Economy/Resources - 3. page

A commentary published in Qiushi, the official theoretical journal of the Chinese Communist Party, has urged authorities to actively counter what it describes as false narratives about the Chinese economy spread by “anti-China forces,” while shaping what it calls the international community’s “correct understanding” of China’s economic prospects.

The article, titled “Continuously Doing Good Work on Stabilizing Expectations,” argues that expectation management is a critical component of macroeconomic governance, and that the Party leadership places great importance on strengthening related mechanisms. It warns that both domestic and foreign narratives that “talk down” the Chinese economy have misled producers and consumers, undermining the effectiveness of macroeconomic policy. “Confidence is more important than gold,” the piece states, calling for a positive cycle linking stable expectations, stronger confidence, and economic stability.

The commentary calls on government departments across China to respond promptly to public concerns, improve communication with businesses, and ensure policy information reaches the market clearly and proactively. It also urges adherence to “correct public opinion guidance” and innovation in economic messaging to “sing the bright future of the Chinese economy.”

The article warns that as China’s economy becomes more deeply integrated with the world, international opinion increasingly shapes domestic sentiment. It claims that anti-China forces are deliberately spreading variations of “China collapse” and “China threat” theories, and that failing to counter these narratives could dampen expectations among global markets, foreign companies, and foreign investors — and eventually filter back into domestic confidence.

The piece concludes by calling for stronger external propaganda efforts to proactively set agendas and rebut claims such as “China’s economy has peaked,” “China’s overcapacity,” and “foreign capital is leaving China.”

Notably, China’s annual parliamentary sessions this year set the economic growth target at 4.5 to 5 percent, a slight reduction from the approximately 5 percent targets of recent years.

Source: Central News Agency (Taiwan), March 17, 2026
https://www.cna.com.tw/news/acn/202603170100.aspx

Shanxi Province recently announced the installation of three new toll stations along a 120-kilometer stretch of National Highway 108, with a collection period of nearly 30 years, reigniting widespread public frustration across China over the return of national highway tolls.

Under the plan, passenger vehicles under 2.5 tons will be charged 10 yuan ($1.38 USD) per trip, while trucks over 30 tons will pay 70 yuan ($9.65 USD). Locals have blasted the three stations as excessively dense for such a short corridor, with some calling the Shanxi government “legitimate road bullies.”

China abolished highway maintenance fees in 2009, replacing them with a fuel consumption tax built into gasoline prices, effectively making most national roads toll-free. However, since 2024, mounting fiscal pressures have driven local governments to reverse course. Starting in the second quarter of 2025, seven provinces — including Anhui, Gansu, Hubei, Jilin, Shanxi, Jiangsu, and Shandong — launched toll pilot programs on national highways, adding as many as 137 new toll stations nationwide.

Analysts point to two converging crises behind the trend. First, the collapse of China’s real estate market has gutted land sale revenues, a traditional pillar of local government income. Second, the rapid rise of electric vehicles, which now account for over 50 percent of new car sales, has eroded fuel tax revenues — which fell 18% in the first half of 2025 — since EVs are exempt from fuel taxes.

This has left gasoline car owners feeling they are paying twice. One estimate calculated that a fuel vehicle driver covering 15,000 kilometers annually already pays roughly 1,600 yuan ($220 USD) in fuel taxes, and would owe an additional 2,000 yuan ($276 USD) in tolls if 5,000 of those kilometers are on toll roads — the same amount an EV driver pays without any fuel tax obligation.

China’s National Development and Reform Commission has indicated it is studying a road-use fee mechanism for new energy vehicles, though no policy has yet been finalized.

Source: Central News Agency (Taiwan), March 14, 2026
https://www.cna.com.tw/news/acn/202603140189.aspx

An article from The Epoch Times reports that China’s medical insurance fund is facing increasing financial pressure, prompting some local governments to use lottery revenues to help fill gaps in the healthcare insurance system. However, analysts caution that lottery income is unlikely to provide a stable or sustainable source of funding.

The report notes that China’s basic medical insurance fund recorded revenue of about 3.48 trillion yuan (US$ 500 billion) in 2024, while expenditures reached about 2.97 trillion yuan (US$ 430 billion), with spending rising faster than income. Interviewees cited in the article attribute the growing financial strain to rising demand for healthcare services, more frequent hospital visits, increased treatment for chronic diseases, and possible over-treatment in some hospitals. In some cities, including Beijing and Tianjin, medical insurance funds have reportedly experienced deficits or required fiscal subsidies to maintain operations.

According to the article, some regions have begun transferring a larger share of public welfare funds from sports and welfare lotteries into social security programs to support healthcare spending. One source said the proportion allocated to such purposes has reportedly increased from around 10 percent to about 20 percent. Analysts warn that this approach may not be sustainable, as lottery sales have slowed in recent years, making the revenue stream uncertain. At the same time, China’s rapidly aging population—now exceeding 200 million people aged 65 or older—is expected to place increasing long-term pressure on the country’s healthcare insurance system.

