Thread: The View, from China

American would call this "Cash for Clunkers". It's what you do when your industries are in the shit.

It seems China wants more tourists. Announced in December, I missed it at the time. More details in the link.

"The National Immigration Administration (NIA) announced today that it will fully relax and optimize the visa-free transit policy, which is effective immediately. The stay duration for foreign nationals eligible for visa-free transit has been extended from the previous 72 hours and 144 hours to 240 hours (10 days). Additionally, 21 ports of entry and exit have been added for visa-free transit individuals, further expanding the allowed areas for visa-free transit travelers. Individuals from 54 eligible countries, including Russia, Brazil, the United Kingdom, the United States of America, and Canada, traveling from China to a third country (region), can enter visa-free through any of the 60 open ports in 24 provinces (autonomous regions and municipalities), and stay within the allowed areas for visa-free transit travelers for no more than 240 hours."

China's visa-free transit policy fully relaxed and optimized


I might do my next UK trip via Shanghai.

Nearly 3 million Chinese restaurants, cafes shut down

China has seen nearly 3 million restaurants, cafes and other catering outlets shut down in the past year, according to industry website Hongcan, with many going bankrupt and even hugely popular chains slashing costs by shutting down hundreds of stores.


In early December, top Taiwanese chicken house Zhenghao Da Da went viral on Weibo after it announced it would shutter all its stores in China, starting with the flagship outlet in Shanghai’s New World City Plaza mall.


But the announcement was just “the tip of the iceberg,” according to a Jan. 21 analysis published on Hongcan’s website.


“‘Contraction’ and ‘stores closing’ were the new buzzwords for the catering industry in 2024,” the article said. “The negative news just kept on coming, and the sense of chill was overwhelming.”


The closures have been seen across all sectors of the industry, from fine dining to cafes, bakeries and hot pot chains to snacks and fast food.


Even high-end Western fine-dining outlets have been hit by bankruptcy, absconding owners and unpaid wages, “in an extremely embarrassing manner,” the article said, citing the closure of Beijing-based Michelin-starred Italian restaurant Opera BOMBANA, which shut down in April 2024 while still owing its staff wages and suppliers money.

L’Atelier 18, a French restaurant on the Bund in Shanghai with a three-Michelin-star chef shut down after only six months in operation, while Paul Pairet at Roodoodoo also shut its doors less than a year after its opening, according to a list of high-profile closures compiled by Redcan.


Tea shops hit hard


Snacks, baked goods and beverages have been equally hard hit, though, with milk tea store Taigai, Jixu Fresh Fruit Coffee and Thank You Tea all shuttering multiple stores through the year, the list showed.


Tea chain Cuonei Village slashed its stores from nearly 500 across more than 80 Chinese cities to less than 50 stores by early December, while Fu Xiaotao and Yuan Zhenzhen Milk Tea have dropped from more than 300 stores apiece to just a handful.


Diners who once piled the shrimp high at Xiamen’s fancy seafood buffet chain Haidinghui have been left out in the cold, while Japan’s Mos Burger exited the Chinese market, closing six outlets in June.


Hotpot chains Just Thai, Xianhezhuang and Panda Lao Zao have all slashed the number of their outlets.

The report cited “more rational” behavior from consumers, increasing global uncertainty and the “shrinking assets of the middle classes” as the driving force behind the mass closures.


Flagging economy to blame


A current affairs commentator from the eastern province of Zhejiang who gave only the surname Lu for fear of reprisals said the industry has been hit from all directions.


“On the demand side, there has been weak domestic economic recovery since the ending of pandemic restrictions,” Lu said. “The assets of the middle classes are shrinking, civil servants are owed wages, and a lot of ordinary people are unemployed.”


“This means consumption has become more rational and focused on value for money and demand more rigid, while high-end catering and internet celebrity restaurants have been hit hard,” he said. Internet celebrity restaurants are eateries that are popular online and attract customers through mass exposure.

A resident of the eastern city of Taizhou who gave only the surname Wang for fear of reprisals said the impact on the street is highly visible where he lives.


“A lot of restaurants in Taizhou have shut their doors, including a lot of long-established ones,” he said.


“Some that were open for only four or five years have also closed.”


The outlets that are still booming are those frequented by government officials and departments, according to Wang.


Online commentator Lao Zhou said the sector has also been hit by rising rents and prices for raw materials.


But mostly, it’s about the flagging economy.


“The closure of restaurants shows us that ordinary people have no money in their pockets,” Lao Zhou said. “Who’s going to go eat in a restaurant if they have no money?”

Access Denied

“The closure of restaurants shows us that ordinary people have no money in their pockets,” Lao Zhou said. “Who’s going to go eat in a restaurant if they have no money?”

But they're all happy and rich surely?

China pledges measures to boost dwindling foreign investment

China has said it will take steps to “stabilize” foreign investment amid plummeting investment inflows in recent years, but analysts say the measures announced Monday by Premier Li Qiang are unlikely to result in genuine policy changes.


Li told State Council executive meeting on Monday that “foreign enterprises play an important role in job creation, export stabilization and industrial upgrading,” state news agency Xinhua reported.


Foreign direct investment in China has weakened since the end of COVID-19 restrictions, and has been flagged as a key factor in Beijing’s push to kick-start flagging economic growth.


Li called for “more practical, effective measures to stabilize existing foreign investment and expand new investment,” the Xinhua report said.

The meeting called for a pilot program opening up the service sector to foreign investors and “encouraged foreign capital to undertake equity investment in China,” the agency reported.


Inbound foreign direct investment, or FDI, fell by 13.7% in 2023 to US$163 billion, according to statistics from the Ministry of Commerce, although the country remained the number four destination for investors in the world, according to the International Monetary Fund.


Investor confidence has been hit by “slower-than-expected economic recovery following COVID-19, lower prospects for long-term growth, capital controls, lack of policy predictability and regulatory transparency, and tensions in the U.S.-China relationship,” according to the U.S. State Department’s 2024 Investment Climate Statement.


The State Council meeting called for “domestic and foreign enterprises to be treated equally in government procurement, as well as the need to broaden financing channels for foreign enterprises,” Xinhua reported.


China is the 11th most restrictive economy out of 89 countries surveyed by the Organization for Economic Cooperation and Development, a ranking that reflects “longstanding prohibitions on investment in key sectors and unpredictable regulatory enforcement,” according to the State Department report.


“Obstacles include foreign ownership caps, requirements to form joint venture (JV) partnerships with local firms, industrial policies to develop indigenous capacity or technological self-sufficiency, licensing tied to localization requirements, and pressures to transfer technology as a prerequisite for gaining market access,” the report said.


‘Meetings are just slogans’


Analysts said Li will have a hard time turning that around, especially as President Xi Jinping has the last word on economic policy.


“All of Li Qiang’s State Council meetings are just slogans, because he’s not allowed to make changes to the broader policies laid down by Xi Jinping,” current affairs commentator Zheng Xuguang told RFA Mandarin in a recent interview.

He said Xi seems resistant to calls for him to relinquish top-down control of the economy, as late supreme leader Deng Xiaoping did from 1979, unleashing decades of breakneck economic growth.


“No one is even thinking about that now, and Xi Jinping seems to lack determination when it comes to solving [the problem of openness to foreign investment],” Zheng said.


