Caption: A visual representation of China's economic downturn. Across both first-tier cities and remote towns, shopping malls and markets face waves of closures, with vendors often outnumbering customers. (Video screenshot)
[People News] On March 9, China’s National Bureau of Statistics announced that the Consumer Price Index (CPI) for February fell by 0.7% year-on-year, marking the largest drop in 13 months. The Producer Price Index (PPI) declined by 0.1% month-on-month and 2.2% year-on-year.
At this year’s Two Sessions, Premier Li Qiang’s government work report did not mention deflationary pressures. Instead, it simply lowered the inflation target from 3% in 2024 to around 2% in 2025. The issue of "deflation" was effectively covered up.
The reason? A single statement from Party leader Xi Jinping: "What’s wrong with deflation? Doesn’t everyone like cheaper prices?" In Xi’s view, lower prices are a good thing—they reinforce the narrative of poverty alleviation as a political achievement. Cheap prices are also an advantage and a strategy. The global expansion of "Made in China 2025" relies on affordability. From this perspective, deflation can help China’s rise while the West declines.
From the official standpoint, disposable household income continues to grow. In 2024, the per capita disposable income of Chinese residents was 41,314 yuan, an increase of 5.3% from the previous year. After adjusting for inflation, the real growth rate was 5.1%. Look at that—it even outpaced GDP growth by 0.1 percentage points! The state is certainly taking good care of the people, right?
Let’s examine another statistic: According to the latest data from China’s central bank, for the first time in history, the average savings per person in China has exceeded 100,000 yuan, reaching 107,000 yuan. Many netizens responded by saying, "I’ve been averaged again." In 2023, the average savings per person was around 97,000 yuan, and in 2022, it was 92,000 yuan. Comparing these three years, notice anything? The Chinese people are saving more each year!
In 2024, the average personal savings growth rate was 10%, while disposable income growth was 5.1%—meaning savings grew at twice the rate of income. Even as bank interest rates continue to drop, approaching zero, the government is trying to push people to spend. Yet, the people simply refuse to do so.
China is not experiencing deflation. Wang Wentao pointed out that the issue stems from a "weak consumption capacity and willingness to consume." To counteract the sluggish domestic demand, the government has taken substantial measures. The 2025 government work report announced an increase of 20 yuan in the minimum standard for basic pensions for urban and rural residents. Reflecting the latest public consumption trend of "extreme low consumption," some individuals are consuming a packet of instant noodles in three separate portions, a consumption behavior reminiscent of inmates in correctional facilities. In this context, 20 yuan can still address significant issues.
On March 23, Han Wenxiu, the deputy director responsible for daily operations at the Central Financial and Economic Affairs Commission Office and director of the Central Rural Work Leading Group Office, remarked at the 2025 China Development Forum annual meeting that there will be an increase in income for urban and rural residents, allowing consumers to have money to spend. But how can we ensure that ordinary people have money? There is a lot of bureaucratic talk, yet no mention of raising wages for workers or distributing money to the public.
A netizen expressed: "When the water level in a pool decreases, and the water volume is not replenished, you will observe many fish jumping up and down in the water, even leaping out of it. This is not due to the fish being strong, but rather because the lack of oxygen in the water forces them to struggle to surface, ultimately leading to many fish dying, leaving only a few large and fat fish. Stimulating consumption without adding water to the pond results in the death of many fish and the emergence of a few giant fish."
When it comes to fish essence, it’s a case of big fish essence preying on small fish essence. Recently, the patriotic big V fish essence Sima Nan (Sīmǎ Nán) has gained notoriety for evading taxes amounting to over 9 million, with his assets reaching into the hundreds of millions. Sima fish essence was elevated by the Party and the state, but the fish essence in Zhongnanhai still depends on 'foreign forces' for recovery.
On March 20, the Office of the Director of National Intelligence of the United States published a report titled 'The Wealth and Corruption Activities of Chinese Communist Party Leaders,' which revealed that high-ranking officials in Zhongnanhai have been quite active, with the Xi Jinping (Xí Jìnpíng) family still possessing assets worth 1 billion dollars in 2024. The report highlighted that particularly at the provincial level, the 'legitimate income' gained by officials through 'corrupt means' can surge by 4 to 6 times.