Source: Epoch Times, March 4, 2026
https://www.epochtimes.com/gb/26/3/4/n14711019.htm

China’s solar energy sector is grappling with one of the most acute cases of “involution” — the term used to describe destructive, low-return competition — in the country’s economy today. While global annual demand for new solar capacity stands at approximately 700 gigawatts (GW), China’s domestic production capacity has ballooned to around 1,400 GW, roughly double what the world needs each year.

During China’s annual “Two Sessions” legislative meetings, Zhong Baoshen, chairman of leading solar manufacturer LONGi Green Energy and a delegate to the National People’s Congress, called for the establishment of a capacity exit mechanism to help the industry escape its current downward spiral. He warned that after China’s newly installed solar capacity peaks at over 300 GW in 2025, installations could face a cyclical decline in 2026, with the structural imbalance between supply and demand still unresolved.

Zhong proposed using efficiency standards as a benchmark — specifically photovoltaic conversion rates — to guide the retirement of outdated production capacity and align industry-wide output with actual market demand. He also criticized companies that lack genuine innovation, relying instead on poaching talent for quick capacity expansion while using non-competitive resources to undercut prices, ultimately squeezing out firms that invest in real technological advancement.

In a notable policy parallel, Zhong urged regulators to apply a framework similar to the real estate sector’s “three red lines” — a set of financial thresholds introduced to curb excessive borrowing among property developers. He recommended monitoring solar companies’ debt-to-asset ratios, net debt levels, and short-term repayment ability, imposing financing restrictions on non-compliant firms and encouraging industry consolidation.

On the policy front, China’s Ministry of Finance has already announced the elimination of VAT export tax rebates for solar products, effective April 1, a measure industry experts view as a signal against cutthroat, low-price competition in overseas markets.

Source: Central News Agency (Taiwan), March 4, 2026
https://www.cna.com.tw/news/acn/202603040248.aspx

All 31 of China’s provinces have released their 2026 budget drafts, each echoing the central government’s directive for Party and government agencies to “live frugally” by cutting administrative and non-essential expenditures. The push reflects an intensifying fiscal squeeze that has been building for years, with some analysts arguing that curbing wasteful local government investment would yield even greater savings than trimming routine spending.

The “living frugally” policy generally refers to reductions in the so-called “three public expenses” — overseas official travel, official hospitality, and government vehicle costs — along with other non-urgent outlays. According to a report by Yicai on February 27, the approach has become a long-term policy directive, particularly as the gap between fiscal revenues and expenditures has widened in recent years.

Several provinces reported concrete results. Tianjin cut 5.87 billion yuan (approximately $806 million USD) in non-essential spending in 2025. Jiangxi saw its three public expenses fall 21 percent, large-scale provincial renovation spending drop 41.9 percent, and conference fees decline 36.4 percent. Shaanxi pledged to further slash budgets for festivals, trade shows, and forums, while Hebei committed to continued reductions across meetings, training, and outsourced service fees.

An anonymous local fiscal official noted that reining in ineffective and hastily launched investment projects — those started without adequate planning or assessment — would save considerably more public funds than cutting general administrative expenses.

The frugality drive traces back to March 2019, when President Xi Jinping explicitly linked government belt-tightening to improving ordinary citizens’ lives. The policy gained further urgency during the COVID-19 pandemic as local finances deteriorated. It was formally institutionalized in May 2025, when the Party and State Council issued a revised regulation on strict economy and opposing waste, moving the directive from a slogan into enforceable policy.

Source: Central News Agency (Taiwan), February 27, 2026
https://www.cna.com.tw/news/acn/202602270112.aspx

The European Union announced on Wednesday (February 25) that it is imposing stricter inspections on a baby formula ingredient imported from China, after confirming that cereulide toxin is the source of contamination in infant formula products.

Cereulide, which can cause nausea and diarrhea, was first detected in December last year in formula containing arachidonic acid oil. Following the discovery, European giants including Nestlé, Danone, and Lactalis launched recalls of infant formula products across more than 60 countries. Ireland’s Food Safety Authority has since stated that the recalls were triggered by the possible presence of cereulide in the affected products.

Arachidonic acid oil, the ingredient in which the toxin was detected, is strictly regulated in Europe and is used in some infant formulas as a source of Omega-6 fatty acids.

Since December, three infant deaths in France have been suspected to be linked to the recalled formula. French authorities are investigating, though they have emphasized that no causal relationship between the deaths and the formula has been established. Nestlé has said it will cooperate with the investigation and that there is currently “no evidence” linking its products to the deaths.

In its Wednesday statement, the European Commission said it was “necessary to strengthen controls on arachidonic acid oil imported from China” under special conditions. Shipments entering the EU from China will now require an official certificate confirming the absence of cereulide, and for the next two months, 50 percent of physical shipments will be subject to random sampling checks.

The Commission explained that investigations have shown Chinese-sourced arachidonic acid oil used in formula production “constitutes the source of contamination,” posing a potential serious risk to human health. While no company was named by the EU, Chinese firm Cabio Biotech — a major global producer of arachidonic acid oil supplying brands such as Nestlé and Danone — is reportedly under investigation for allegedly supplying the contaminated ingredient.

Source: Deutsche Welle, February 25, 2026
https://p.dw.com/p/59Onh