Wang En-kuo, honorary president of the Taiwanese Business Association in the eastern city of Nanchang, said tariffs on exports to the United States are a major factor in turning away foreign investors from China.


“Everyone knows that these are just declarations, that won’t have any real effect,” Wang told RFA Mandarin in a recent interview. “That’s because China’s fundamental problems haven’t been solved.”


“For foreign-invested enterprises that produce in China for export, tariffs are the biggest consideration,” Wang said. “Export-oriented foreign investment will certainly consider looking for other locations where tariffs or production costs can be reduced.”


Even foreign-invested enterprises focused on the domestic Chinese market are facing severe competition from Chinese companies.


“If they can’t make a profit, they’ll have to leave,” Wang said.


Other destinations


And it’s not just foreign companies that are leaving.


South Korea’s Ministry of Trade, Industry and Energy has said Chinese companies are currently setting up in South Korea at the rate of one a day, according to a Feb. 10 report by BusinessKorea.

It cited the example of a semiconductor and display manufacturing company in Daejeon that was acquired by a Chinese company last year. While most of the company’s employees are still Korean, more than 90% of the shares are now controlled by Chinese capital, the report said, suggesting it was a form of “identity laundering” aimed at circumventing U.S. tariffs on Chinese-made goods.


According to Wang, the most popular destination for Chinese companies looking to relocate is currently Vietnam.


“Chinese exports to Vietnam grew by more than 25% year-on-year in the first three quarters of 2024, and almost all of [the orders] were from Chinese companies,” Wang said.


“The Chinese government is not worried about the departure of local companies, because even if these companies move abroad, they will still import raw materials from China.”


Zheng said Chinese companies have been relocating their production facilities, while still importing raw materials and spare parts from China.


“Companies may be able to avoid the 10% tariff by relocating to other countries, as [U.S. President] Trump’s tariffs haven’t hit those places yet,” he said. “But Trump’s policy is very clear: tariffs will be imposed on all countries.”


He said Vietnam is a salient example.


“Exports from Vietnam and Mexico have increased significantly, which is actually the effect of Chinese companies moving there,” Zheng said. “If Trump imposes tariffs across the board, then it’ll be pointless to relocate production facilities.”


China’s General Administration of Customs has said that Chinese exports to Vietnam will grow by nearly 18% in 2024 to a record high of US$162 billion, Bloomberg reported, while exports to Japan totaled US$152 billion during the same period.

Access Denied

Grab thyself a coffee.

The Chinese government has promised new child care subsidies, increased wages and better paid leave to revive a slowing economy. That is on top of a $41bn discount programme for all sorts of things, from dishwashers and home decor to electric vehicles and smartwatches.

Beijing is going on a spending spree that will encourage Chinese people to crack open their wallets.

Simply put, they are not spending enough.

Monday brought some positive news. Official data said retail sales grew 4% in the first two months of 2025, a positive sign for consumption data. But, with a few exceptions like Shanghai aside, new and existing home prices continued to decline compared to last year.

While the US and other major powers have struggled with post-Covid inflation, China is experiencing the opposite: deflation - when the rate of inflation falls below zero, meaning that prices decrease. In China, prices fell for 18 months in a row in the past two years.

Prices dropping might sound like good news for consumers. But a persistent decline in consumption - a measure of what households buy - signals deeper economic trouble. When people stop spending, businesses cut prices to attract buyers. The more this happens, the less money they make, hiring slows, wages stagnate and economic momentum grinds to a halt.

That is a cycle China wants to avoid, given it's already battling sluggish growth in the wake of a prolonged crisis in the property market, steep government debt and unemployment.

The cause of low consumption is straightforward: Chinese consumers either don't have enough money or don't feel confident enough about their future to spend it.

But their reluctance comes at a critical moment. With the economy aiming to grow at 5% this year, boosting consumption is a top priority for President Xi Jinping. He is hoping that rising domestic consumption will absorb the blow US tariffs will inflict on Chinese exports.

So, will Beijing's plan work?

To tackle its ailing economy and weak domestic demand, Beijing wrapped up its annual National People's Congress last week with increased investment in social welfare programmes as part of its grand economic plan for 2025.

Then came this week's announcement with bigger promises, such as employment support plans, but scant details.

Some say it is a welcome move, with the caveat that China's leaders need to do more to step up support. Still, it signals Beijing's awareness of the changes needed for a stronger Chinese consumer market - higher wages, a stronger social safety net and policies that make people feel secure enough to spend rather than save.

A quarter of China's labour force is made up of low-paid migrant workers, who lack full access to urban social benefits. This makes them particularly vulnerable during periods of economic uncertainty, such as the Covid-19 pandemic.

Rising wages during the 2010s masked some of these problems, with average incomes growing by around 10% annually. But as wage growth slowed in the 2020s, savings once again became a lifeline.

The Chinese government, however, has been slow to expand social benefits, focusing instead on boosting consumption through short-term measures, such as trade-in programmes for household appliances and electronics. But that has not addressed a root problem, says Gerard DiPippo, a senior researcher at the Rand think tank: "Household incomes are lower, and savings are higher".

The near-collapse of the property market has also made Chinese consumers more risk-averse, leading them to cut back on spending.

"The property market matters not only for real economic activity but also for household sentiment, since Chinese households have invested so much of their wealth in their homes," Mr DiPippo says. "I don't think China's consumption will fully recover until it's clear that the property sector has bottomed out and therefore many households' primary assets are starting to recover."

Some analysts are encouraged by Beijing's seriousness in targeting longer-term challenges like falling birth rates as more young couples opt out of the costs of parenthood.

A 2024 study by Chinese think tank YuWa estimated that raising a child to adulthood in China costs 6.8 times the country's GDP per capita - among the highest in the world, compared to the US (4.1), Japan (4.3) and Germany (3.6).

These financial pressures have only reinforced a deeply ingrained saving culture. Even in a struggling economy, Chinese households managed to save 32% of their disposable income in 2024.

That's not too surprising in China, where consumption has never been particularly high. To put this in perspective, domestic consumption drives more than 80% of growth in the US and UK, and about 70% in India. China's share has typically ranged between 50% to 55% over the past decade.

But this wasn't really a problem - until now.

There was a time when Chinese shoppers joked about the irresistible allure of e-commerce deals, calling themselves "hand-choppers" - only chopping off their hands could stop them from hitting the checkout button.

As rising incomes fuelled their spending power, 11 November in China, or Double 11, came to be crowned as the world's busiest shopping day. Explosive sales pulled in over 410 billion yuan ($57bn; £44bn) in just 24 hours in 2019.

But the last one "was a dud," a Beijing-based coffee bean online seller told the BBC. "If anything, it caused more trouble than it was worth."

Chinese consumers have grown frugal since the pandemic, and this caution has persisted even after restrictions were lifted in late 2022.

That's the year Alibaba and JD.com stopped publishing their sales figures, a significant shift for companies that once headlined their record-breaking revenues. A source familiar with the matter told the BBC that Chinese authorities cautioned platforms against releasing numbers, fearing that underwhelming results could further dent consumer confidence.

The spending crunch has even hit high-end brands - last year, LVMH, Burberry and Richemont all reported sales declines in China, once a backbone of the global luxury market.

