The Second-Generation Red Nobility Stages a Coup, Xi is Panicked. (People News Report Illustration)
[People News] The CCP’s major fiscal stimulus plan has finally been revealed.
On November 8, Xinhua News Agency reported that the 12th meeting of the Standing Committee of the 14th National People's Congress passed the "Resolution of the Standing Committee of the National People's Congress on Approving the State Council's Proposal to Increase the Debt Limit of Local Governments to Replace Existing Implicit Debt." The proposal aims to increase the local government debt limit by 6 trillion yuan to replace existing implicit debt. The plan will be approved at once and implemented over three years. Under this arrangement, the local government special debt limit for the end of 2024 will increase from 29.52 trillion yuan to 35.52 trillion yuan.
On November 8, Minister of Finance Lan Fo'an explained that starting in 2024, 800 billion yuan annually from new local government special bonds will be allocated for debt relief for five consecutive years, totaling 4 trillion yuan to replace implicit debt. Hidden debts related to urban renewal projects maturing in 2029 and beyond, totaling 2 trillion yuan, will still be repaid according to the original contracts. Together with the 6 trillion yuan debt limit increase, this stimulus package amounts to 12 trillion yuan. The CCP calls it a "three-arrow" approach.
Rumors about the CCP's fiscal stimulus plan, touted by scholars as a major policy shift to rescue the market, have been circulating, and an eagerly awaited comprehensive package has finally been announced. However, it does not target public welfare but instead shores up government accounts.
Previously, The Wall Street Journal cited insiders in the CCP who claimed that a 10 trillion yuan fiscal stimulus plan was forthcoming, including 6 trillion yuan for debt relief and 4 trillion yuan for real estate investments. If Trump were elected, an additional 4 trillion yuan would be allocated to offset tariff impacts, and 1 trillion yuan would be used to replenish bank capital.
Liu Shijin, deputy director of the Economic Committee of the Chinese People's Political Consultative Conference and an economist, predicted that the 10 trillion yuan fiscal policy would focus on local government debt relief, social welfare funds, and real estate. Morgan Stanley economists, using a social perception index measuring adverse societal incidents due to economic decline, predicted Xi Jinping might shift economic policies toward supporting public welfare and boosting domestic consumption.
All of these predictions were wrong. Markets, Morgan Stanley, and insiders all misjudged. After the debt relief scale was announced by the National People’s Congress, the offshore yuan plunged sharply, briefly crossing the 7.19 mark, rivaling the currency impact of Trump's election victory.
In Xi Jinping's view, public hardship is not enough to incite widespread rebellion; common people at most resort to jumping from buildings or bridges, which local police can handle with minimal expense.
However, unpaid salaries for civil servants, police without paychecks, and officials lying flat are serious concerns—without funding, no one can maintain stability for the Communist Party. Vice President of the Central University of Finance and Economics Li Jianjun disclosed that local debt totals 100 trillion yuan, including 42.23 trillion yuan in explicit debt and 57.16 trillion yuan in implicit debt from urban investment bonds. Central government debt stands at 30 trillion yuan, making the combined total 130 trillion yuan.
This figure does not include hidden guarantees by local governments. What are hidden guarantees? These are government endorsements for state-owned enterprises or banks, or guarantees by influential government figures for businesses involved in profit-sharing relationships, which ultimately implicate the government in debt when the backed party incurs losses. This issue arises from the CCP’s planned economy’s soft budget constraints and excessive government power due to collusion between power and money. The amount of hidden guarantees by local governments nationwide remains undisclosed by the CCP. However, the potential fiscal and financial risks are significant and could trigger societal risks, as seen in the case of Liu Wenjie, director of the Hunan Finance Department, who was killed—possibly linked to hidden government guarantees. Despite being a private loan, Liu’s official status provided credibility, enabling the borrowing to occur. Such hidden debts essentially amount to abuse of power, underpinned by collusion between power and capital, a pervasive issue in CCP officialdom.
What truly keeps Xi Jinping up at night is local government debt, not the financial struggles of ordinary citizens. Local government debt has escalated beyond salary cuts for civil servants to demands for regional autonomy. According to Zhao Lanjian, a media figure who posted on the X platform, 1,500 police officers were mobilized in Henan Province to cross provinces to seize 600,000 yuan. Wealthier provinces can no longer control poorer ones raiding them for enforcement. Chinese society is on the brink of collapse. The centralized management system struggles to adapt to an economy on the brink of collapse and relies on public security forces to maintain the massive corrupt system. Reports suggest that Guangdong and Zhejiang provinces are applying for judicial independence, with several other provinces leaning toward similar demands, signaling the start of regional autonomy and posing a real threat to the CCP and Xi Jinping.
Hence, the CCP is spending heavily to cover local government debt. Last year, former Finance Minister Liu Kun insisted that “whoever’s child it is, they should take care of it,” but this year, the stance has changed, indicating that the local debt issue has hit a red line threatening CCP stability. It has now become a case of “the parent paying for the child's debt”; otherwise, resentment could lead to retaliation.
Minister of Finance Lan Fo'an announced that more funds would be released to reassure the market. However, for ordinary citizens, rest assured—the only thing that will fall on them is the sickle, not gold coins.
On November 8, Xinhua’s website also published a peculiar article titled "Learning and Implementing the Spirit of the Third Plenary Session—Why Improve the Leadership and Management System of the People’s Army." The piece praised Xi Jinping's military reforms and emphasized the absolute leadership of the Party over the military, stating that the Third Plenary Session's "Decision" specified the establishment of a "system and mechanism to fully implement the system of the Chairman of the Military Commission." It called for the army to deeply understand the decisive significance of the "Two Establishes," strengthen the "Four Consciousnesses," solidify the "Four Confidences," and achieve the "Two Maintenances." Curiously, the article mentioned "Chairman Xi" only once and omitted Xi Jinping's name.
Since the Third Plenary Session, rumors have circulated about Xi Jinping losing military power, and reports of power struggles between Xi and Zhang Youxia have spread online. Zhang Youxia, with a background in the army, hosted a comprehensive training session focused on the army in Zhangjiakou while Xi Jinping attended the BRICS meeting in Kazan. Xi’s ally He Weidong sat below the dais, listening to Zhang’s speech, considered further evidence of Xi losing control of the military. The article highlighted the need to "adhere to the absolute leadership of the Party over the military," breaking away from the "large army structure," and stated, "If the Chairman of the Military Commission system is implemented well, the Party’s absolute leadership over the military is fundamentally guaranteed; if not, it will be fundamentally weakened."
The article acknowledged the incomplete implementation of the Military Commission Chairman system, making the Xi-Zhang power struggle public and directly targeting Zhang Youxia, implying Xi Jinping’s intent to regain military power. Since October, Xi has visited the Huangshan Rocket Brigade in Anhui and the airborne troops in Xiaogan, Hubei, with Zhang and He accompanying him and drew red lines at a Politburo meeting, stressing reforms that should not be altered.
These actions by Xi send strong signals, suggesting that the power struggle between Xi and Zhang may escalate. Recently, independent media personality Lao Deng revealed on his show that people from Xi's camp handed black materials on Zhang Youxia to him, asking him to expose Zhang on his show, which Lao Deng refused. Before the 20th Party Congress, Lao Deng's program fueled speculation about Xi stepping down and Li taking over; after Xi’s re-election, Li Keqiang died under mysterious circumstances. Will Zhang Youxia become another Lin Biao or Li Keqiang? Or will he make a bold move, seize power, and rewrite the CCP's script entirely?
(First published by People News)
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