Xi warns of ‘arduous’ reform as Beijing vows to boost consumption
Welcome back to What’s Happening in China, your weekly update on the latest news and developments from the country.
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Through the Lens
In Focus
I. Hukou: China’s 'invisible wall'
Even as China’s leaders have looked for ways to lift sagging birthrates, Beijing thought there was one group who would always want to have many children: rural couples.
They were wrong. Research suggests that rural migrant workers have severe reservations about starting a family. And a big reason appears to be China’s household-registration system, which since the 1950s has divided the population into rural or urban and makes it hard for rural workers to take their children with them.
Described as an invisible wall, the hukou system was set up to prevent cities from becoming overrun. It limits migrant workers’ ability to put down roots in China’s biggest cities by restricting access to local services such as healthcare and education, or the right to buy an apartment.
When China started its economic reforms in the 1980s, most Chinese lived in villages and rural towns. The new economic opportunities sent millions to work in factories or construction sites in cities. Partly because of the residency restrictions, children typically stayed behind in the care of grandparents or other family members.
Many so-called left-behind children have grown up to become migrant workers themselves. And many reject the tough prospect of having children only to live apart from them.
One 27-year-old woman who grew up with her grandparents while her parents hopped from city to city for jobs said she wouldn’t rush to get married or have children.
“I deeply understand the low self-esteem and timidity as a left-behind child,” said the woman, who asked to be identified only by her family name, Zhao. Her grandparents were illiterate and had to work the land in their village in Guizhou province. With little oversight and care, Zhao and her sister barely managed to finish vocational school.
“I don’t want the next generation to be like me,” Zhao said.
Even though two-thirds of Chinese now live in cities, only 48% have urban residency rights, suggesting that roughly a quarter of a billion people are shut out of many benefits in the cities where they work. According to data from the Ministry of Human Resources and Social Security, in 2017 only about 22% of migrant workers were part of pension plans in their city jobs or had medical insurance. The ministry hasn’t disclosed more recent data.
Some demographers argue that eliminating the household-registration system could be one of the few moves Beijing could take that might dramatically lift births, a priority as the population declines and ages.
Read: China's Population Doom Loop Is Being Amplified by This 'Invisible Wall' (WSJ)
II. “Xi still believes that the East is rising and the West is in decline.”
Some are calling it a “Lost Decade.”
More than 10 years into the Xi Jinping era, it has become clear that much of China’s growth under his watch was driven by unsustainable borrowing, real estate speculation and investments in factories and infrastructure the country didn’t really need. Difficult reforms that could have unlocked more durable growth, such as steps to increase consumer spending, were neglected in favor of policies designed to bolster Communist Party control.
Now, China is drowning in debt, reeling from a property bust that wiped out trillions of dollars of household wealth, and verging on a deflationary spiral. Growth has slowed, Western investment has collapsed and consumer confidence is near a record low.
And yet, as China squares off with the U.S. for a second showdown over trade, Xi is digging in. He’s convinced that his top-down approach to managing China’s economy, with plans to make it an even bigger industrial power, offers the best path for China to eventually surpass the U.S. in economic might.
People close to Beijing’s decision-making say nothing that has befallen China in recent years has changed Xi’s belief that the U.S. is fading as the singular superpower, and that China’s importance is rising on the world stage.
“Xi still believes that the East is rising and the West is in decline,” said a foreign-policy adviser in Beijing, referring to a pronouncement the leader made three years ago when China’s economy, driven by Western demand for its exports, experienced a short-lived recovery from the Covid pandemic. “It might just not be a straight line in his view.”
Read: Xi Digs In With Top-Down Economic Plan Even as China Drowns in Debt (WSJ)
Related: Stagnation With Chinese Characteristics ( by )
III. EVs: “No other country comes close to China.”
Electric vehicles are expected to outsell cars with internal combustion engines in China for the first time next year, in a historic inflection point that puts the world’s biggest car market years ahead of western rivals.