On RedNote, a Chinese social media app, posts tagged with "consumption downgrade" have racked up more than a billion views in recent months. Users are swapping tips on how to replace expensive purchases with budget-friendly alternatives. "Tiger Balm is the new coffee," said one user, while another quipped, "I apply perfume between my nose and lips now – saving it just for myself."

Even at its peak, China's consumer boom was never a match for its exports. Trade was also the focus of generous state-backed investment in highways, ports and special economic zones. China relied on low-wage workers and high household savings, which fuelled growth but left consumers with limited disposable income.

But now, as geopolitical uncertainties grow, countries are diversifying supply chains away from China, reducing reliance on Chinese exports. Local governments are burdened by debt, after years of borrowing heavily to invest, particularly in infrastructure.

Xi Jinping has already vowed "to make domestic demand the main driving force and stabilising anchor of growth". Caiyun Wang, a National People's Congress representative, said, "With a population of 1.4 billion, even a 1% rise in demand creates a market of 14 million people."

But there's a catch in Beijing's plan.

For consumption to drive growth, many analysts say, the Chinese Communist Party would have to restore the consumer confidence of a generation of Covid graduates that is struggling to own a home or find a job. It would also require triggering a cultural shift, from saving to spending.

"China's extraordinarily low consumption level is not an accident," according to Michael Pettis, a senior fellow at the Carnegie Endowment for International Peace. "It is fundamental to the country's economic growth model, around which three-four decades of political, financial, legal and business institutions in China have evolved. Changing this won't be easy."

The more households spend, the less there is in the pool of savings that China's state-controlled banks rely on to fund key industries - currently that includes AI and innovative tech that would give Beijing an edge over Washington, both economically and strategically.

That is why some analysts doubt that China's leaders want to create a consumer-driven economy.

"One way to think about this is that Beijing's primary goal is not to enhance the welfare of Chinese households, but rather the welfare of the Chinese nation," David Lubin, a research fellow at Chatham House wrote.

Shifting power from the state to the individual may not be what Beijing wants.

China's leaders did do that in the past, when they began trading with the world, encouraging businesses and inviting foreign investment. And it transformed their economy. But the question is whether Xi Jinping wants to do that again.

Why is China spending billions to get people to open their wallets?

Regional Chinese censorship more aggressive than national Great Firewall: study

Online censorship in China by some regional governments is even more aggressive than enforcement of the national-level ‘Great Firewall’ by the central government, according to a recent study and local sources.


The Great Firewall Report (GFW Report) highlights how the central Chinese province of Henan has adopted its own provincial firewall which is less sophisticated and robust than the central government’s but more volatile and aggressive, blocking significantly more websites than the national-level censorship system.


Local sources told Radio Free Asia that the heightened restrictions at the provincial government level may reflect uncertainty about instructions from higher authorities, leading to “excessive blocking” to avoid blame for failing to carry out their duties.


GFW Report is a censorship monitoring platform, primarily focused on China. During one experiment its researchers ran between Dec. 26, 2023 and March 31, 2025, they found that the Henan Firewall blocked 4.2 million domains, about six times that of the 741,542 at the national level.


Since 2023, netizens in Henan had reported a rise in the number of websites that were inaccessible in the region but accessible elsewhere in China, the study found.


“This localized censorship suggests a departure from China’s centralized censorship apparatus, enabling local authorities to exert a greater degree of control within their respective regions,” researchers Mingshi Wu at GFW, Ali Zohaib and Amir Houmansadr at University of Massachusetts Amherst, Zakir Durumeric at Stanford University, and Eric Wustrow at the University of Colorado Boulder wrote in the GFW Report published in May, “A Wall Behind A Wall: Emerging Regional Censorship in China.”


But the phenomenon extends beyond Henan, sources inside China told RFA.


Local governments in neighboring Hebei, another central Chinese province, as well as those in Tibet and Xinjiang have been operating similar censorship systems as the one reported in Henan for at least four years, Zhao Yuan, a network engineer based in Hebei, said.


“In the past, we could access overseas websites that were not blocked by the national firewall,” Zhao said. “Now, even virtual private networks (VPNs) in Henan and Hubei don’t work.”


While the national-level firewall, known as the Great Firewall, targets more news and media sites, in line with China’s long-standing policy of censoring politically sensitive information, the provincial-level firewall systems, like the one in Henan, blocks domains focusing on topics like the economy, technology, and business, GFW Report researchers found.


The Chinese Communist Party has, in recent years, emphasized a multi-pronged approach to censorship, including the management of all types of propaganda at the domestic and international level through a framework known as “territorial management” and implementation of “digital stability maintenance” measures, such as policing of sensitive content online on dates deemed politically sensitive by the government.


“Local governments have taken the initiative to establish local blocking systems, indicating that the top leaders are increasingly vigilant about the flow of information,” Wei Sicong, a Beijing-based political observer, said.

Researchers at GFW found that the Henan firewall monitors and blocks traffic leaving and entering the province, as opposed to the national-level censorship system that is focused on traffic entering and exiting the country.


Other sources in the region told RFA that the heightened restrictions at the provincial government level suggest lack of clear legal know-how about how to enforce instructions from higher-ups.


“Officials would rather block more and more than take responsibility. So the result you see is ‘turning off the whole world’,” network engineer Zhang Jianan said.


GFW Report researchers said their analysis showed no regional censorship in other areas they studied, such as Beijing, Guangdong, Shanghai, and Jiangsu.


In Henan and Hebei, however, local residents told RFA that even the websites of some foreign universities are inaccessible, as a result of which they turn to VPNs and other circumvention tools to bypass government censorship and surveillance.


“Some classmates can connect in Beijing and Shanghai, but we can’t in Zhengzhou and can only rely on circumvention software,” Zhang, a student at Henan’s Zhengzhou University, said.


Hebei-based network engineer Zhao said, “The censorship is getting stricter and stricter. We can’t even connect to some foreign university websites.”


RFA found that as early as December 2023, a university in Henan province sought to purchase a “public opinion monitoring system,” specifically aimed at international students, students and dissidents, and had conducted an open bidding process.


Henan University of Science and Technology had laid out a 2024-2025 budget of 120,000 yuan (or US$16,657) for the public opinion monitoring service system to provide 24/7 real-time monitoring, early warning analysis and crisis response of public opinion information on the entire network, covering news websites and social media platforms such as Weibo and Douyin, the university’s website showed.


When RFA contacted the university, a teacher confirmed they are using an old monitoring system and that they have now started a bidding process for a new one.


Regional Chinese censorship more aggressive than national Great Firewall: study – Radio Free Asia

Damn Chinks.
Winning the game big time.

Originally Posted by HuangLao

Damn Chinks.
Winning the game big time.

WTF are you wittering on about Jeff?

Clearly not the birth rate. The population of China is in free-fall. Raising children in China is very expensive relative to incomes.

Originally Posted by 39TG

Clearly not the birth rate. The population of China is in free-fall. Raising children in China is very expensive relative to incomes.

There are two points there. One is the birth rate, currently below 1.0, apparently.
I say apparently, because the second point is that we don't really now what the Chinese population is. Officially it is 1.4 billion but there are several studies using indicative data that suggest it is probably below 1 billion.
One of the many unknowns is how many people died from Covid the first time around, almost certainly a much larger number than China claimed.

