1 Old photo of Peng Liyuan in military garb emerges, fueling speculation
May 3
A photo of Xi Jinping’s wife Peng Liyuan began to make the rounds on overseas Chinese social media. The photo shows Peng Liyuan in a military uniform being accompanied by naval officers. The caption of the photo reads, “Peng Liyuan, full-time member of the Central Military Commission’s Cadre Assessment Committee, visits the (military) academy to research the construction of high-level talent teams” (中央軍委幹部考評委員會專職委員彭麗媛來校研究高階人才隊伍建設).
The photo later caught the attention of Chinese commentators and overseas Chinese language media, including the pro-Beijing Hong Kong newspaper Sing Tao Daily. Some commentators believe the photo is a sign that Peng is joining the CCP’s elite circles of power and will be involved in governance.
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Information circulating on Chinese social media claims that the military academy that Peng Liyuan visited in the photo was the PLA Naval University of Engineering in Wuhan City. The naval officer in blue camouflage fatigues accompanying Peng is Ma Weiming, a naval engineer holding the rank of rear admiral who is known as the “father of China’s electromagnetic catapult technology.”
Peng, 62, formerly served as president of the People’s Liberation Army Academy of Art (Military and Cultural Institute of National Defense University) from May 2012 to July 2017. She also holds the military rank of brigadier general.
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Peng Liyuan accompanied Xi Jinping on his trip to France on May 6.
Rumors of PLA dissatisfaction with Xi
There are currently several rumors circulating on overseas Chinese social media about how some PLA senior officers are unhappy with Xi Jinping and his close associates. These rumors include:
- Some PLA senior officers are dissatisfied with the Xi leadership’s appointment of some people with no understanding of military affairs and sycophants in key military positions. As a result, some capable and knowledgeable officers who feel that they have no prospects are filing requests to transition to civilian careers.
- Some PLA senior officers believe that defense minister Dong Jun was someone who was appointed to “fill an empty seat” (湊數) and whose ability was not up to the job (趕鴨子上架).
- Dong Jun’s entry into the Central Military Commission is being delayed due to widespread dissent in the PLA, with the loudest opposition coming from retired senior military officers.
- A “second-generation red” military veteran from a military region in southern China once criticized the Xi leadership with foul language at a gathering.
- There is considerable discontent within the military regarding Xi Jinping’s alleged desire to have Peng Liyuan join the Central Military Commission.
Big picturec
1. The United States and its allies are putting pressure on Xi Jinping and the CCP to withdraw the PRC’s support for Russia and persuade Moscow to halt the war against Ukraine. Meanwhile, Western media outlets, commentators, and think tanks continue to spotlight the prospect of PRC aggression towards Taiwan and in the region.
2. Rumors that bode ill for the Jiang Zemin faction, including Xi allegedly being undecided on whether to publicly criticize Jiang and the supposed arrest of Jiang Mianheng and Alvin Jiang, have recently surfaced.
Our take
1. We have been unable to independently verify the authenticity of the Peng Liyuan photo. But assuming that it is genuine, the photo is likely to have been taken in late 2019. First, Ma Weiming is wearing a Type 07 maritime camouflage uniform in the photo, but the PLA is currently wearing the Type 21 uniform (issued in Winter 2021). Second, Xi Jinping established the Talent Work Leading Group and Cadre Assessment Committee of the CMC in 2019 as part of CMC policy and institutional reforms introduced during his second term in office. Third, the lack of masks in the photo dates it to before the outbreak of the COVID-19 pandemic.
If the photo is indeed authentic, then it suggests that Xi had placed his wife in a key position when carrying out military institutional reforms before the 20th Party Congress in what was likely a move to control the selection of military personnel at the political conclave in 2022. The move, however, appeared to have upset some in the military and could have led disgruntled elements to “leak” the photo as an “advanced blackening” measure aimed at Xi; showing Peng in military garb and participating in important organizational work (i.e. the selection of personnel) reinforces the perception among overseas Chinese commentators that she is a Jiang Qing-figure and Xi is another Mao Zedong.
If what we analyzed above is indeed the case, then it reflects Xi Jinping’s lack of “quan wei” (authority and prestige) in the Party despite his strong official control over the PLA. This scenario would also partly affirm our earlier analysis of why Xi elevated Wang Renhua, the secretary of the CMC’s Political and Legal Affairs Commission, to the rank of general; we wrote that Xi could be enhancing the influence of the CMC PLAC secretary so that the department can “better deal with growing instability in the military resulting from sweeping anti-corruption and criminal investigations.”