China is set to smash international forecasts and Beijing’s official targets with domestic EV sales — including pure battery and plug-in hybrids — growing about 20 per cent year on year to more than 12mn cars in 2025, according to the latest estimates supplied to the Financial Times by four investment banks and research groups. The figure would be more than double the 5.9mn sold in 2022.
At the same time, sales of traditionally powered cars are expected to fall by more than 10 per cent next year to less than 11mn, reflecting a near 30 per cent plunge from 14.8mn in 2022.
Meanwhile, EV sales growth has slowed in Europe and the US, reflecting the legacy car industry’s slow embrace of new technology, uncertainty over government subsidies and rising protectionism against imports from China.
Robert Liew, director of Asia-Pacific renewables research at Wood Mackenzie, said China’s EV milestone signalled its success in domestic technology development and securing global supply chains for critical resources needed for EVs and their batteries. The industry’s scale meant steep manufacturing cost reductions and lower prices for consumers.
“They want to electrify everything,” said Liew. “No other country comes close to China.”
Read: EV sales set to overtake traditional cars in China years ahead of west (Financial Times)
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Politics & Society
China sets dates for ‘two sessions’ as investors await 2025 economic growth target (SCMP)
China’s top legislature will begin its annual parliamentary meeting on March 5 next year – a session that will be closely watched by investors as Beijing will announce its growth target and decide on ways to stimulate the country’s stalled economy.
The start date of the third annual session of the 14th National People’s Congress (NPC) in Beijing was announced by the NPC Standing Committee on Wednesday.
On the same day, the Chinese People’s Political Consultative Conference (CPPCC), the country’s top political advisory body, announced March 4 as the tentative start date for its annual session.
China’s Xi Says Nation Faces ‘Arduous’ Reform, Stability Tasks (Bloomberg)
Chinese President Xi Jinping said the nation faces “very arduous” reform, development and stability tasks next year, after having “smoothly” achieved economic and social targets for 2024.
Xi urged officials at all levels to identify people’s most urgent needs and solve their most pressing issues, state broadcaster China Central Television reported Friday, citing a Politburo meeting he chaired.
The nation will further deepen reforms to help its economic recovery and complete the targets laid out in its current Five-Year Plan ending in 2025, the report said, without elaborating on the stimulus efforts for 2025. The meeting was convened to discuss Xi’s thoughts on Chinese socialism.
Xi also said the Communist Party should fight against corruption with an “extremely resolute” attitude, and members of the Politburo vowed to be more “steadfast” in supporting the central leadership and enforcing its decisions, the CCTV report said.
Xi's anti-Corruption Warning at Politburo's Democratic Life Meeting ( by )
Since 2015, the Politburo has been holding annual democratic life meetings at the end of the year. These meetings entail discussions on ideological and disciplinary issues, with senior Party members offering self-criticisms before Xi. Today’s People’s Daily’s front page covers the report on this year’s democratic life meeting.
Xi’s remarks about the need to prioritise “political cultivation,” for Politburo members to persist with lifelong learning, the seemingly endless nature of the anti-corruption campaign and the call for them to strengthen education of family members and surrounding staff are striking. It is quite a chilling message that is being sent to the Party elite about the sword that hangs above them.
China ousts 2 military lawmakers as Xi’s defence purge widens (The Straits Times)
China abruptly ousted two military lawmakers from Parliament without explanation, as a purge of key personnel in the upper echelons of the nation’s defence establishment shows no sign of easing.
The country’s top legislative body revoked the membership of Lieutenant-General You Haitao and Vice-Admiral Li Pengcheng during a meeting on Dec 25, according to a report from the National People’s Congress Standing Committee.
China Abruptly Changes Army General Overseeing Political Loyalty (Bloomberg)
China named a new political commissar for its large ground forces, an unexpected move that signals President Xi Jinping is tightening military discipline.
General Chen Hui has been appointed to instill political loyalty and manage manpower in the ground forces of the People’s Liberation Army, the official Xinhua News Agency reported on Monday. The 61-year-old previously served in the Air Force and in April was named the political commissar of the new PLA Aerospace Force.
