87 million units, accounting for 86.9 percent of the total. Meanwhile, shipments of domestic brands reached 20.074 million units, a 12.1 percent year-on-year decrease.
As high-ticket electronic consumer goods, the continuous decline in smartphone shipments is a direct manifestation of lowered expectations for disposable income and “consumption downgrading” in China. This shrinkage in domestic consumption stands in sharp contrast to the 24.3 percent growth in electromechanical exports reported by the PRC customs authority. It indicates that Chinese manufacturing is undergoing a forced “exportization” — if goods cannot be sold at home, they must be funneled into ASEAN, African, or Latin American markets at even lower prices.
