CCP propaganda during Beidaihe debunks Xi ‘power lost’ narrative; July fiscal data underscores China’s economic woes

  1   CCP propaganda during Beidaihe period debunks Xi ‘power lost’ narrative

The annual Beidaihe work retreat appeared to conclude in the third week of August, with members of the top leadership and provincial leaders starting to make public appearances.

Rumors and speculation about Xi Jinping “losing power” were sustained during the Beidaihe period. However, various developments during the period indicated no change in the political dynamic in the CCP regime.

  Party propaganda promotes Xi

Environment
Aug. 15
PRC state media reported that CCTV will air a 10-episode special lecture series on “Xi Jinping Thought on Ecological Civilization” (習近平生態文明思想系列講讀) from Aug. 16 to Aug. 25 to mark the 20th anniversary of the concept of “lucid waters and lush mountains are invaluable assets” (綠水青山就是金山銀山). Xi first brought up the concept on Aug. 15, 2005 when he inspected Yu Village in Zhejiang Province as the provincial Party secretary.

Private economy
Aug. 16
Qiushi, the CCP Central Committee ideological journal, published an important article by Xi Jinping titled, “Promoting the Healthy and High-Quality Development of the Private Economy” (促進民營經濟健康發展、高質量發展). The article is based on a speech by Xi at a symposium with private enterprises on Feb. 17, 2025.

The article’s main points include:

• The private economy is an important component of China’s socialist market economy. It plays a key role in economic growth, innovation, and employment, and is protected by the PRC constitution and laws.
• Ensure that private enterprises have equal access to production factors and fair market competition, revise the negative list for market access, and implement a policy of “what is not prohibited is allowed.”
• Address financing difficulties faced by private enterprises and resolve the issue of overdue payments, starting with government agencies and state-owned enterprises taking the lead.
• Protect the rights and interests of private enterprises and entrepreneurs according to law, avoid arbitrary law enforcement, and minimize interference in business operations.
• Party Central has consistently supported the private economy since the 18th Party Congress, issuing policy documents and speeches to strengthen guarantees.
• The new wave of technological revolution is impacting traditional private enterprises, especially in the fields of technology and exports.
• Local policy implementation remains uneven, and societal misunderstandings about the private economy still exist.
• Encourage private enterprises to operate with integrity, innovate, and align with national development strategies to achieve sustainable development.

Deepening reform
Aug. 17
State mouthpiece Xinhua reported that the CCP’s Institute of Party History and Literature has edited volumes I and II of Xi Jinping’s “On Upholding Comprehensive Deepening of Reform.” The volumes, which are published by the Central Literature Publishing House, are now being distributed nationwide.

Xinhua added that the volumes are arranged chronologically. First published in December 2018, the book “On Upholding Comprehensive Deepening of Reform” is now republished as volume I in the collection. It includes 73 important writings by Xi from December 2012 to December 2018 on the topic of comprehensively deepening reform. Volume II includes 92 important writings by Xi from January 2019 to April 2025, some of which are being published for the first time.

Xinhua said that reform and opening up is an important tool for the Party and the people to make “great strides in keeping up with the times.” It praised Xi for initiating a new journey of comprehensive deepening of reform at the Third Plenum of the 18th Central Committee and creating a brand-new state of reform and opening up with epoch-making significance. Xinhua added that the Third Plenum of the 20th Central Committee made systematic plans for further comprehensively deepening reform and advancing Chinese-style modernization, pushing reforms to greater breadth and depth.

Xinhua also lauded Xi for personally leading, deploying, and promoting the work of comprehensively deepening reform, creatively putting forward a series of “new ideas, new viewpoints, and new conclusions,” and giving clear answer to major questions of the new era, including why it is necessary to comprehensively deepen reform and how it should be advanced.

Military
Aug. 18
Xinhua reported that the Central Military Commission Political Work Department, with the CMC’s approval, has compiled and published the fourth volume of “Xi Jinping on Strengthening and Revitalizing the Military” (習近平論強軍興軍). The volume, which is being formally released and distributed throughout the armed forces, is meant for all officers and soldiers to fully and systematically study and grasp Xi Jinping Thought on a strong military, deepen their understanding of the decisive significance of the “Two Establishes,” and reinforce their political, ideological, and practical consciousness in upholding the core and following orders.

