State of the Mainland: The weekly recap

China’s annual government meetings – aka the Two Sessions – wrapped up on Tuesday in Beijing, and to be honest, it was a refreshingly boring affair.

ICYDK: The Two Sessions – the annual meetings of China’s legislature (NPC) and political advisory body (CPPCC) – are like the State of the Union address in the US, but on steroids.

• They set out a wide range of policy objectives for officials throughout the country to pursue in the year ahead.
• And this year’s State of the Mainland was all about consistency.

As one of my Trivium co-founders, Trey McArver, pointed out on this week’s Trivium China Podcast, this year’s meetings felt almost like a carbon copy of last year’s.

• The real GDP growth target was unchanged from last year’s “around 5%.”
• The monetary and fiscal policy settings maintained a slight loosening bias.
• Officials focused, once again, on the need to strengthen household consumption.
• And the various meetings and speeches underscored Chinese leaders’ ongoing obsession with boosting technological innovation.

While the rest of the world seems to have been gripped by wild political and economic convulsions over the past year, China’s trajectory – and policy priorities – haven’t changed one iota.

Indeed, in a week when the Western press has been fully focused on Donald Trump’s escalating trade war – and the associated market sell-off – China’s leaders presided over a pretty ho-hum, steady-as-she-goes policy refresher.

• This is yet another good reminder that the narrative and focus inside China often differ drastically from those in Western capitals.
• Xi Jinping and company are laser-focused on tackling a laundry list of domestic challenges – and they aren’t about to be distracted by external volatility.

I wrote about the major economic targets set out at the Two Sessions last week, so this week I wanted to touch on other key themes, as illustrated by Xi’s public appearances during the meetings.

• BTW – this week’s note is, once again, an abbreviated version of our weekly podcast discussion, which you should definitely check out if you haven’t already.

During the Two Sessions, state media highlighted three key meetings that Xi participated in, as he sat down with:

• NPC delegates from Jiangsu province, encouraging them to take the lead in driving economic growth through innovation (a meeting Xi also held last year)
• CPPCC delegates from the education sector to discuss how improving the education system can drive innovation
• Various military leaders, where he talked about – you guessed it – the need for new technologies, along with building integrated platforms across sea, space, and cyberspace

As ever, Xi’s itinerary mirrors his current policy priorities, and he is clearly focused on fostering technological innovation across the economy.

• Importantly, he’s also focused on breaking down silos to ensure China’s innovative capacities are being actively applied across the entire society – from modernizing legacy industrial and manufacturing processes, to improving education and health outcomes, to integrating new technologies into government and the military.

Xi has previously stressed his view that the strongest economies are not those with the fastest economic growth, but those with the best technology and the ability to apply it effectively.

And that was the message delivered to thousands of officials across the week.

• The goal for the rest of the year is for those officials to drive innovation in their respective areas.
• And as one of my colleagues in China pointed out this week, there now seems to be a strong belief among the Chinese public that China can make it happen – thanks in large part to the sudden emergence of DeepSeek as a global AI leader.

The topsy-turvy news flow out of DC and other Western capitals looks likely to persist for the foreseeable future. But this week reminds us that, despite the volatility in the wider world, Beijing’s priorities are unlikely to change in the months and years to come.

Andrew Polk, Co-founder, Trivium China

What you missed

Econ and finance

According to the central bank’s monthly credit data, released on March 14, outstanding total social financing (TSF) grew 8.2% y/y last month, up from 8.0% in January.

• Outstanding RMB loans grew 7.3% y/y, down from 7.5% in January.
• Bank loan growth of 7.3% is pretty robust, especially in an environment of persistent producer price deflation.
• That said, it’s also the slowest pace of growth since our dataset began in 1998, and a sign that credit demand among Chinese firms and households is getting weaker.

Tech

On Wednesday, the industrial regulator (MIIT) released new measures to coordinate satellite internet frequencies.

• According to the new rules, lower-priority networks must proactively avoid interference with higher-priority networks, including those with global and domestic approvals.
• Beijing is laying the groundwork for satellite internet expansion – a sector it wants to develop fast to compete with US leaders like SpaceX.

Corporates

On Monday, Chinese social media platform Xiaohongshu – also called RedNote – announced the pilot launch of cross-border e-commerce services.

• Currently, the program is invite-only for select sellers. Chinese merchants will initially be able to sell to users in Hong Kong, Macau, and the US.
• Our take: This seems like an odd moment to undertake global expansion efforts – 2025 is not projected to be an easy year for Chinese e-commerce companies internationally.

China’s new energy vehicle (NEV) makers are adopting a new strategy to boost sales: ultra-generous financing plans.

• In mid-2024, Tesla became the first automaker to offer cheap financing, offering customers a five-year, zero-interest repayment plan with a low down payment.
• The success of Tesla’s approach has set a new industry standard that other firms are now emulating.

Politics

On Wednesday, Cai Qi, head of the Central Party-building Leading Small Group, launched a four-month education campaign to reinforce Xi Jinping’s Eight-Point Frugality Rules.

• Xi introduced the rules in 2012 to curb displays of extravagance, restrict lavish spending, and eliminate excessive formalism among senior leaders. Over time, the rules have been expanded to include all officials nationwide, addressing infractions such as bureaucratic inertia and accepting gift cards.
• Cai’s latest campaign aims to enhance discipline through “warning education” using real-world cases and to ensure focused rectification efforts.

US-China

On Tuesday, China’s commerce ministry (MofCom) summoned Walmart executives for a chat – as the American retail giant has reportedly been demanding that its Chinese suppliers lower their prices to counteract hefty US tariffs on Chinese goods.

• Our take: Walmart may be on thin ice.
• In addition to its rapidly growing sales in China, Walmart’s sourcing model is highly China-dependent.
• Being included on China’s Unreliable Entity List or otherwise singled out for punishment could massively damage the big box giant.

Taiwan

The Taiwan Affairs Office (TAO) this week accused Taiwanese leader Lai Ching-te of “pushing Taiwan towards a perilous state of military conflict” and warned that China would respond “decisively” if Taiwan crosses any “red lines.”

• This came after Lai, on Tuesday, convened a high-level national security meeting where he outlined strategies to counter five major threats from China.
• Our take: As we recently speculated, Beijing may use the US “America First” foreign policy promoted by President Donald Trump as an opening to ramp up pressure on Taiwan. How Beijing responds to Lai’s remarks will be a key test of that theory.

As always, it was a busy week in China.

• Thank goodness Trivium China is here to make sure you don’t miss any of the developments that matter.