Chen’s appointment is surprising because he had only been at the Aerospace Force for less than a year and has no experience in the ground forces. He replaces the 61-year-old Qin Shutong. No official reason was given for Qin’s departure and his next posting wasn’t announced. Qin’s predecessor stepped down at the de facto retirement age of 65.
Chart of the Day: The Military Brass Ensnared in China’s Anti-Corruption Campaign (Caixin)
More than 80 generals have been ensnared in China’s anti-corruption campaign since it kicked off in the wake of the 18th National Party Congress held in October 2012, Caixin calculations show.
A total of 13 full generals, 18 lieutenant generals, and more than 50 major generals have fallen from grace in graft probes in the past dozen years, a Caixin compilation found. Notable officials include Li Shangfu, who was sacked from his position as defense minister in 2023, and Wei Fenghe, Li’s predecessor who was stripped of his rank as general in June.
China is building new detention centers all over the country as Xi Jinping widens corruption purge (CNN)
China has built or expanded more than 200 specialized detention facilities nationwide to interrogate suspects ensnared in Xi Jinping’s widening anti-corruption drive, a CNN investigation has found, as the Chinese leader extends his crackdown beyond the ruling Communist Party to a vast swath of public sectors.
Since taking power in 2012, Xi has launched a sweeping campaign against graft and disloyalty, taking down corrupt officials as well as political rivals at an unprecedented speed and scale as he consolidated control over the party and the military.
Now well into his third term, the supreme leader has turned his relentless campaign into a permanent and institutionalized feature of his open-ended rule.
And increasingly, some of the most fearsome tools he has wielded to keep officials in line are being used against a much broader section of society, from private entrepreneurs to school and hospital administrators – regardless of whether they are members of the 99-million-strong party.
China Stuns With Heavy Stealth Tactical Jet’s Sudden Appearance (The War Zone)
In something of a stunning development, China appears to already be flying a stealthy, high-performance sixth-generation crewed combat aircraft, imagery of which began to emerge today. At this early stage, we have very little idea about the precise identity of the new aircraft, but many elements of its design are very much in line with what we already knew about Chinese sixth-generation airpower aspirations.
[…]
In other words, it could put targets in the air, on the ground, and at sea at risk in areas where they currently do not expect a threat from a manned combat aircraft. This has real implications for American tankers, airlifters, and airborne early warning and control, and reconnaissance aircraft, as well as allied ships and forces operating at forward locales. It would also serve as a critical force-multiplying sensor platform operating far forward. Paired with drone wingmen of relevant endurance, its lethality and survivability would be multiplied.
In other words, the existence of this aircraft is a very big deal.
China launches amphibious assault ship that can launch fighter jets (AP)
China launched a new amphibious assault ship Friday, capable of launching fighter jets and designed to strengthen the navy’s combat ability in distant seas.
The Sichuan, the first ship of the 076 type, is China’s largest such ship yet, displacing 40,000 tons and equipped with an electromagnetic catapult which will allow fighter jets to launch directly off its deck, according to the official Xinhua news agency.
The ship is designed to launch ground troops in landing crafts and provide them with air support.
Developed by Chinese researchers, it’s also equipped with an “arrestor technology” which allows fighter jets to land on its deck.
Chinese man sentenced to death for killing 35 people after driving into a crowd (AP)
A court in China has sentenced a man to death for killing 35 people last month by driving into a crowd, in an attack that raised national concern about mass killings.
Fan Weiqiu was venting his anger because he was unhappy with his divorce settlement, the court in the southern city of Zhuhai said in handing down the sentence on Friday. The victims were exercising at a sports center. Fan pleaded guilty to endangering public safety by dangerous means, a court statement said.
Fan’s “criminal motive was extremely despicable, the nature of the crime was extremely vile, the means of the crime were particularly cruel, and the consequences of the crime were particularly severe, resulting in great social harm,” the court said.