Xinhua said that the CMC has issued a notice requiring all levels of the military to carefully organize and arrange study of the fourth volume of “Xi Jinping on Strengthening and Revitalizing the Military.” The book is to be studied in conjunction with the previous three volumes, as well as the “Outline for the Study of Xi Jinping Thought on a Strong Military (2023 Edition),” with a persistent focus on “reading the original works, studying the original texts, and understanding the underlying principles.” By linking this study with the historic achievements of the strong military in the new era, officers and soldiers are expected to appreciate the power of truth and practice, and to master theoretical, doctrinal, and philosophical insights.

Xinhua added that the CMC notice requires Party Committee theory study sessions, cadre theoretical training, troop political education, and political theory teaching in academies to include the study of the fourth volume of “Xi Jinping on Strengthening and Revitalizing the Military” as a key component and incorporate it into their study plans. Combined with political rectification, this effort is intended to strengthen political tempering, ideological remolding, and purify the political environment.

  Li Qiang upholds Xi in public appearances

Aug. 15
PRC premier Li Qiang attended the opening ceremony of the 2025 National Ecology Day main event and a symposium on practicing the concept of “lucid waters and lush mountains are invaluable assets” in Beijing.

According to state media, Li delivered a keynote speech at the symposium where he emphasized:

• We must adhere to Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as our guiding principle, and thoroughly implement Xi Jinping Thought on Ecological Civilization.
• We must strengthen the Party’s overall leadership over ecological civilization construction.
• We must do a good job in promoting and explaining Xi Jinping Thought on Ecological Civilization.

Aug. 18
Li Qiang presided over the ninth plenary meeting of the State Council. Per state media, the meeting studied and implemented Xi Jinping’s important speeches on the current economic situation and economic work. The meeting also stressed the need to unify thinking and action with Party Central’s scientific judgment and policy decisions, to consolidate and expand the momentum of economic recovery and improvement, and to strive to achieve the year’s economic and social development goals.

Li also delivered a speech at the meeting. Key points in his speech include:

• Under the strong leadership of the Party Central with Comrade Xi Jinping at the core, and through joint efforts in overcoming difficulties, China’s economy has been stable with progress (穩中有進) since the beginning of the year, achieving new results in high-quality development.
• Consolidate and expand the momentum of economic recovery, comprehensively and dialectically grasp the economic situation, strengthen confidence, and respond calmly to risks and challenges.
• Strengthen the domestic economic cycle to cope with international uncertainties.
• Continue to unleash consumption potential and systematically remove restrictive measures in the consumer sector.
• Increase and expand effective investment, leverage the leading role of major projects, and actively promote private investment.
• Advance the construction of a unified national market in depth, and continuously release the dividends of a massive-scale market.
• Take strong measures to consolidate the stabilization of the real estate market.
• Promote the deep integration of technological innovation and industrial innovation, stimulating innovation and creativity among all types of market entities.
• Unswervingly expand high-level opening-up, and orderly expand both autonomous and unilateral openness.

  Our take

1. The CCP leadership typically embarks on a summer retreat to Beidaihe around the last weekend of July to the middle of August. While some members of the senior leadership could make public appearances during this period if there are events that require their presence (such as Li Qiang attending the 2025 National Ecology Day events on Aug. 15), most of them would only return to the public eye following the conclusion of Beidaihe.

In 2024, some overseas Chinese commentators misinterpreted Xi Jinping’s lack of public appearances during that year’s Beidaihe period as a sign of political vulnerability following the publication of an Aug. 9, 2024 People’s Daily piece (“Notes from the Beidaihe Vacation”) noting the end of vacations for the expert class. This year, most China watchers recognize Xi’s absence during the Beidaihe period as routine rather than anomalous.