2. Disgruntled elements in the military aside, it is also possible that those in the “anti-Xi coalition” were behind the photo’s “leak.” The “anti-Xi coalition,” including the remnant Jiang faction, could be concerned about what Xi Jinping might do at the Third Plenum of the 20th Central Committee and is working to strengthen Xi’s image as a Mao-like dictator so as to forestall any drastic factional struggle moves by the Xi leadership against them at the plenary session. Blackening Xi’s image serves to turn the Party elite in politics, the military, and business against Xi in general, and ferments an environment that allows for future action to undermine the Xi leadership.
If the “anti-Xi coalition” is indeed behind the Peng Liyuan photo, then the Sing Tao Daily report about it could be “advanced blackening” on the part of Xi Jinping’s rivals. The “anti-Xi coalition” would want to create the impression that Xi is raising his wife’s public image through pro-PRC media as part of a bold attempt to elevate his wife in the CCP’s power center and consolidate even more power.
3. There is a very low probability that Xi Jinping is looking to elevate Peng Liyuan if he is still observing Party’s personnel reshuffle norms for the most part. For one, PLA regulations stipulate that senior officers at the major general rank who reach the age of 60 and are not promoted further must retire. Peng turned 60 in 2022 and there is no public sign that she was promoted beyond the rank of brigadier general. Also, Peng is not eligible for further promotion at her age (62 in November) and is almost certainly retired, which makes her ineligible to continue serving on the CMC.
Assuming that the speculation that Xi is turning Peng into a powerful Jiang Qing-like figure is correct, then perhaps one reason why the Third Plenum was delayed and why the rumors circulating about her are emerging is because Xi is attempting to break personnel reshuffle norms and promote his wife to higher office at the upcoming plenary session. Whether or not this is the case will be verified at the Third Plenum when personnel changes are officially announced.
2 May Day holiday tourism figures and spending affirm China’s economic woes
Tourism up, consumption down
May 5
Online tourism products and services company Tongcheng Travel published its 2024 May Day holiday travel consumption report (2024「五一」假期旅遊消費報告). The report noted that domestic tourists tended to go to the smaller cities during the recent May Day holiday, with hotel bookings in dozens of cities in the third-tier and below increasing by over 100 percent compared to the previous year.
The Tongcheng report also noted that first and second-tier cities saw lower year-on-year growth rates of travel booking as compared to third and fourth-tier cities, and third and fourth-tier cities saw lower travel booking growth rates than county-level tourist destinations. For instance, popular third and fourth-tier cities like Yangzhou, Luoyang, Qinhuangdao, Weihai, Guilin, and Kaifeng saw an average travel booking growth rate of 11 percent from a year ago, while popular county-level tourist destinations like Anji, Tonglu, Dujiangyan, Yangshuo, and Mile had an average travel booking growth rate of 36 percent.
May 6
According to data from the PRC Ministry of Culture and Tourism:
- China saw 295 million domestic tourist trips during the May Day holiday, an increase of 7.6 percent from the previous year.
- Domestic tourist expenditure during the holiday period totaled 166.89 billion yuan, up 12.7 percent from a year ago.
- The average per capita spending during the holiday period was 88.5 percent of that in 2019.
- Popular destinations for outbound travel during the holiday period include Singapore, Japan, Thailand, South Korea, and the United States.
- The searches “Chinese tourists spent nearly 300,000 yen per capita in Japan” and “Japan emerges as the biggest winner of [China’s] outbound travel during the May Day period” trended on Weibo.
According to data from the Ministry of Transport:
- The total cross-regional mobility of people across society exceeded 1.3 billion person times and averaged 272 million person-times per day during the May Day holiday period, an increase of 2.1 percent when compared to the same period in 2023 and an increase of 24.1 percent compared to 2019.
The National Immigration Administration released data showing that 8.466 million people entered and exited China during the May Day holiday period, an increase of 35.1 percent from the previous year. Data from travel products and service provider Tuniu Travel showed that outbound tourist trips accounted for 27 percent of all outbound trips, a 190 percent increase as compared to a year ago.
A survey conducted by China Youth Daily’s social survey center showed that 58.8 percent of respondents prefer to go to less crowded and niche tourist destinations during the May Day holiday period, compared to 35.8 percent preferring popular tourist cities and attractions.
Mainland media Jiemian News reported that there were more domestic tourists during the May Day holiday period this year as compared to 2023, citing data from Qunar.com. While hotel bookings in popular cities increased by 30 percent from a year ago, the average price of a hotel stay decreased by 20 percent and the average price of domestic economy class airplane seats dropped by 10 percent compared to 2023.