On the subject of Chinese whispers, in the absence of facts we only have rumours and circumstantial evidence to understand what might be happening in the world's second largest economy.

It is rumoured that on May 14th there was a meeting of the politburo, expanded to include extra people such as Hu Jintao. There are contradictory rumours about what was said by whom. Broadly speaking the mood seemed to be that China's economy and China's international relations are not where the party want them to be and that change is required.

How is Xi doing, healthwise? A state secret so no one can say. He hasn't looked great recently.

Where is Xi? He hasn't been seen for ten days or so, which is an unusually long time for him. Also state media have made fewer mentions of Xi thought in recent days.

After Moscow, Xi went on an inspection visit to Henan. Surprisingly, his close helper, whose name is something like Tai Qi, wasn't seen. Tai oversees Xi's personal security and has always been close at his side, everywhere Xi goes.

It feels like change is in the air. The name Wang Yang has been mentioned.

It’s 9.58am on a Tuesday, and anticipation is building at a Suning appliance store in Shenzhen’s western Bao’an district.


Five sales representatives stand ready, phones in hand, as shoppers hover beside them in quiet urgency. In just two minutes, the scramble begins.

That’s when a limited daily batch of government vouchers drops, and they will race to help customers verify QR codes and redeem subsidies offering up to 20 per cent off new appliances like fridges and air-conditioners under China’s national trade-in programme.


CNA observed similar scenes playing out at other major home appliance retailers, including JD and Sundan. One store manager, who wanted to be known as Xian, said the walk-in queues only began in mid-June.

“Online redemptions have stopped because the money (for the next tranche of subsidies) hasn’t come in, so now everyone has to come down in person,” she told CNA.


The on-the-ground snapshot comes amid reports of subsidy suspensions in parts of China, frustrating shoppers. Retailers and officials cite reasons ranging from funding shortfalls to system upgrades.

The pauses have spurred creative workarounds as consumers look for ways to access the subsidies, while also drawing attention to alleged misuse of the scheme.


At the same time, analysts say the halts actually reflect higher-than-expected demand - an encouraging sign for Beijing’s flagship trade-in programme, designed to revive domestic consumption and reduce reliance on external demand.


“It means people are quite enthusiastic about the programme,” Zhou Xue, senior China economist at Mizuho Securities, told CNA.


But even as China pledges continued funding, observers caution that the trade-in scheme alone is a stopgap - broader efforts are needed to tackle structural challenges like a sluggish property market, weak job and income prospects, and ongoing tensions with the United States.


China needs to buy time, Chen Bo, a senior research fellow at the National University of Singapore’s East Asian Institute (EAI), told CNA.


“This period is like a breather, because other policies are also being rolled out.”


OUT WITH THE OLD, IN WITH THE SUBSIDISED


Launched in March 2024 to spur household spending, China’s national trade-in scheme offers cash rebates to consumers who swap old goods for new ones.


While the name suggests a trade-in is needed, many platforms and provinces offer 10 to 20 per cent off consumer goods even without one - broadening the programme’s appeal.


This year, the initiative is backed by 300 billion yuan in ultra-long-term special bonds, double the amount allocated in 2024. It has also expanded beyond home appliances and electric vehicles to include electronics such as smartphones, tablets, smartwatches and fitness bands priced under 6,000 yuan (US$836).

But headwinds have emerged in recent weeks, with consumers in provinces such as Guangxi, Jiangsu, Henan and Liaoning reporting that applications for subsidies under the scheme have been suspended.


Local governments have provided varying reasons. Authorities in Chongqing, Henan and Hunan cited “funds running dry”, while Jiangsu and Guangdong blamed “system upgrades” and “risk control enhancements”.


Authorities have pledged continued support and funding for the trade-in scheme. Still, frustration is bubbling online, with some Chinese citizens taking to social media to air their grievances.


“It’s ridiculous, I was about to make a purchase today and suddenly they halted it,” one user wrote on the social media platform Xiaohongshu.


“No subsidy, no deal,” another declared. A third user quipped: “Not buying saves me money - 100 per cent.”

Analysts say the pauses of the trade-in subsidies in some provinces are likely due to faster-than-expected uptake.


“If we’re seeing these pauses now, it suggests claims are coming in quicker than anticipated - meaning participation has exceeded expectations,” said EAI’s Chen, who further noted that provinces with tighter local finances, such as Jiangxi and Gansu, enacted the temporary subsidy halts.


Allan Von Mehren, chief analyst and China economist at Danske Bank, has a similar view.

“It shows that it’s working as intended – people are actually using it. Of course, if you run out of money, that could be a challenge,” he told CNA.


The trade-in scheme is funded through ultra-long-term special bonds, with co-funding from local governments under a 9:1 central-local ratio, and additional top-ups where needed, according to the National Development and Reform Commission (NDRC).


While some local governments have cited funding shortfalls for the subsidy pauses, analysts CNA spoke to were sceptical.


“Provinces like Chongqing and Jiangsu are financially strong … they can issue general local bonds to fund these expenses,” said Zhou from Mizuho Securities.


“I don’t think financing 10 per cent of the subsidies is a problem.”


Hannah Liu, a China economist at global financial services firm Nomura, believes that the roll-out is moving along at a “normal pace”.

The central government allocated 162 billion yuan for the subsidies in two tranches in January and April. A further 138 billion yuan is scheduled for release in the third and fourth quarters, with the next tranche set to roll out in July.


Liu added that April’s tranche was mostly used up by end-June.


“The quick take-up shows people are using the subsidies … if they weren’t, that would be a bigger concern,” she said.


Every yuan of government subsidy translated into roughly seven yuan of consumer spending, said Zhou.


According to the Ministry of Commerce, in the first five months of the year, the national trade-in scheme generated 1.1 trillion yuan in sales across five major categories - cars, home appliances, digital devices, e-bikes, and kitchen and bathroom upgrades.


Liu suggested the recent surge in claims is largely seasonal – driven by a flurry of events in May, including the 618 shopping festival and the Dragon Boat Festival holiday.


“There may not be particularly strong underlying demand directly tied to the subsidies,” she told CNA.


“If authorities had accounted for seasonal sales patterns, they might’ve staggered the allocations - less in Q1, more in Q2 and beyond.”


“That clearly wasn’t the case.”


OF WORKAROUNDS AND LOOPHOLES


Amid the subsidy halts in some regions, some enterprising Chinese consumers have found ways to work around the issue.


Among them is Guangzhou resident Wendy Huang, who had her eye on a 14-inch MacBook Pro listed on Taobao for nearly 13,000 yuan.

By stacking subsidies from the trade-in scheme with a platform discount, the 25-year-old corporate marketing employee could have snagged it for under 7,000 yuan, nearly half off.


It would have been her fifth purchase under the programme. But when she tried to confirm the purchase the next day, the deal had vanished. Subsidies for that category had been suspended in Guangzhou, though still available in neighbouring Shenzhen.


Rather than give up, Huang improvised. “The price was just too tempting,” she told CNA.


Instead, Huang redirected the laptop delivery to Shenzhen North High-Speed Rail Station. There, she met the courier, let him snap photos of the unboxing - a requirement for the rebate - and squatted by the platform to inspect the device.


