Xi makes nice with private firms
Ahead of the Two Sessions in early March, a symposium on private enterprise, chaired by General Secretary Xi Jinping on February 17, signalled confidence in the PRC market. This followed the steady rise of PRC stocks in the wake of DeepSeek’s impact on tech prospects. Xi’s message on meeting face-to-face with the heads of private firms (for only a fourth time) was clear: the Party-state would tolerate thriving private businesses—provided they are at one with national objectives.
New ‘Opinions’ on support for major financing targets, issued by the CSRC (China Securities Regulatory Commission) on 7 February, betoken more support on the way. The Opinions’ address financing difficulties for SMEs, the predominant category of private firms, notes Tian Lihui 田利辉 Nankai University Institute of Financial Development.
Evidence of businesses struggling to restore their pre-pandemic lustre isn’t hard to find. Highly respected property developer Vanke announced a vast asset reorganisation on 5 February. Shenzhen’s Metro became a major shareholder, bailing Vanke out as it and fellow developers’ property sales failed to ‘correct’.
Transformative SOE reform entails activating the state to shoulder tasks the market is unable or unwilling to do. Yet another new national SOE is reportedly in the works. This one, the third in the last year, is aimed at integrating national data resources across key industries: energy, transport, finance, healthcare and manufacturing.
Prominent in the run-up to the Two Sessions, economist Liu Yuanchun 刘元春 was invited to the State Council’s February bimonthly study session, where he lectured on consumption’s role in driving economic growth. He argues in his latest critique of standard doctrine that traditional price indices (e.g. the Consumer Price Index (CPI) or the GDP deflator), fail to fully capture PRC performance. He urges instead a broader framework transcending inflation targeting, integrating financial stability, industrial structure, and corporate profitability.
no let up in trade tension
PRC–US trade tensions crossed more red lines in February when Trump imposed additional tariffs of ten percent on imports from the PRC, new tariffs on Chinese imports now total 20 percent. Beijing retaliated, imposing its own on some US ag machinery and LNG, restricting some critical mineral exports, sanctioning two US firms and placing Google under an anti-monopoly probe. Targeted and pretty even-handed for now, the clap-back aligned with commentariat calls for restraint and ‘doing our own thing well’.
Beijing sought public input on draft rules to monitor rare earth production. The aim was to tighten control over domestic output to prepare for restricting raw material exports in retaliation for tech sanctions.
A significant PRC lead in global trade, while positive, is unsustainable, argues Gong Jiong 龚炯 Chongyang Institute for Financial Studies; he urges stepping up foreign investment in the PRC. Concurring, Yao Yang 姚洋 National School of Development, forecast firms’ going global on an unprecedented scale.
Duty-free passage of low-cost packages, a key conduit for PRC e-commerce into the US, was suspended by Washington, which later paused the measures due to rollout concerns. Anticipating more headwinds, Song Yuru 宋玉茹 Chinese Academy of Social Sciences advised CBEC (cross-border e-commerce) firms to shift from low-cost competition to innovation and brand-building.
With foreign direct investment deteriorating, State Council passed a new Action Plan. Boosting services and digital trade are also on the table, along with pledges made to open up more in telecommunications, education, culture, medicine and finance.
Other moves in trade this month were
- further five years of anti-dumping duties for EU potato starch
- a second batch of national service industry standardisation pilots
- new negative list and measures for outflowing data in the Shanghai Pilot FTZ
refining renewable policies
A new renewables pricing protocol will take effect from June 2025. From now on energy projects will use a 'contract for difference' model. Instead of fixed prices, their earnings will be based on market prices plus adjustments. This balances market forces with stable income for producers. It forces developers to shift from a ‘build-first’ strategy to a market-driven approach, focusing on operational efficiency and cost management.
New energy storage now has an action plan for its next development phase. It calls for commercialising new techniques, such as sodium-ion batteries, while steadily improving the affordability and efficiency of lithium.
agriculture No 1 document issued
More yield boosts for grain and oilseeds top the bill in this year’s ‘No.1 document’, the annual blueprint for agriculture and the rural sector. The text mandates the rollout of minimum purchase prices for rice and wheat. Market support for rice procurement was launched in Henan, Jiangsu, Heilongjiang, and Anhui. Procurement was raised for wheat and corn, while soybean sales and processing were promoted.
‘New productive forces for ag’ were highlighted, leveraging tech advances to spur innovation. The Ministry of Agriculture and Rural Affairs noted some usual targets for development: new crop varieties, improved soil quality, advanced machinery, pest control, efficient farming practices, green agriculture, food processing, and rural development.
It highlighted
- biotech breeding: further industrialising it to enhance crop yields
- ag machinery: focus on high-quality domestic ag machinery R&D
- smart ag: supporting expansion of AI, data applications, and low-altitude tech
DeepSeek take up in government admin
DeepSeek's momentum continues, with its CEO meeting Xi Jinping at the 17 February Symposium. Once used only in big cities to improve efficiency, AI is now penetrating tier-3 cities, thanks to lower costs. Experts warn of the risks: errors and unclear results in public services.
still no climate NDCs
Beijing has yet to issue updated climate targets or NDCs (nationally determined contributions). These targets, will likely underpromise and overdeliver, a feature of previous iterations.
Domestic targets are a different story. The 14th 5-year plan (2021–25) sought to reduce energy consumption per unit of GDP by 13.5, carbon emissions intensity by 18 percent. Official data however suggest these targets, ‘binding’ or not, will not be met.
As three out of every four PRC cities now meet the current national PM2.5 standard, tighter limits are, insist experts, necessary to sustain progress and further protect public health.
Party watches the Party watchmen
The drive to clarify legal standards and norms cuts across political and judicial realms. Li Xi 李希 CCDI (Central Commission for Discipline Inspection) secretary addressed disciplinary-supervision agencies on 25 February, urging investigation according to legal and Party protocols. Standardising disciplinary work was highlighted to sustain the Party's internal 'self-revolution'.
On the judicial side, the SPC outlined interest rate metrics for late payments settled in foreign currencies. Provided parties agree on rates, they should be upheld under PRC and foreign law. Absent an agreement, discreet standards would be set for the US dollar, common currencies (euro, Australian dollar), and others. This would standardise rulings and refine foreign-related adjudication.
education–industry partnerships
Vocational education was back in focus in February. Standards were updated by MoE on 11 February, adding granular teaching requirements, highlighting industry-education cooperation, and digital and AI education. Management measures were added by MoE and other ministries on 20 February. They support universities and organisations conducting industry-education collaboration via employing part-time teachers from industry, or industry-education cooperation.
Children were the focus of healthcare. NHC (National Health Commission) issued 'Enacting 2025 health system service project' on 13 February, with action on paediatric services, childcare, and mental health. Guidelines for assessing children’s (aged 0-3) development were published by NHC on 8 February.
Munich Security Conference
A multipolar world is ‘not only a historical inevitability’ but is ‘becoming a reality,’ FM Wang Yi 王毅 told the 61st Munich Security Conference in mid-February. He was in line with expectations—promoting ‘multipolarity’ (duōjíhuà 多极化) is nothing new, though the term has its own reading in Beijing’s developing diplospeak. He held bilateral meetings with top European officials on the MSC sidelines, denying any Sino-European conflict of interest.