2. Persistent rumors alleging Xi Jinping’s “loss of power” — including military remonstrations, second-generation reds criticizing Xi, and Party elders putting pressure on Xi — circulated during the Beidaihe period. These allegations, often citing anonymous sources and amplified by overseas Chinese language media, lack substantiation and do not track with observable signs of power dynamics in the CCP regime. For instance, state and Party propaganda continue to promote Xi and his political theories, as well as the centrality of his “core” leadership over the CCP and its military. Li Qiang’s speeches at the 2025 National Ecology Day event and the ninth plenary meeting of the State Council also reinforced Xi’s ideological framework and upheld the “Xi core.”

We previously analyzed that Xi Jinping retains a robust grip on power, contrary to the intense speculation and allegations on the matter (see here, here, and here). That being said, Xi continues to be constrained and hampered by the many serious deficiencies of the CCP authoritarian system (Party culture, “lying flat,” formalism and bureaucratism, etc.) despite having consolidated power to a very high degree and escalating efforts to rectify longstanding problems in the officialdom. If the rumors about Xi reflect amplified discontent within the Party’s rank and file towards him, there is a case to be made that Xi’s actual control over the regime and levels of “quan wei” (authority and prestige) could be lower now than before the COVID-19 pandemic years, which in turn translates into Xi having less effective power. This, however, does not equate to Xi losing political power.

  2   July fiscal data underscores China’s economic woes

  Financial data for first 7 months of 2025

Aug. 19
The PRC Ministry of Finance released fiscal revenue and expenditure data for the first seven months of the year:

Nationwide general public budget revenue and expenditure

• The general public budget revenue increased 0.1 percent year-on-year to 13.5839 trillion yuan.
  • Tax revenue decreased 0.3 percent to 11.0933 trillion yuan.
  • Non-tax revenue increased 2 percent to 2.4906 trillion yuan.
  • Main tax revenue items:
    • Domestic VAT increased 3 percent to 4.2551 trillion yuan.
    • Domestic consumption tax increased 2.1 percent to 1.0213 trillion yuan.
    • Corporate income tax decreased 0.4 percent to 3.0566 trillion yuan.
    • Personal income tax increased 8.8 percent to 927.9 billion yuan.
    • Securities transaction stamp tax increased 62.5 percent to 93.6 billion yuan.

• The general public budget expenditure increased 3.4 percent year-on-year to 16.0737 trillion yuan.
  • Central-level expenditure increased 8.8 percent to 2.3327 trillion yuan.
  • Local-level expenditure increased 2.5 percent to 13.7410 trillion yuan.
  • Main expenditure categories:
    • Education increased 5.7 percent to 2.4438 trillion yuan.
    • Science and technology increased 3.2 percent to 533 billion yuan.
    • Culture, tourism, sports, and media increased 5.3 percent to 201.2 billion yuan.
    • Social security and employment increased 2.7621 trillion yuan to 9.8 percent.
    • Healthcare increased 5.3 percent to 1.2402 trillion yuan.
    • Energy conservation and environmental protection increased 4.3 percent to 294.9 billion yuan.
    • Urban and rural community affairs decreased 3.5 percent to 1.1185 trillion yuan.
    • Agriculture, forestry, and water decreased 7.7 percent to 1.2323 trillion yuan.
    • Debt servicing (interest payments) increased 6.4 percent to 757.3 billion yuan.

• The nationwide government fund budget revenue decreased 0.7 percent year-on-year to 2.3124 trillion yuan.
  • Central government fund revenue increased 8.8 percent to 259.6 billion yuan.
  • Local government fund revenue decreased 1.8 percent to 2.0528 trillion yuan.
  • State-owned land use rights transfer revenue decreased 4.6 percent to 1.695 trillion yuan.

• The nationwide government fund budget expenditure increased 31.7 percent to 5.4287 trillion yuan.
  • Central government fund expenditure increased 450 percent to 710.9 billion yuan.
  • Local government fund expenditure increased 18.1 percent to 4.7178 trillion yuan.
  • Expenditure related to land use rights transfer decreased 6.1 percent to 2.3572 trillion yuan.