“It was a bit of a hassle, and I had to pay for the train,” she told CNA. “But with a discount like that, it was absolutely worth the detour.” Her ticket cost around 80 yuan.


Huang isn’t alone in finding creative ways around the rules. On Chinese social media, users have been swapping tips on how to tap trade-in subsidies across provincial borders.


A Shenzhen resident, who declined to be named, told CNA he recently bought a 13-inch MacBook Air in his hometown of Shanxi and had his family mail it to him.


“It only cost around a few dozen yuan to ship,” he said, adding that he saved 20 per cent off the list price of 7,399 yuan - paying just 5,399 yuan.


But beyond workarounds, the recent subsidy suspensions have also spotlighted alleged misuse of the trade-in programme, particularly in the automobile sector.


Scroll through a Chinese secondhand car platform, and it’s easy to find thousands of listings for vehicles with barely any mileage - often just 100km to 300km on the odometer.


Dubbed “zero-mileage used cars” or “ling gong li er shou che” in Chinese, these listings have raised concerns that dealers are exploiting a loophole in the national trade-in scheme.


The playbook: buy new cars from automakers, register them under the names of relatives or employees to qualify for subsidies and sales bonuses, then resell them as secondhand - all without the vehicles ever hitting the road.


In May, Great Wall Motor chairman Wei Jianjun publicly called out the practice, estimating that “at least 3,000 to 4,000 vendors” are involved.


But industry experts told CNA the phenomenon is far from new.

“It’s nothing new, people have been doing this for years,” said Zhang Xiang, director of the Digital Automotive International Cooperation Research Centre at the World Digital Economy Forum.


Zhang said many dealers are rushing to act before the subsidies expire by year-end.


“Some operate secondhand shops themselves, offering a convenient channel to offload the unused vehicles and keep sales numbers up.”


Take, for instance, a new electric vehicle priced at 100,000 yuan.


A dealer buys the car directly from the automaker and registers it under a collaborator's name - often someone hired online - allowing it to be counted as “sold” and unlocking a manufacturer sales bonus of 1,000 yuan to 2,000 yuan.


The vehicle is then transferred to the dealer’s own or a partner’s secondhand platform and listed as a “zero-mileage used car”, with under 300km on the odometer. It's priced slightly below retail to attract buyers.


Meanwhile, the dealer scraps an old vehicle provided by the collaborator to qualify for the national trade-in subsidy, worth up to 20,000 yuan for EVs. The dealer often pays the person more than the scrap car is actually worth.


The result is still a tidy profit, thanks to the combined gains from sales bonuses and government incentives.


Zhang noted that while the practice may seem questionable, it is not illegal, as there are no rules requiring cars to clock a minimum distance before being resold.


Chen from EAI described it as a “by-product of extreme market competition”.


Competition has been intensifying in the world's largest auto market, with price wars that started in early 2023 showing little sign of abating despite concern among both government and industry.


“When car prices fall quickly, the combined value of factory rebates, government subsidies and secondhand resales can be more profitable than selling to actual customers,” Chen said.


Rather than stimulating genuine demand, Chen said such behaviour is distorting the market.


“It accelerates the drop in new car prices and ends up squeezing out quota in the primary car market - because buyers who would’ve purchased new cars are now getting them through secondhand channels at a discount,” he said.

Analysts acknowledged the difficulties in making the trade-in programme airtight.


“It's impossible to make a programme completely bulletproof,” said Danske Bank’s Von Mehren.


“Given the size of the Chinese market, it is not surprising that issues arise with a programme like this. Creativity runs high, and there are always attempts to find loopholes and ways to circumvent certain rules.”


FUEL FOR NOW, NOT THE LONG HAUL


While Chinese officials have moved to reassure the public that the trade-in programme and its subsidies remain on track, experts agree the current approach is not sustainable.


They warn that it offers only short-term relief, while pointing out that it is just one part of a broader push by China to address deeper structural challenges.


EAI’s Chen likened the scheme to “reigniting the engine” of domestic consumption - a short-term spark rather than a long-term fix.

He pointed to three persistent challenges weighing on China’s recovery - stubborn unemployment and stagnant wages, mounting corporate debt choking cash flow, and external headwinds such as escalating trade tensions with the US.


“In the long run, when we use subsidies, what we’re really doing is trying to reignite people’s desire to spend. But subsidies alone can’t fundamentally shift total demand,” said Chen.


He said the scheme provides some breathing room as concurrent efforts to bolster the Chinese economy - including settling commercial arrears to restore private sector confidence, boosting tech innovation, and stabilising the beleaguered property market - take deeper root.


Crucially, Chen believes it’s too early to assess whether the trade-in programme is working.


It will take one to two quarters after the subsidies cease to see if consumers are still motivated to spend, Chen said.


“The key test is whether the subsidies can unlock broader demand - demand that’s dozens of times larger than the subsidy itself. That’s what would show it worked.”

For Von Mehren, China is moving in the right direction, but must act with greater urgency.


He believes the property sector is one of the most pressing issues that must be addressed to revive confidence and get the economy moving.


China’s prolonged property slump remains one of the biggest drags on consumer confidence. In May, official data showed that new home prices fell 3.5 per cent year-on-year and 0.2 per cent from April - the 11th straight month of decline.


With housing accounting for about 70 per cent of household wealth, the downturn has eroded the financial security of many families, dampening their willingness to spend.

“I think (China) should actually recover a bit in order to get more confidence among people that the bottom has been reached,” Von Mehren said. “Because as long as you don't know if you reach the bottom, it creates uncertainty.”


Zhou Xue from Mizuho Securities said the current recovery in the property market remains “very fragile”, citing historically high inventory levels.


“There’s more local governments can do to support the market. And I think the best way is allowing them to raise more money from the bond market to support this programme.”


Even with the next tranche of subsidies expected to be released next month, Zhou predicts that, based on last year’s usage patterns, funds may run dry in some cities before September.


She expects authorities to respond by expanding the scheme - possibly into service-related categories such as tourism.

Public holidays are largely viewed as key drivers of consumption in China, offering concentrated bursts of economic activity as hundreds of millions of people travel, shop, and dine. This year, authorities have added two extra days to the statutory holiday calendar, raising the total to 13.


But Nomura’s Liu argued that service-related subsidies would be difficult to sustain, as rising demand could push up prices and dilute the stimulus effect.


Instead, she believes priority should be placed on the silver generation, referring to China’s fast-expanding elderly demographic.


“Those who have money are more inclined to spend - and that tendency is stronger among lower-income groups,” she said, noting that retirees make up a significant share of this segment.


“Nearly 70 per cent of them rely on monthly pensions of just a few hundred yuan. If they’re given more support, their marginal propensity to consume would be significantly higher.”


In the meantime, Chinese consumers are navigating the current subsidy landscape as best they can.


With the next round of government support on the horizon, some savvy shoppers are already holding off on purchases, waiting to capitalise on the upcoming injection of subsidies.


Huang, the Guangzhou resident, is among them. She’s not done shopping – just biding her time.


“I’ll wait.”