On March 24, 2025, The Wall Street Journal featured an article titled 'Xi Jinping's Large-Scale Campaign Against 'Fly and Ant Corruption' to Soothe the Public,' noting that 'since Xi Jinping took the helm in 2012, the Communist Party's disciplinary inspection and supervision officials have punished over 6.2 million individuals for issues including corruption and bureaucratic inaction.' 'In 2024, China's disciplinary inspection agencies dealt with 530,000 cases, with 16,000 individuals referred to prosecutorial authorities for criminal charges. These investigations led to a record number of disciplinary cases last year, with national disciplinary inspection and supervision agencies imposing party disciplinary and administrative penalties on a total of 889,000 individuals.'
The article analyzes that the anti-corruption campaign launched by Xi Jinping over a decade ago was designed to cultivate his image as a leader who is close to the people. Currently, with the real estate market struggling and youth unemployment rates remaining high, these issues not only undermine consumer confidence and lead to social unrest but also intensify external criticism of Xi Jinping's economic management. Thus, the crackdown on corruption is aimed at eliminating threats to the legitimacy of the Communist Party of China's (CPC) governance.
The article highlights that the Chinese government is grappling with persistent unrest stemming from economic challenges. The China Dissent Monitor, run by the U.S. human rights organization Freedom House, reports an increase in protests in China last year, partly due to dissatisfaction among workers and homebuyers. Between January and September of last year, there were over 2,400 protests, marking a 16% increase compared to the previous year.
The CPC and its leader Xi Jinping are trying to win public support through anti-corruption measures, seeking to absolve themselves and extend their rule, but this strategy has been undermined by the rise of a 'Trump 2.0' figure. Chinese citizens work 996 (9 am to 9 pm, six days a week) for the smallest of wages, generating the world's second-largest wealth. Why are they hesitant to spend? Because from local towns to the State Council and Zhongnanhai, the pervasive presence of various levels of the CPC system competing with the populace for resources is apparent everywhere! To sustain this environment that fosters corruption, significant resources must be allocated to stability maintenance and military expenditures.
Why are Chinese people not spending? There are two fundamental reasons: first, the public lacks disposable income; second, the government is encroaching on consumer spending.
In 2023, China's per capita disposable income stood at 39,218 yuan, which represents only 43.89% of the country's per capita GDP of 89,358 yuan for that year. Looking ahead to 2024, the national per capita disposable income is projected to rise to 41,314 yuan, accounting for 43.13% of the per capita GDP of 95,797 yuan, marking a decrease of 0.76% compared to 2023.
Research by scholars has shown that since 1978, the share of disposable income of Chinese residents relative to GDP peaked at around 63.00% during the 1980s, in the early years of reform and opening up. Since then, this proportion has steadily declined, hitting a low of 40.23% in 2011, with 2010 being the second-lowest year. Ironically, in 2010, China’s GDP ranked as the second largest in the world, just behind the United States. Over the past decade since Xi Jinping took office, this ratio has fluctuated between 42% and 44%. In comparison, the share of personal disposable income to GDP in the United States has consistently hovered around 80%, with most developed countries also reporting figures above 65%.
Examining the growth rate of disposable income managed by the Chinese Communist Party (CCP) government departments reveals that it significantly outpaces the GDP growth rate. In 2021, total government revenue constituted 32.98% of GDP, marking an increase of 15.27 percentage points compared to the macro tax burden level derived from the national general public budget revenue. In 2022, broad fiscal revenue—which includes national tax revenue, non-tax revenue, government fund budget revenue, total revenue from state-owned capital operations (final accounts), and social insurance fund revenue—reached 41.64 trillion yuan, representing 34.6% of that year's GDP (120.47 trillion yuan), reflecting an increase from 2021.
Moreover, the growth rate of government spending has also far exceeded that of GDP, creating a stark contrast with the long-term trend of residents' disposable income growth lagging behind GDP growth. Between 2004 and 2021, the scale of national general public budget expenditure surged by 7.65 times, with its share of GDP rising from 16.51% to 21.54%, an increase of 5.03 percentage points. Meanwhile, the total scale of government expenditure increased by 8.34 times, with its share of GDP climbing from 30.16% to 39.39% (which was 41.12% in 2019), an increase of 9.23 percentage points. Both expenditure measures have outpaced GDP growth, leading to a growing skew in GDP distribution towards the government. The disproportionately high share of income and expenditure distribution by government departments naturally diminishes the income and expenditure proportions for businesses and residents.
Within the vast expenditures of government sectors lies a staggering level of corruption among officials. The rate of corruption among Chinese Communist Party (CCP) officials, relative to GDP growth, is undoubtedly the highest globally. Asking the public why they are not spending is akin to the question, 'Why not eat porridge?'
(Originally published by People News)
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