China’s top general falls to long-running purge of military officials<\/a><\/p>\n Rumours of a probe swirled last week after military officials Zhang Youxia and Liu Zhenli appeared to miss a meeting chaired by Xi Jinping.<\/p>\n Long considered Chinese President Xi Jinping’s closest military ally, he was the senior figure controlling the Central Military Commission and one of the few senior officers with combat experience.\u00a0<\/p>\n The military clean-out is the latest in a long string of Xi-inspired crackdowns, ostensibly targeting corruption, that initially focused on political rivals before shifting to China’s business elite.<\/p>\n Xi, who is now effectively China’s emperor since removing presidential term limits in 2018<\/a>, has been a brilliant if brutal strategist in the art of cementing power and control.<\/p>\n But there is one area that has eluded his best attempts at maintaining a stranglehold on power: the economy.<\/p>\n Youth unemployment remains uncomfortably high and a property market crash now entering its seventh year continues to infect consumer demand, while deflation is creating havoc within the domestic economy.<\/p>\n And now its demographics are working against it.<\/p>\n Running out of options<\/p>\n Before the turn of the century, Australian industrial leaders were obsessed with conquering the Chinese market.<\/p>\n With a population of 1.5 billion, the logic went something along these lines: “All we have to do is sell one pair of socks to everyone in China and we’ll make squillions.”<\/p>\n It didn’t quite work out that way.<\/p>\n Australia’s brewers, banks and a host of other firms dropped vast fortunes before closing up shop and returning home defeated.<\/p>\n What they failed to realise was that, while China is a huge industrial powerhouse, it doesn’t consume much.<\/p>\n Even now \u2014 in fact, now more than ever \u2014 it relies on other countries to buy its output to make up for the dearth of demand from within its own borders.<\/p>\n China is an industrial powerhouse, but its goods are primarily exported. (Reuters)<\/p>\n Almost 13 years ago, then-premier Wen Jiabao in his departing speech put his finger firmly on the problem, warning the country’s growth model was “unbalanced, uncoordinated and unsustainable”.<\/p>\n China was too reliant on exporting goods to other countries, he said, leaving it at the beck and call of consumers in the West.<\/p>\n “We should unswervingly take expanding domestic demand as our long-term strategy for economic development,” he said.<\/p>\n His own efforts to fix the problem were derailed by the global financial crisis, when China ramped up its investment in export industries and spending on government-debt-funded infrastructure projects.<\/p>\n That’s been the playbook ever since.<\/p>\n What’s the reason for this mismatch? It’s because Chinese households save almost half their income rather than spending it, as the graph below shows.<\/p>\n Unlike most developed Western economies, where household savings rates rarely hit 10 per cent, Chinese households stash away more than 40 per cent of their income.<\/p>\n Job insecurity, a sub-standard pension scheme for retirees and years of the one-child policy, which stripped retirees of support from their offspring once they could no longer work, have all contributed.<\/p>\n Growing old and in decline<\/p>\n The headline number for China’s economic growth came in bang on at 5 per cent last week, just like it did the previous year.<\/p>\n Some say it’s a marvel of statistical engineering. The Politburo makes a prediction early in the year and, wouldn’t you know it, the result rarely deviates.<\/p>\n Buried in the data, however, were some concerning statistics.<\/p>\n The population shrank for the fourth year on the hop to 1.405 billion but, more alarmingly, the birthrate plunged 17 per cent to the lowest level since records began in 1949.<\/a><\/p>\n China’s population drops for fourth year as fewer babies born<\/a><\/p>\n National data shows that in 2025, China’s population shrank by 3.39 million people, as experts warn the trend is likely to continue.\u00a0<\/p>\n The birthrate \u2014 at 5.63 for every 1,000 people \u2014 is less than half the rate in 2015 when the one-child policy officially ended.<\/p>\n While urbanisation is continuing, this trend will further dampen a property market in disarray, which will ultimately detract from local consumption. It will also limit the government’s ability to create jobs and growth by building new cities.<\/p>\n China’s economic growth last year was powered by a surge in exports despite the trade war with America.<\/p>\n It is now relying on a smaller number of countries to buy the surplus goods it produces. That’s likely to inflame the already growing tensions with its trading partners, whose own industries are being undercut on price and by an artificially low yuan.<\/p>\n These forces are coalescing, heaping pressure on Beijing to take radical action to boost local consumption.<\/p>\n China’s birthrate continues to decrease, and its older citizens must now work longer before retirement. (Reuters: Tingshu Wang)<\/p>\n LoadingRetiree saving mentality crippling the economy<\/p>\n For the past two years, financial markets have been waiting for the fiscal bazooka \u2014 the big spending stimulus boost that Beijing routinely unleashes to fire up the local economy.<\/p>\n Retirement at 50? Not anymore<\/a><\/p>\n In response to an aging population and growing pressure on pensions, the Chinese Communist Party raises the statutory retirement age.<\/p>\n But it never arrived. Apart from some looser lending arrangements, rate cuts and some modest spending initiatives, the authorities appear unwilling to continue down the same path.<\/p>\n One idea that could reshape China’s economy is an overhaul of its social security, especially its retirement pension system.<\/p>\n It recently raised the retirement age<\/a> and is bringing the system under national control, rather than the regional system now in place.<\/p>\n Hardly generous, the current system is split in three, covering more than 1 billion workers and retirees, and highlighting huge disparities within the workforce<\/a>.<\/p>\n China’s old-age pension system is running low on funds. (Reuters: Tingshu Wang)<\/p>\n Government employees enjoy the most lucrative payments of up to $US1,000 ($1,446) a month once they finish work.<\/p>\n In contrast urban workers, of which there are more than 534 million, pull in around $US537 ($776) a month, while rural workers are expected to survive on just $US32 ($46) a month.<\/p>\n Improving those payments would be expensive and would take time to filter through to spending after decades of entrenched frugality.<\/p>\n But it might bring consumer spending forward, encouraging households to spend more during their working lives and, in turn, lifting the country’s economic sustainability.<\/p>\n China needs to encourage domestic spending, and improving its pension system could help. (Pixabay<\/a>: moerschy<\/a>)<\/p>\n Ironically, while some leaders in capitalist economies have long railed against overly generous social security programs, there appears to be clear benefits from improved consumer spending and household saving patterns.<\/p>\n Beijing is facing mounting pressure at home and abroad to urgently restructure its economy and the longstanding lack of social support is now weighing on its future.<\/p>\n It’s a problem that won’t be fixed with another purge.<\/p>\n","protected":false},"excerpt":{"rendered":"Donald Trump has a habit of hogging the headlines. But while he was creating havoc in Davos last…\n","protected":false},"author":2,"featured_media":439514,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,26722,99,9732,28706,11054,4217,1794,1793,1781,2310,228772],"class_list":{"0":"post-439513","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-au","9":"tag-australia","10":"tag-birth-rate","11":"tag-business","12":"tag-chinese-economy","13":"tag-domestic-demand","14":"tag-exports","15":"tag-infrastructure","16":"tag-pension","17":"tag-retirement","18":"tag-savings","19":"tag-social-security","20":"tag-zhang-youxia"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/439513","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=439513"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/439513\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/439514"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=439513"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=439513"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=439513"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"A](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2026\/01\/fc8f78ecdc45a01a710493f09abb2ab2.jpeg\")
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