1 More signs emerge of Xi preparing a sweeping ‘rectification’
Party Central launches a fresh round of inspections
March 31
State media reported that the Politburo reviewed regulations on ecological and environmental protection inspections (生態環境保護督察工作條例) and a comprehensive report on the fourth round of inspections of the 20th Central Committee (關於二十屆中央第四輪巡視情況的綜合報告).
The meeting noted that the central inspection team had inspected certain central and state state agencies, and identified some issues that required “serious and thorough rectification.” The meeting called for enhancing political awareness and taking concrete actions to uphold the “Two Safeguards.” Also, the meeting urged the strengthening of political responsibility to “resolutely advance the implementation of reform tasks.” The meeting further noted that efforts should be made to improve the leadership team, issues of “disorderly conduct, inaction, lack of initiative, and incompetence” should be addressed, and mechanisms for the promotion and demotion of leading cadres should be normalized.
Politburo members swap jobs
April 2
State media reported that Shi Taifeng, a Politburo member and former head of the United Work Front Department, attended a briefing in the capacity of Central Organization Department head. The meeting was on the department’s efforts to deepen the study and implementation of the Central Committee’s “eight-point regulations.”
On the same day, Li Ganjie, a Politburo member and former head of the Central Organization Department, chaired a symposium on democratic supervision of ecological protection in the Yangtze River in the capacity of United Front Work Department head. The symposium was attended by central committees of various democratic parties and non-Party individuals.
He Weidong absent from tree-planting event
April 2
State media reported that Zhang Youxia, vice chairman of the Central Military Commission, participated in an annual voluntary tree-planting activity in Beijing’s Tongzhou District along with CMC members Liu Zhenli and Zhang Shengmin. CMC vice chairman He Weidong was absent from the proceedings; before He’s no-show, both CMC vice chairs typically attended the tree-planting activity.
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On March 13, overseas Chinese-language media reported rumors that He Weidong had been taken away for investigation shortly after the conclusion of the Two Sessions on March 11. The rumors claim that He’s residences in Beijing and Shanghai were searched.
On March 27, PRC defense ministry spokesman Wu Qian said he had “no information on this matter and am not aware of the situation” when asked about Western media reports about the alleged probe of He Weidong.
Our take
The above developments suggest that Xi Jinping is undertaking a sweeping rectification of the Party, government, and the military, and are in tandem with Beijing’s ongoing efforts at intensifying political indoctrination.
1. He Weidong’s absence from the tree-planting event in Beijing increases the probability that he is currently under investigation as rumored. A probe into He would likely be connected to the investigation into former CMC Political Work Department director Miao Hua. More senior military officials could be implicated and investigated as the anti-corruption authorities look into Miao’s case.
An expanding probe of those linked with Miao Hua lines up with information provided by overseas Chinese self-media commentator Cai Shenkun in late March 2025. Cai claimed that the People’s Liberation Army was being subjected to a large-scale rectification effort. Senior officials at the military region level and higher are required to conduct self-examinations in four areas, namely, political discipline, organizational discipline, integrity discipline, and mass discipline. Officials are also being asked to disclose their associations with individuals who are being investigated.
According to Cai, officials have to make “clarifications” on not just issues concerning currying favors with superiors or forming small cliques to manage interpersonal relationships, but also explain how they implemented rectifications following past inspections, audits, and disciplinary talks, as well as clarifications regarding significant issues in their personal life. Cai added that the extensive self-examination process has caused extreme anxiety among senior military officials, noting that “many (officials) are struggling to sleep, and it’s difficult to confess, but even harder not to. Even retired high-ranking officers are not exempt” from the rectification process.
2. Politburo members Li Ganjie and Shi Taifeng swapping jobs is an unprecedented and extremely unusual development. The move foreshadows a sweeping purge or reassignment of officials in the Party, the government, and the military, as well as major personnel changes.
i) The Central Organization Department is a crucial organ responsible for all personnel decisions concerning high-level officials under direct control of the CCP leadership (so-called “centrally-managed cadres”). Xi Jinping likely wants a shakeup of the Department to ensure greater quality control in personnel selection for those in the top leadership ranks, particularly seeing how Beijing had to purge several senior officials over the past two years.
Xi could also be looking to improve personnel selection as he seeks to maintain his grip on power amid troubling times. Beijing needs officials who are absolutely loyal to Xi and the Party, and who are up to scratch in their work (at least on paper), to better tackle the growing economic challenges and geopolitical pressures facing the CCP regime.
ii) Shi Taifeng was likely entrusted with handling important personnel matters because he is a key ally of Xi’s. Two prior developments hint at Shi’s political value to the Xi camp.
In February 2020, Shi Taifeng launched a “20-year retroactive investigation” of Inner Mongolia when he was Party secretary of the province. We analyzed at the time that Shi likely undertook the momentous initiative on Xi’s instructions and the move was part of Xi’s attempt to remove obstacles (specifically, caution both allies [Hu Jintao] and rivals [the Jiang Zemin faction] against forcing him to designate former Inner Mongolia Party boss Hu Chunhua as his successor) to his bid for a third term at the 20th Party Congress.