‘No subsidy, no deal’: Shoppers fume as China's trade-in drive stalls – what’s next? - CNA

Very reasoned commentary from both of those videos. I'm still very, very surprised by the arrests of Zhang Youxia and Liu Zhenli. I wonder if they are still alive.
Gunfire in Beijing and all sorts of military movements suggest that it isn't going smoothly.
With Zhang gone, that left Xi with only one other member on the Central Military Commission, Zhang Shengmin. Except that Zhang Shangmin hasn't been seen in a week and there are rumours that he committed suicide. That adds to the list of deceased military leaders over the past year. Some might be natural causes, a couple of the retired generals were in their eighties.
Curiouser and curiouser.

Chinese leader Xi Jinping has purged dozens of senior People’s Liberation Army officers since mid-2023, including two in January, but will this increase the risk of war? The loss of experienced officers could make Xi less confident in how his military would perform, but his increased power could also provide him greater latitude to order troops into combat to achieve what might be a key legacy for him — the long-elusive unification of China with Taiwan.



As political scientists recognize, competent leadership is a key ingredient of battlefield effectiveness. Recent purges have removed some of the highest-ranking and most experienced Chinese officers of their generation and underlined Xi’s lack of trust in his own inner circle. Zhang Youxia, who served as vice chairman of the Central Military Commission, which is the highest military decision-making and advisory body in China, was perhaps his closest advisor. Empty chairs at the decision-making table, and in key operational posts throughout the military, will weigh on any leader contemplating a war.
The disruption, however, will likely be temporary. The greatest prospects for war will be in the medium term of the late 2020s to early 2030s when new commanders are firmly in place. Those officers will have stronger credentials but less power than their predecessors to push back if Xi embraces war optimism. Xi will also be aware that the long-term time horizon will be bleaker. Not only will he be gone, but his successor will have trouble managing a force that could revert to its old habits of corruption and obfuscation. The key for deterrence in these middle years will be to convince Xi himself, moreso than his military advisors, that the risks of aggression remain unacceptable.


Near-Term Woes



The loss of senior commanders will probably reduce the People’s Liberation Army’s ability to plan for and conduct a war over the next year or two. The Central Military Commission has ceased to function. Members of this commission are typically appointed at the major conclaves of the Chinese Communist Party that meet every five years, called party congresses. Of the six officers who Xi appointed at the 20th Party Congress in Oct. 2022, the sole survivor is Zhang Shengmin. Unlike his former Central Military Commission colleagues Zhang Youxia or Liu Zhenli (who served concurrently as the chief of the joint staff and was also purged in January), Zhang Shengmin is not a combat veteran but a political commissar. These are uniformed officers whose main function is not to fight wars but to protect the authority of the party within the military by overseeing political indoctrination and personnel appointments. One of Zhang’s chief functions in recent years was managing the purges as head of the Discipline Inspection Commission. If war broke out tomorrow, there would be no high command to lead it.



Below this level, Xi has taken out some of his most experienced operators over the past two-and-a-half years. Of the 43 generals and admirals that the most recent congressionally mandated report on China’s military power lists as having been purged since July 2023, 29 were senior operational commanders. Their responsibilities included leading the five theater commands (including two former commanders of the Eastern Theater, which would carry out cross-strait operations), services, and departments under the Central Military Commission. The purge cut more deeply into the operational muscle than an earlier campaign carried out from 2012 to 2015, in which most targets were logisticians and political commissars. Xi may have judged that such a drastic step was necessary to cleanse the force of its most corrupt offenders and elevate readiness to the high levels demanded in wartime.



Reconstituting key billets will take time. Given that many of the prime candidates would have had close professional connections to Zhang Youxia or other recently dismissed officers, Xi would be cautious in filling positions and may have to rely on deputies serving on an acting basis. Vetting will be difficult because the systems that Xi relied on to scrutinize choices were themselves impacted by the purges. This includes the political work system, which is responsible for managing promotions and whose leader Miao Hua was dismissed in 2024, and the Central Military Commission’s general office, which functions as a critical gatekeeper to Xi and as his “eyes and ears” to deliver information on military activities.



To be sure, Chinese military and paramilitary forces will still be able to carry out powerful demonstrations, such as combat rehearsals around Taiwan. They may even be able to escalate to quasi-war activities such as a limited quarantine of the island. But the process necessary to vet new commanders and establish trust with Xi will take time. These delays could impact his ability to meet the deadlines he imposed on the force to be ready for a full-scale cross-strait conflict by 2027 — the ability to achieve a “strategic decisive victory” against Taiwan and credibly threaten U.S. intervention on Taipei’s behalf. Being ready for such a contingency in this tight timeframe was always going to be a tall order for a military that has not fought a war since 1979, but the replacement of many of the senior commanders who would be responsible for it has probably set the clock back.



Peak People’s Liberation Army



In the medium term, the odds of war will increase as new commanders arrive and trust is built. Cleaning the slate gives Xi a chance to reach into a new generation of rising stars who have professional advantages over their predecessors. They tend to be better educated and technically literate, have more real-world experience conducting operations in places like the Taiwan Strait and beyond China’s periphery, and have more experience operating in the new command structure that Xi established as part of his 2015-2016 reforms. Under those reforms, the old Cold War-era system that Xi inherited, where operational control was held by the services, was replaced by a national-level joint staff and five joint-theater commands. They are collectively responsible for developing contingency plans, executing joint training, and would lead forces from all the services into combat if ordered by Xi. Under the new system, there have been more officers from the navy and air force serving in senior roles, who would be tasked with conducting multi-domain joint operations.



One example is the new Eastern Theater commander, Yang Zhibin, who assumed his role in Dec. 2025. A career air force officer, Yang served much of his early career in the former Nanjing Military Region opposite Taiwan and is therefore familiar with the cross-strait operating environment. What distinguishes him from his predecessors, however, is his impressive joint qualifications. Prior to his current position, he served as deputy commander in the Eastern, Western, and Southern Theaters. This type of experience is similar to the rotations offered to rising stars in the U.S. military to gain joint experience in a variety of challenging environments and emerge with stronger credentials. Xi will be able to benefit from more officers like Yang over the next several years.



What makes this medium-term phase dangerous is not only the professional competence of the military’s new elite, which could give Xi confidence that he has the right people in place to lead a war, but the new party-army dynamic that puts him in control. In China, party-army relations refer to the ways in which the Chinese Communist Party’s leadership, which is led by Xi, exercises authority over the armed forces. In the past, the model was a bargaining relationship where military officers could exercise significant influence on internal military matters such as personnel and procurement. But by eviscerating his high command, Xi has become the unequivocal leader of the military — a role he has sought since early in his tenure under the label of the “Central Military Commission Chairman Responsibility System.”



This system is enshrined in the 1982 Chinese constitution, but was largely ignored under Xi’s predecessors when the military vice chairman of the commission made most of the important decisions. This put Xi’s predecessors, Jiang Zemin and Hu Jintao, into weak roles. By stressing the Chairman Responsibility System, Xi has positioned himself to make the tough calls and will not tolerate alternative power centers. Whoever he appoints to fill important vacancies will be in a diminished status and less likely to push back if Xi orders them to undertake risky missions.