Mainland lodging rental platform Tujia noted in a report that homestay prices during the May Day holiday period decreased by 12 percent in Chongqing, down 17 percent in Beijing, and down 22 percent in Fuzhou. The prices of homestays in several tourist cities during the holiday period remained stable compared to regular days, and average homestay prices in some popular cities even dropped by around 10 percent year-on-year.
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The Macau government’s tourism office issued preliminary statistics showing 605,000 inbound tourists to Macau from May 1 to May 5, a 23.2 percent increase from a year ago. Also, the average hotel occupancy rate during that period was 89.2 percent.
Hong Kong’s immigration office said it recorded approximately 766,000 mainland Chinese tourists entering the special administrative region through various sea, land, and air control points during the May Day holiday period. About 153,000 mainland tourists entered Hong Kong on average each day, an increase of 22 percent compared to the same period in 2023. The Hong Kong immigration authorities also reported that about 570 mainland Chinese tour groups with about 19,000 tourists had traveled to the city during the holiday day period.
Hong Kong media reported that although there were more mainland Chinese tourists in Hong Kong this year during the May Day holiday period, those tourists were more budget-conscious and were unwilling to spend extravagantly (carrying large amounts of cash and shopping in luxury malls, etc.) as in pre-pandemic years. Many mainland tourists also stayed in nearby Shenzhen for the night and traveled to Hong Kong for sightseeing during the day.
May Day home sales plummet
1. China Index Academy published some property data for the 2024 May Day holiday period:
- The daily average sales area of new homes in 22 representative cities during the May Day holiday period fell by nearly 50 percent as compared to the 2023 period and was down by about 30 percent as compared to the pre-pandemic level in 2019.
- The daily average transaction area of new homes in 22 representative cities during the 2023 May Day holiday period (April 29 to May 3) was 157,000 square meters. For the 2024 May Day holiday period (May 1 to May 5), the daily average transaction area of new homes fell 47 percent from a year ago to 83,000 square meters.
- Of the 22 representative cities, only Beijing (first-tier), Jinan (second-tier), and Yueyang (third-tier) saw increased property sales from a year ago while the rest saw declines. In particular, first-tier cities Guangzhou and Shanghai saw property sales drops of 65 percent and 62 percent respectively, while second-tier cities Nanjing (down 74 percent), Qingdao (down 72 percent), and Wenzhou (down 70 percent) saw declines of 70 percent and higher.
- The property transaction data for second-hand homes mirrored that of new homes, and property transactions continued to decline on the whole.
2. Data from Zhuge Data Research Center showed that 2,123 units of new residential properties were sold in 12 key cities during the May Day holiday period, with an average daily transaction of 425 sets. This represented a 52.12 percent decrease in the transaction volume during the May Day holiday period in 2023 (4,434 units).
Our take
1. China’s May Day tourism data points to insufficient demand and “consumption downgrade” (i.e. people adopting more conservative spending behavior to counter economic slowdown, including the “lipstick effect”). Those signs in turn reflect the economic downturn that can be observed from scrutinizing the official figures and domestic pessimism in general about China’s economic future.
While the number of tourists and trips increased during this year’s May Day holiday period compared to 2023 and before the pandemic in 2019, consumption has not bounced back to even 90 percent of the pre-pandemic level. After adjusting for tourist numbers and the duration of the holiday period, the daily per capita spending during the 2024 May Day holiday period was only 113 yuan, or a figure that is lower than the 151 yuan during the same period in 2019 and the five major holidays in China since the Dragon Boat Festival in 2023.
The phenomena of tourists opting for less popular destinations (likely to save on ticket and hotel costs), falling average hotel prices, declining domestic flight prices, and reduced spending in Hong Kong are signs of “consumption downgrade.” Earlier signs of “consumption downgrade” were seen during last year’s May Day holiday period when people flocked to Zibo City in Shandong Province for cheap barbecue and traveled to Harbin during the winter season. The “consumption downgrade” observed from this year’s May Day tourism figures points to continued deterioration of the Chinese economy, growing pessimism about China’s prospects, and a sustained decrease in household income (i.e. the year-on-year drop of 1 percent and 4.5 percent respectively in personal income tax collected in the first quarters of 2023 and 2024 indicate a sizeable contraction in the group of people with month incomes above 5,000 yuan).
2. The increase in the number of travelers during the 2024 May Day holiday period and the growth in outbound tourists could also be partly due to people having more disposable income available from opting not to purchase property.
With property prices falling, many people with the means to buy homes are likely waiting for the real estate market to bottom out before dipping in. This leaves this group with more disposable cash to spend on traveling, while the wealthier segments of the group would be inclined to go abroad and spend big in places like Japan.
