Interesting article in QS where Xi explains reasons behind the "common prosperity" drive: 1. Taking the promotion of common prosperity for all people as the focus of seeking happiness for the people, and constantly consolidating the foundation of the party’s long-term governance;
2. High-quality development requires high-quality workers. Only by promoting common prosperity, increasing the income of urban and rural residents, and enhancing human capital, can we increase total factor productivity and consolidate the foundation for high-quality development.
3. The problem of global income inequality is prominent. Some countries are divided between the rich and the poor, ...leading to social tearing, political polarization & populism. China must resolutely prevent polarization, & achieve social harmony & stability.
so how to achieve this? Xi laid down the following principles: 1. everyone has to take part in, avoiding "involution" and "laying flat".
2. Adhere to the basic economic system. Public ownership is the mainstay & plays important role in promoting common prosperity, at the same time promote the healthy development of the non-public economy and the healthy growth of people from the non-public economy.
"healthy"...
3. Don't try to raise your appetite & make promises that cannot be fulfilled. The government can't pay everything. Don't fall into the trap of "welfare states" and raise lazy people.
4. "Common prosperity" can't be achieved overnight. It will be with us for a long time.
& now some practical advice: 1. "Coordinated development of finance and real estate with the real economy". So the days of big profits for big banks and developers are over?
2. "Attract more high-quality talents to join the team of skilled workers". Good news for college graduates!
3. "Adhere to the positioning that the house is used for living, not for speculation, rent and purchase at the same time, implement policies in accordance with the city, and improve the long-term rental policy".
More bad news for the developers?
4. "Strengthen the regulation and adjustment of high income".
How? income tax, capital tax, property tax, consumption tax.
So what exactly constitutes "excessively high income"? I tweeted this 2 months ago:
& this part is so loaded:
"We have a complete solution to the problem of poverty, but we still need to explore and accumulate experience on how to get rich. It is necessary to protect property rights and intellectual property rights, and protect legal wealth".
"We must resolutely oppose the disorderly expansion of capital, draw a negative list for access to sensitive areas, strengthen anti-monopoly supervision. At the same time, we must mobilize enthusiasm of entrepreneurs to promote the healthy development of various types of capital"
5. "Promote the common prosperity of the people's spiritual life", in line with the drive for “online civilization" that I discussed in @china_neican earlier this month. neican.org/p/civilizing-c…
6. "Accelerate the industrialization of agriculture" and "revitalize rural assets", which is coded language for lifting the restrictions on sale of rural land.
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Xi’s Feb speech to private firms is finally published—and it confirms everything I predicted before the meeting:
Private firms must fully align with China’s strategic competition vs the US.
Xi says private firms’ problems stem from external shocks (tech revolutions, trade restrictions) or internal missteps (over-diversification).
To Xi, the Party is not the problem, it is the solution.
Thus, firms must “unify their thoughts and actions with the Central Committee.”
Xi was even more explicit on measures to boost private firms: they should lead national science & tech projects, access major research infrastructure, and join state-led initiatives.
Exactly what I predicted 3 years ago in my @CIGI essay: private firms must be integrated into
What’s the biggest threat to China’s economy in the 2nd half of 2025?
It’s not the trade war, nor any new government policy. It’s a judicial interpretation from the Supreme Court.
On July 31, the Court issued Interpretation on Applicable Law in Trying Labour Dispute Cases (II).
Article 19 states:
“If the employer agrees with the employee, or the employee promises the employer, that there is no need to pay social security premiums, the people’s court shall find the agreement or promise invalid. If the employer fails to pay social security premiums in
accordance with the law, and the employee requests the termination of the labour contract in accordance with the third paragraph of Article 38 of the Labour Contract Law and demands economic compensation, the people’s court shall support the claim.”
The new tariff numbers confirm what I wrote 4 months ago in my @commonplc piece “The Art of a Trade Deal”:
1. I stressed that these negotiations aren’t just about trade-security alignment would be a key factor. This is now explicit in the executive order, which repeatedly cites
security considerations in setting final tariff rates.
2. I predicted countries would be grouped based on key criteria. That’s exactly what we see: broadly speaking, there are three groups—friends (10–15%), enemies (30%+), and frenemies (19–25%).
3. I anticipated aggressive transshipment controls targeting China. The executive order includes just that.
4. Perhaps most tellingly, the order hints what China—the last holdout from the Liberation Day Tariffs—is likely to face: at least 40%, matching the rate applied to
The US-UK trade deal is out—and it confirms most of my predictions in my @commonplc piece “The Art of a Trade Deal” 4 weeks ago:
1. Tariffs: The 10% tariff remains in place for now, but contrary to some interpretations, this doesn’t mean the UK failed to negotiate it down. The
Agreement explicitly states that both sides will enter negotiations to reduce tariff rates. As I noted, the likely landing point is around the US’s 3.4% rate-if the UK is willing to match it.
2. Non-Tariff Barriers (NTBs): Just as I anticipated, NTBs is central to the next phase
For a developed country like the UK, the focus is on overregulation—technical barriers to trade, SPS measures, and similar restrictions—all explicitly referenced in the Agreement.
3. Supply Chains: I flagged this as a key issue, and the Agreement confirms it. It addresses supply
Today’s front page of People’s Daily features the Central Peripheral Work Conference—a major development, given this is only the second such meeting in the PRC’s 76-year history.
The first such meeting was in Oct 2013, when Xi launched the BRI, which
was elevated to a national strategy at the 3rd Plenum of the 18th CCP Central Committee held the following month.
As I argued in this @trade_review article 3 years ago, the BRI was China’s strategic response to US containment through the TPP, where the cambridge.org/core/journals/…
@trade_review US tried to “make sure the US—and not countries like China—is the one writing this century’s rules for the world’s economy.”
But the TPP was killed.
Now, as @realDonaldTrump tries to rewrite the rules of global trade through the Reciprocal Tariff Policy, China is striking back.