The critical variable is whether Xi’s calculus on war changes. In his first 15 years, he hesitated in pushing the boundary between war and peace. While he used armed forces aggressively in regional disputes, he was not as brash as Russian President Vladimir Putin and sought to avoid lethal force. By the late 2020s, Xi could conclude that the time is right for his end game with Taiwan. More capable generals with less ability to push back could promote the same war optimism that beguiled Putin — even if those officers privately think that a war would be too risky. Of course, the generals might be overly confident in their own skills and not desire to resist in the first place. These dynamics would complement other factors that push in the direction of war, such as new capabilities that make crossing the strait plausible and the tendency of aging autocrats to take more risks to firm up their legacy.


After Xi: Back to the Past



The long-term future could herald a return to the same problems that plagued Xi during his early years in power. Xi will be followed by a successor drawn from the civilian elite of the Chinese Communist Party. Specifically, that person is often selected from the Politburo Standing Committee, which is the party’s highest decision-making body and currently includes Xi and six other civilians. That person will not have had any military experience and may not have close connections with those in uniform.



Xi has avoided naming a civilian vice chairman of the Central Military Commission, a role that he served in from 2010 to 2012, and may hesitate to do so until at least the 21st party congress in 2027 since this would atrophy his own power. A new civilian leader will take time to establish his credentials as chairman and have less latitude to order troops into combat.



Xi’s successor will also have to contend with the same dysfunctions in party-army relations that he faced early in his tenure. These include poor information sharing, corruption, and limited willingness to work with colleagues from other parts of the national security apparatus. The reason why these problems are likely to resurface is that Xi has not changed the basic structure of party-army relations in China. Unlike Soviet dictator Josef Stalin, who used internal security agents to purge the Red Army, Xi has allowed his army to remain autonomous of outside interference.



Xi has established his own bona fides by developing a “cult of personality” through frequent appearances at military events and writings that troops must study. The emphasis on the Chairman Responsibility System is part of that strategy to elevate his own status. But to achieve his vision, he counts on the military to police itself. Political commissars are supposed to safeguard the party’s interests but are still uniformed officers, not external agents. Financial auditing is also done by specialists within the military rather than from outside inspectors. Xi also needs to rely on those in uniform to carry out the purges. These have been executed by military members who have aligned themselves with Xi (most notably Zhang Shengmin and members of the Discipline Inspection Commission system).



Even after the most recent purges, this basic system of self-policing remains in place. Civilian oversight remains confined to Xi and management of the military is done internally. Xi might have avoided changing the party-army relationship because he needed military support to accomplish other goals, such as his 2015 to 2016 reforms. He also might have faced more concerted pushback against his leadership if he had attempted to impose Stalin-esque external checks and balances, such as sending in representatives of the civilian internal security forces to look into military malfeasance. Whatever his rationale, he has allowed the party’s military to continue to operate as an insular organization. External control is provided only by the thin reed of his own tenure as Central Military Commission Chairman, which will expire at some point in the coming years.



Xi’s successor will therefore inherit a military staffed with capable generals, but ones who have too much autonomy and may return to their old habits. As scholars also note, the longer-term future for China will be beset by problems such as demographic trends that create economic headwinds the party will have to handle in the 2030s and 2040s, and China’s adversaries will have new military capabilities (such as stronger arsenals of hypersonic weapons) to counter offensive campaigns. Thus, even if military officers tend to be more professional than in the past, the successor will still have many other issues that could prevent them from taking decisive action against Taiwan.



Navigating the Medium Term



Xi himself is looking out to this uncertain future. He must consider what kind of military his successor will inherit, and whether that individual will be able to compel reunification through force during a tenure that may extend to mid-century. A bleaker outlook for the military in the long term could promote riskier decision-making in the medium term when Xi has the power and the leadership to make bold decisions.



For China’s opponents, the key will be directly influencing Xi’s calculus. Military deterrence, such as exercises and the revelation of new capabilities, will be of little use if China’s military leadership is either too confident to be intimidated, or too intimidated by Xi to deliver bad news. Information underscoring the heavy risks, not only military but also economic and political, of a gamble on Taiwan must be messaged directly to Xi by his foreign counterparts. An example of effective messaging came in April 2023 when European Commission President Ursula Von der Leyen warned Xi about the dangers of unilateral changes to the status quo. Statements from leaders such as French President Emmanuel Macron suggesting that they might sit out a Taiwan conflict send the wrong signal. The essence of deterrence in the late 2020s and early 2030s will be whether the West and other supporters of Taiwan can speak truth to power in a way that might elude Xi’s own generals.

https://warontherocks.com/2026/02/th...e-risk-of-war/

You might find this interesting snubby.

Why Xi Jinping Keeps Purging Generals

China’s Medical Insurance Deficits Skyrocket Despite Lottery Cash

China’s basic medical insurance program supports more than 1.3 billion people. Still, the system shows clear signs of stress. Official updates describe 2025 as “stable,” with about 2.95 trillion yuan in revenue and 2.42 trillion yuan in spending.


However, several pressure points tell a different story. In key places, costs rise faster than income because the population is aging, care gets more expensive, and policy changes have narrowed access to some effective treatments.


Local accounts show how fast the gap is growing. In 2024, resident medical insurance funds posted large deficits in major cities. Beijing reported a shortfall of 525.6 million yuan. Tianjin recorded more than 1.3 billion yuan. Those numbers point to a budget strain that can push more costs onto regular families.


To cover these shortfalls, officials have leaned on a surprising source, welfare lottery funds. These funds usually support social programs such as elder services and disability aid. Now, larger shares go toward medical insurance gaps. In some cases, reports suggest the share has roughly doubled to around 20%. Even so, national totals remain hard to confirm, since broader fiscal reporting remains limited.


The Main Drivers, Aging and Policy Choices Put the Fund Under Pressure


Demographics sit at the center of the problem. China’s older population continues to grow quickly. By 2040, adults 65 and older are projected to make up 27% of the population. As a result, demand rises for long-term care, chronic disease treatment, and more hospital use.


At the same time, healthcare spending has jumped over the past 20 years. Reports describe nearly a 20-fold increase, reaching trillions of yuan each year. That growth makes it harder for insurance funds to keep up, especially at the local level.


Policy choices add another layer. The state has pushed cost controls through volume-based purchasing and broader use of domestic generics. These steps can lower prices, but they also reduce access to many foreign-branded new drugs through reimbursement list changes.


Some doctors and critics say certain generics don’t work as well for every patient. When treatment takes longer, patients can face more visits and more complications. Over time, that can raise total costs instead of lowering them. Public frustration has flared at times, which reflects a wider concern that price targets can come at the expense of results.


An aging population increases chronic illness, including heart disease, cancer, and neurological disorders.
Changes to drug coverage reduce access to some advanced therapies.
Longer treatment cycles can raise per-patient costs and strain city budgets.
Because of these forces, some local funds have moved from occasional swings to ongoing deficits.


Lottery Money, From Social Welfare Support to a Healthcare Backstop


China’s welfare lottery system includes sports and charity lotteries. In 2025, lottery sales reached nearly 628 billion yuan (about $90 billion). That marked only a 0.7% rise from the year before, which suggests slower growth during a tougher economy. While proceeds still support traditional welfare uses, more money now patches medical insurance budgets.