China court hands suspended death sentence to driver who attacked school crowd in Changde, Hunan (CNN)
A Chinese court has issued a suspended death sentence to a man who rammed his car into crowds outside a primary school in southern China last month, injuring more than two dozen people in one of several violent attacks that has recently rattled the country and prompted officials to ramp up security measures.
The driver, named as Huang Wen, was sentenced to death with a two-year reprieve by a court in Changde city in Hunan province, state news agency Xinhua reported Monday.
Under Chinese law, the reprieve means Huang’s penalty can be commuted to life imprisonment, subject to his conduct during the two-year period.
China’s Xi vows to stop a spree of mass killings known as ‘revenge on society crimes’ (AP)
China’s leader Xi Jinping wants the recent spree of mass killings that shocked the country not to happen again. He ordered local governments to prevent future “extreme cases.”
The attacks, where drivers mow down people on foot or knife-wielding assailants stab multiple victims, are not new in China. But the latest surge drew attention.
Local officials were quick to vow to examine all sorts of personal disputes that could trigger aggression, from marital troubles to disagreements over inheritance.
However, the increasing reach into people’s private lives raises concerns at a time when the Chinese state has already tightened its grip over all social and political aspects in the East Asian nation.
China: A year of mass attacks reveals anger and frustration (BBC)
Chinese people often air their grievances online, says Lynette Ong, a political science professor at the University of Toronto, who has carried out significant research on how the Chinese state responds to push back from its people.
"[They] will go on to the internet and scold the government… just to vent their anger. Or they may organise a small protest which the police would often allow if it's small-scale," she explains. "But this sort of dissent, small dissent, has been closed off in the last couple of years."
There are plenty of examples of this: Increased internet censorship, which blocks words or expressions that are deemed controversial or critical; crackdowns on cheeky Halloween costumes that make fun of officialdom; or when plain-clothed men, who appeared to have been mobilised by local officials, beat up protesters in Henan province outside banks which had frozen their accounts.
As for dealing with people's mental and emotional responses to these stresses, this too has been found wanting. Specialists say that China's counselling services are vastly inadequate, leaving no outlet for those who feel isolated, alone and depressed in modern Chinese society.
[…]
When China's leader Xi Jinping spoke about the Zhuhai attack, he seemed to acknowledge pressure was building in society. He urged officials across the country to "learn hard lessons from the incident, address risks at their roots, resolve conflicts and disputes early and take proactive measures to prevent extreme crime".
But, so far, the lessons learnt seem to have led to a push for quicker police response times using greater surveillance, rather than considering any changes to the way China is run.
"China is moving into a new phase, a new phase that we have not seen since the late 70s," Prof Ong says, referring to the time when the country began opening to the world again, unleashing enormous change.
"We need to brace for unexpected events, such as a lot of random attacks and pockets of protest and social instability emerging."
12356 set as hotline for distress calls (China Daily)
A nationwide mental health support hotline will soon be available across China, aiming to address the growing prevalence of psychological issues, the National Health Commission announced on Wednesday.
The hotline number — 12356 — is expected to be operational around New Year's Day on Jan 1 or this year's Spring Festival on Jan 29 and will be accessible nationwide starting May 1, according to the commission.
Each city-level region is required to establish at least one hotline, which must be staffed by at least two operators for a minimum of 18 hours daily.
Through the hotline, operators will provide mental health education, psychological counseling and support, as well as respond to urgent mental health needs. Efforts are also underway to integrate the mental health hotline with the country's emergency hotlines for police, fire and medical aid services.
In the Dark: The Grown-Up Kids Struggling With Depressed Parents (Sixth Tone)
Depression has become a common issue among China’s elderly. A 2021 survey in Beijing by the Chinese Academy of Sciences’ Institute of Psychology found that 19% of respondents aged 60 or over displayed mild symptoms of depression, while 12% had moderate to severe symptoms. Yet, experts say their offspring often struggle to notice the warning signs.