• Aggregate government revenue increased 1.5 percent year-on-year to 15.8963 trillion yuan.
• Aggregate government expenditure increased 2.8 percent year-on-year to 21.5024 trillion yuan.
• Aggregate government deficit increased 48.6 percent year-on-year to 5.6061 trillion yuan.

  Our take

China’s fiscal data for the first seven months of the year reveals stagnant revenue growth. This growth is reliant on increased taxation, non-tax income, and short-term financial market gains, while the underlying tax base contracts.

Meanwhile, rigid expenditure growth, particularly in social security, healthcare, and debt servicing, is crowding out public investment and infrastructure spending. The worsening fiscal position, exacerbated by a collapsing land sales-based revenue model and rising debt dependency, mirrors China’s broader economic challenges — weak consumption, subdued investment, and softening external demand.

Below we look at specific manifestations of China’s deepening economic predicament in the fiscal data.

1. China’s fiscal revenue growth has stalled, with no new drivers to offset a contracting tax base. To bolster revenue, the CCP authorities are leaning on non-tax measures, intensified tax collection, and short-term market effects:

• Overall tax revenue fell 0.3 percent year-on-year, reflecting shrinking corporate profits, consumer spending, and trade activity.
• Personal income tax rose 8.8 percent and securities stamp tax surged 62.5 percent. This appears to be driven by stricter tax enforcement and the A-share market’s liquidity-driven “water buffalo” rally. These contrast with declines in 2023 (personal income tax down 1 percent, stamp tax down 30.7 percent) and 2024 ( down 1.7 percent and down 55 percent respectively), and suggest that the revenue boosts are due to temporary developments rather than fundamental economic improvement.
• Land sale revenues are down significantly due to a 12.0 percent drop in real estate investment. Declining land sales are severely impacting local government finances.

2. China’s fiscal expenditure is increasingly skewed toward mandatory spending, squeezing out growth-oriented investments:

• Social security and employment (up 9.8 percent), debt servicing (up 6.4 percent), and healthcare (up 5.3 percent) expenditures are rising rapidly, driven by an aging population, unemployment pressures, and mounting debt obligations. These politically sensitive costs, tied to regime stability, are non-negotiable expenditures for the CCP authorities, and are likely to grow as economic conditions deteriorate.
• Infrastructure and growth-oriented spending contracted, with agriculture, forestry, and water (down 7.7 percent), transportation (down 3.3 percent), and urban-rural community development (down 3.5 percent) seeing significant declines. This signals Beijing’s limited capacity for large-scale economic stimulus.

3. China’s fiscal system is increasingly trapped in a cycle of rising interest payments, new debt issuance, and expanding deficits — hallmarks of a debt trap:

• Government fund expenditure surged 31.7 percent, but falling land revenues forced reliance on new debt to fill gaps. This is seen from local governments issuing 5.84 trillion yuan in special and refinancing bonds in the first seven months of 2025, with 51 percent used for “borrowing new to repay old,” exacerbating the debt snowball.
• Debt interest payments increased 6.4 percent year-on-year to 757.3 billion yuan, outpacing the growth in general public budget expenditure (up 3.4 percent). Interest payments now account for 4.71 percent of general budget expenditure (up from 4.44 percent in 2023), nearing the scale of infrastructure investment (approximately 10 trillion yuan) and creating a significant crowding-out effect.

4. China’s fiscal troubles reflect a loss of synergistic momentum in its “troika” of growth drivers (exports, investment, consumption) and underlying economic weakness:

• Personal income tax growth stems from stricter enforcement, not rising household incomes. This adds pressure on the middle class and has suppressed consumption (retail sales growth slowed to 3.7 percent in July).
• Declines in infrastructure spending, real estate-related taxes, and land revenues have widened the fixed-asset investment gap.
• Import-related taxes fell 6.1 percent, reflecting weak domestic demand. Meanwhile, export tax rebates rose 9.7 percent, indicating that companies are relying on subsidies to sustain exports.
• The surge in stamp duty revenue highlights the A-share market rally’s role in offering a temporary lifeline for public finances through propping up fiscal revenue and state-owned enterprise dividends (with the Ministry of Finance as a major shareholder).