Several trends stand out:


In some targeted uses, diversion levels appear to reach about 20% or more.
The shift offers quick relief, but it doesn’t last forever.
When the economy slows, ticket sales can weaken, which shrinks the pool.
Lottery funds have long played a large role in elder-related programs. Reports often place that share around 60% in certain welfare efforts. However, heavier reliance on lottery funding for healthcare creates new risks. If households cut back on non-essential spending, lottery revenue can fall, and the backup plan gets smaller.


Unequal Access and Corruption, More Strain on a System Already Under Load


As resources tighten, unequal access becomes harder to ignore. Premium care often flows to “cadre wards,” specialized hospital areas that serve top officials and other elites. These wards tend to offer better equipment, shorter waits, and higher service levels.


Meanwhile, many ordinary patients deal with long lines, higher out-of-pocket bills, and fewer options for advanced care. This gap fuels public resentment because people see public money supporting two standards of treatment.


Corruption remains another drain, even with enforcement campaigns. Authorities have punished large numbers of people in healthcare fraud cases. Some cases involved hospital leaders who created fake treatments or inflated billing to extract insurance payouts.


In a major sweep, more than 350 prominent figures faced discipline. Bribery, kickbacks, and favoritism continue to damage trust, especially when citizens feel they pay more but receive less.


Cadre wards concentrate premium services for elites.
Fraud and inflated claims pull money away from patient care.
Regular households face higher premiums, lower reimbursements, and rising worry about coverage stability.
A Patchwork Plan That Can’t Hold Forever


Beijing’s move to redirect more lottery welfare funds may steady budgets in the short term. Still, it doesn’t fix the core issues. An aging society needs a stronger funding base, fairer access to care, and tighter control over fraud. It also needs drug policies that balance price with results, so patients don’t pay later for cheaper choices today.


Without deeper reforms, deficits could spread to more regions. Enrollment could keep dropping, since millions have exited resident programs in recent years. As confidence falls, people may stop seeing medical insurance as reliable protection. Over time, the safety net could weaken, and inequality could grow.


Economic pressure adds another limit. When the public buys fewer lottery tickets, less money remains to cover gaps. That leaves the system leaning on a shrinking support beam, while costs continue to rise.

China's Medical Insurance Deficits Skyrocket Despite Lottery Cash

A hacker has allegedly breached one of China’s supercomputers and is attempting to sell a trove of stolen data

A hacker has allegedly stolen a massive trove of sensitive data – including highly classified defense documents and missile schematics – from a state-run Chinese supercomputer in what could potentially constitute the largest known heist of data from China.

The dataset, which allegedly contains more than 10 petabytes of sensitive information, is believed by experts to have been obtained from the National Supercomputing Center (NSCC) in Tianjin – a centralized hub that provides infrastructure services for more than 6,000 clients across China, including advanced science and defense agencies.

Cyber experts who have spoken to the alleged hacker and reviewed samples of the stolen data they posted online say they appeared to gain entry to the massive computer with comparative ease and were able to siphon out huge amounts of data over the course of multiple months without being detected.

An account calling itself FlamingChina posted a sample of the alleged dataset on an anonymous Telegram channel on February 6, claiming it contained “research across various fields including aerospace engineering, military research, bioinformatics, fusion simulation and more.”

The group alleges the information is linked to “top organizations” including the Aviation Industry Corporation of China, the Commercial Aircraft Corporation of China, and the National University of Defense Technology.

CNN has reached out to China’s Ministry of Science and Technology as well as the Cyberspace Administration of China for comment.

Cyber security experts who have reviewed the data say the group is offering a limited preview of the alleged dataset, for thousands of dollars, with full access priced at hundreds of thousands of dollars. Payment was requested in cryptocurrency.

CNN cannot verify the origins of the alleged dataset and the claims made by FlamingChina, but spoke with multiple experts whose initial assessment of the leak indicated it was genuine.

The alleged sample data appeared to include documents marked “secret” in Chinese, along with technical files, animated simulations and renderings of defense equipment including bombs and missiles.

“They’re exactly what I would expect to see from the supercomputing center,” said Dakota Cary, a consultant at cybersecurity firm SentinelOne who focuses on China and has reviewed the samples placed online from the alleged hack.
“You would use supercomputer centers for large computational tasks. The swath of samples that the sellers put out kind of really speaks to the breadth of customers that this supercomputing center had,” Cary said.

Most of those customers would have little reason to maintain their own supercomputing infrastructure independently, he added.

Intelligence value

The Tianjin center — the first of its kind in China when it opened in 2009 — is one of several supercomputing hubs located in major cities including Guangzhou, Shenzhen, and Chengdu.

According to Marc Hofer, a cybersecurity researcher and author of the blog NetAskari, the size of the dataset would make it attractive to adversarial state intelligence services.

“Only they probably have the capacity to work through all this data and come back with something useful.”

To put the scale in perspective: one petabyte equals 1,000 terabytes, and a high-spec laptop typically holds around one terabyte.

“There are leaks from China’s cyber ecosystem that I’m familiar with that have sold very quickly,” Cary told CNN. “I’m sure that there are plenty of governments globally that are interested in some of the data at the NSCC, but many of those governments that are interested also may already have the data.”

How did the hacker gain access?

Hofer, who reviewed the sample of the leak, said he was able to contact on Telegram a person who claimed they had carried out the hack. The attacker claimed to have gained access to the Tianjin supercomputer through a compromised VPN domain.

Once inside, the attacker told Hofer they deployed a “botnet” — a network of automated programs that were able enter the NSCC’s system and then extract, download and store the data. The extraction of 10 petabytes of data took around six months.

CNN could not independently verify the account the hacker gave to Hofer.

Cary said the approach was less about technical sophistication and more about architecture.

“You can think of it as having a bunch of different servers that you have access to and you’re pulling data through this hole in the security of the NSCC — pulling some down to one server, some down to the next,” he said.

By distributing the extraction across many systems simultaneously, the attacker reduced the risk of triggering an alert. Somebody on the defensive side is less likely to notice small amounts of data leaving the system compared to large amounts of data going to one location, Cary said.

Cary added that the method, while effective, was not particularly unique.

“It wasn’t, at least my read on it, anything particularly incredible in the way that they pulled out this information,” he said.

Vulnerabilities

The alleged breach, if genuine, points to a potentially deeper vulnerability in China’s technology infrastructure as it vies with the United States to be a world class technology innovator and AI leader. Cybersecurity has long been a known weakness across both the government and private sector, according to Cary.

In 2021, a massive online database apparently containing the personal information of up to one billion Chinese citizens was left unsecured and publicly accessible for more than a year until an anonymous user in a hacker forum offered to sell the data and brought it to wider attention in 2022.

“They’ve really had poor cybersecurity for a very long time across a wide number of industries and organizations,” Cary told CNN. “If you look at what Chinese policymakers say themselves, cybersecurity in China has not been good. They would say it’s still improving at this point in time.”

China’s own government has acknowledged as much.

The country’s National Security White Paper in 2025 listed building “robust security barriers for the network, data, and AI sectors” as a key priority, adding that “China has continued to strengthen the development of coordinated cybersecurity mechanisms, means, and platforms to ensure the security and reliability of key information infrastructure.”

A hacker has allegedly breached one of China’s supercomputers and is attempting to sell a trove of stolen data | CNN