Xi Jinping’s balancing act is not working

CHINA ADVISORY - Report 18 Jun 2026 by Andrew Collier

At the March meeting of China's legislature, the National People’s Congress, Party Secretary Xi Jinping noted the importance of fostering "new productive forces". By this he meant upgrading existing industries and supporting future industries such as semiconductors, AI, and robotics. However, policy statements differ from actual implementation.

As the economy struggles, tax revenue is falling behind GDP, forcing the state to rely on banks and other government institutions to drive growth. This is increasing the country’s debt. The collapse of the property market has exacerbated the weak tax revenue. The lack of revenue is particularly hard on provinces that are poorer or that rely on state industries, compared with wealthier coastal provinces for which exports provide additional income. Analysis of economic data shows a continuing declining trend for key metrics that will increase pressure on Xi Jinping and his priority objectives.

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