Even when they do, convincing a middle-aged or elderly person to seek medical care or professional counseling is not easy. A simple search of the subject on any Chinese social media platform yields countless tales of adult children attempting — and, more often than not, failing — to get their anxious or depressed parents the help they desperately need.
Following are the stories of three people who tried, with mixed results.
Chinese legal experts condemn police for sending blogger to psychiatric hospital (SCMP)
Chinese legal experts have condemned police in the eastern province of Jiangxi, saying they abused their power by once again sending a blogger – who previously accused an auxiliary officer of sexual assault – to hospital for psychiatric treatment.
Police in Jiangxi’s provincial capital Nanchang said on Sunday they had sent Li Yixue – a twenty-something blogger with more than 800,000 followers on Douyin, the Chinese version of TikTok – to hospital for treatment after a Beijing hospital diagnosed her with “obsessive-compulsive disorder” and “personality disorder”.
In April 2022, Li accused a Nanchang auxiliary police officer of sexually assaulting her, but local police said their investigation did not support her claims. They then sent Li to a psychiatric hospital for two months of treatment, citing the possibility that Li might take her own life.
In December 2022, Li sued the hospital after tests conducted at other institutions after her release showed she was mentally healthy, drawing widespread attention on Chinese social media. A court heard the case that month but a verdict has not yet been announced.
Earlier this month, Li posted a plea for help on Douyin, saying that police had broken into her home “with a dozen people” and damaged a camera on her front door.
What is neijuan, and why is China worried about it? (The Guardian)
On the Chinese internet, the country’s current predicament – slowing economic growth, a falling birthrate, a meagre social safety net, increasing isolation on the world stage – is often expressed through buzzwords. There is tangping, or “lying flat”, a term used to describe the young generation of Chinese who are choosing to chill out rather than hustle in China’s high-pressure economy. There is runxue, or “run philosophy”, which refers to the determination of large numbers of people to emigrate. Recently, “revenge against society” attacks – random incidents of violence that have claimed dozens of lives – have sparked particular concern. And there is also neijuan, or “involution”, a term used to describe the feeling of diminishing returns in China’s social contract.
China steps up campaign for single people to date, marry and give birth (Financial Times)
China has stepped up a nationwide campaign to convince single people to date, marry and have children as Beijing grapples with an increasingly severe demographic crisis.
Local governments are cold-calling married women to ask about their plans to have children and are handing out cash to parents to encourage them to have more than one child.
Universities have been asked to introduce so-called love courses for single students, and regular articles appear in state media about the benefits of having children.
China’s population is shrinking, with the number of deaths outstripping births, piling pressure on local governments to address an increasingly bleak demographic outlook.
“China’s population faces three major trends: ageing, low birth and low marriage rates,” said prominent economist Ren Zeping in an interview with domestic press last month. “There are fewer children and more elderly people. The speed and scale of China’s ageing is unprecedented.”
Beijing has pledged to offer subsidies and bigger tax cuts for parents to reduce the cost of raising children. The State Council, China’s cabinet, in October said it was drafting a plan to build a “birth-friendly society” as part of a broader stimulus package to tackle an ailing economy. Details of this plan are still being thrashed out.
In the meantime, married women in their twenties and early thirties across the country have been receiving calls from local officials asking about their plans to start a family, according to multiple people who spoke with the Financial Times and posts on social media.
In some instances, callers asked women to attend prenatal body checks. Other callers were more direct, offering subsidies to women who had more than one child. Couples need to have on average 2.1 children to reach the population replacement rate.
A Zhejiang resident who declined to be named said officials offered local women a Rmb100,000 ($14,000) subsidy for having a second child. “There is no explicit policy, but if you ask for it, the village will find you a way to get you the subsidy,” she said. Currently, subsidies for children are determined by local governments depending on their fiscal health.
The personalised lobbying comes against a background of an intensified media campaign hailing the benefits of childbirth. In recent months, the state-run People’s Daily and Life Times have promoted scientific voices saying childbirth is good for the mother’s health and can even help prevent cancer and treat certain diseases.
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Tibet: How China cracked down on rare protests over Kamtok dam (BBC)
The protests, followed by the crackdown, took place in a territory home to Tibetans in Sichuan province. For years, Chinese authorities have been planning to build the massive Gangtuo dam and hydropower plant, also known as Kamtok in Tibetan, in the valley straddling the Dege (Derge) and Jiangda (Jomda) counties.
Once built, the dam's reservoir would submerge an area that is culturally and religiously significant to Tibetans, and home to several villages and ancient monasteries containing sacred relics.
One of them, the 700-year-old Wangdui (Wontoe) Monastery, has particular historical value as its walls feature rare Buddhist murals.
The Gangtuo dam would also displace thousands of Tibetans. The BBC has seen what appears to be a public tender document for the relocation of 4,287 residents to make way for the dam.
Harbin Firm Under Fire for Banning Employees From Ice Festival (Sixth Tone)
An agricultural firm in the northeastern Chinese city of Harbin has come under fire this week after telling employees not to visit the city’s most iconic tourist destination.
In an internal statement issued Saturday, the Heilongjiang Heliang Agriculture Company told employees to suspend their plans to visit the city’s Ice and Snow Festival, which had kicked off earlier that same day.
The company explained it hoped to make it easier for travelers from the south to secure tickets to the internet-famous event and threatened to strip violators of their annual bonuses.
The attempt quickly backfired after leaked copies of the statement circulated widely on Chinese social media. Hashtags related to the story have more than 150 million views on the microblogging platform Weibo as of Tuesday afternoon, with most comments critical of the ban.
China school ditches ‘elite dining’ for high-achieving pupils after online backlash (SCMP)
A secondary school in China has been mired in controversy for setting a “good students dining area” for students who achieved good grades.
The Shishichengfei Secondary School in southwestern China’s Sichuan province was exposed to have provided superior lunch sets for a group of students.
Their table in the school canteen was also labelled as a “straight A student area”.
According to the school, only the student with the best overall grade, the student with the best grade in one subject, and the student who made the biggest progress from each class in the December school test were awarded with a better lunch and a small gift.
Students with ordinary grades dined in the same canteen.
When video footage of the discriminating dining arrangement went viral online and triggered controversy, the school apologised on December 17.
It admitted that the award was a “half-baked decision that brought bad influences”, and announced that it had cancelled the scheme, vowing to “care for the well-being of every student”.
A member of staff at the school said that the award was only given once a month after each test, and it did not discriminate against any student but simply valued academic performance.
Shelf Esteem: Chinese Stores Give ‘Ugly’ Veggies a Fresh Look (Sixth Tone)
Traditionally, only the most perfect fruits and vegetables make it onto the shelves of supermarkets and grocery stores, while ugly ones – whether pockmarked, gashed, or squashed – are discarded as unsellable.
Now, some Chinese grocers want to see if discounts and advertising can sell consumers on the merits of these “ugly veggies.”
Leading the charge is Freshippo, the Alibaba-owned Chinese supermarket giant. In addition to lower prices — it sells blemished produce for 30% to 50% less than unmarked counterparts, on average — the chain has unveiled a series of mascots, from a “Smiling Tomato” with a horizontal gash to a forked carrot reimagined as a saucy showgirl.
The retailer says the push, which began in June, can reduce food waste by up to 4 tons per week.
Shanghai airport rail link cuts transit time to 40 mins (China Daily)
Shanghai unveiled a high-speed rail link between its two major airports on Friday, reducing transit time between the city's aviation hubs to just 40 minutes.
The Shanghai Suburban Railway Airport Link Line had its inaugural ceremony at Shanghai Hongqiao International Airport, where Gong Zheng, mayor of Shanghai, announced the official launch of the line.
Prior to the airport link's launch, transiting between Hongqiao and Shanghai Pudong International Airport via the metro took around 1 hour and 40 minutes. The new high-speed airport rail cuts that transit time to just 40 minutes.
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