In the leadup to the 20th Party Congress, Xi appeared to repeat the personnel reshuffle move that he did with Hong Kong and Macau Affairs Office Xia Baolong by deploying the then-65-year-old Shi Taifeng to seemingly less prestigious positions (Chinese Academy of Social Sciences president in May 2022, vice chairman of the NPC’s education, science, culture, and health committee in June 2022), which gave the impression that the latter was on his way out. The personnel arrangement allowed Shi to stay in office until he could be appointed to the Politburo and as head of the United Front Work Department at the 20th Party Congress. Shi was subsequently made a vice chairman of the Chinese People’s Political Consultative Conference in what appeared to be a move by Xi to effectively oversee and counterbalance CPPCC head Wang Huning, who has long had associations with the Jiang Zemin faction.
iii) Xi Jinping likely deployed Shi Taifeng to the United Front Work Department at the 20th Party Congress because he saw a need to strengthen the Party’s united front (domestic and external influence and subversion) efforts. In particular, the CCP would have been hoping to influence the outcome of the 2024 Taiwanese general elections through various united front schemes. While the CCP failed to prevent the election of Democratic Progressive Party candidate William Lai Ching-te, its united front efforts likely contributed to the DPP losing the Taiwanese legislature and the election of pro-China opposition candidates (including Legislative speaker Han Kuo-yu). Such results would have been acceptable for the Xi leadership and Shi Taifeng would continue to remain in Xi’s good graces.
Shi’s redeployment to the Central Organization Department indicates that personnel management is now an even greater priority than united front work. Shi has previous experience handling Party affairs, having worked at the Central Party School for 25 years (1985 to 2010), of which nine years were as vice president of the school. The Central Party School is responsible for training mid- to senior-level Party officials, and Shi’s time there would likely give him a leg up in selecting and evaluating officials at the Organization Department. By contrast, Li Ganjie spent the bulk of his career in technocratic positions (nuclear safety and environmental protection), and would have comparatively limited experience in handling personnel selection matters and related Party affairs.
Shi Taifeng’s appointment as Central Organization Department head also potentially improves the prospect of him being elevated to the Politburo Standing Committee. The prospect, however, is still relatively low at present barring unusual circumstances because Shi would be far beyond the retirement age of officials at his level come the 21st Party Congress in 2027 and Xi Jinping would likely have to expend precious and limited political capital to warrant keeping Shi around regardless of how well he performs on the job.
2 Analyzing the impact of Trump’s tariffs on China
US-China tariffs
US tariffs
On April 2, President Donald Trump announced an additional 34 percent tariff on Chinese imports, on top of an existing 20 percent levy. The tariffs will go into effect on April 9.
On the same day, Trump signed an executive order that closes the “de minimis” trade loophole that has allowed low-value packages from China and Hong Kong to enter the U.S. duty free. Researchers at Nomura previously noted that “de minimis” shipments account for 11 percent of China’s exports to the United States.
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Banks, including Morgan Stanley, believe that Trump’s tariffs will bring average U.S. tariffs on China to at least 65 percent when counting pre-existing duties. Chad Bown, a senior fellow at the Peterson Institute for International Economics, said that the average U.S. tariff on Chinese products is 76 percent after counting previous tariff measures. Professor Henry Gao, an international trade expert at the Singapore Management University, calculated the total U.S. tariff rate on Chinese imports to be as high as 79 percent, excluding exemptions for certain goods.
Morgan Stanley economists led by Robin Xing said in a report, “The U.S. tariff shock would be significantly higher and more pervasive than 2018-19. Besides the direct tariff shock on China’s exports to the U.S., the indirect impact would also be notable, as the U.S.’s pervasive tariff hikes on other trading partners would slow global trade.”
PRC retaliatory tariffs and actions
On April 4, the PRC announced a raft of countermeasures against U.S. tariffs, including:
- Imposing a 34 percent tariff on all U.S. imports, effective April 10.
- Adding 16 U.S. companies to its export control list for dual-use exports, and 11 U.S. firms (including Skydio Inc and BRINC Drones) to the unreliable entities list.
- Adding several rare-earth minerals to its export control list, including samarium, gadolinium, terbium, dysprosium, lutetium, scandium, and yttrium.
- Suspending imports of sorghums from grain exporter C&D (USA) Inc, as well as poultry and bonemeal from three U.S. companies, effective immediately.
- Launching an anti-dumping investigation into imports of certain medical CT tubes from the United States.
- Launching an anti-trust investigation into U.S. biotech giant DuPont.
- Appealing against the U.S. tariffs at the World Trade Organization.
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On April 4, President Trump wrote on Truth Social, “CHINA PLAYED IT WRONG, THEY PANICKED – THE ONE THING THEY CANNOT AFFORD TO DO!”
PRC statements on US tariffs
April 3
1. A spokesperson for the PRC commerce ministry said that China firmly opposes the U.S. imposing “reciprocal tariffs” on all its trading partners, and that the PRC will resolutely take countermeasures to safeguard its own interests.
The spokesperson added that the U.S. approach violates international trade rules, seriously harms the legitimate rights and interests of relevant parties, and is a “typical act of unilateral bullying.”
2. PRC foreign ministry spokesman Guo Jiakun said at a regular press conference, “We have emphasized more than once that trade and tariff wars have no winners. Protectionism leads nowhere. We urge the U.S. to stop doing the wrong thing, and resolve trade differences with China and other countries through consultation with equality, respect, and mutual benefit.”
April 4
The China National Textile and Apparel Council (CNTAC) issued a statement criticizing the Trump administration for closing the “de minimis” trade loophole.
The CNTAC said that the move “seriously violates international trade rules, disrupts the normal trade order between China and the U.S. textile industries, and adversely affects Chinese textile and apparel enterprises—especially small and micro businesses, cross-border e-commerce operators, and related supply chains.” The CNTAC added that the move affects American consumers and undermines “fairness and efficiency” in international markets.
April 6
Party mouthpiece People’s Daily published a commentary on the PRC’s position on the U.S. tariffs. The commentary noted that while the tariffs will impact China, “the sky won’t fall.” Also, the PRC “haven’t closed the door to negotiations” despite “U.S. variability and extreme pressure,” but “don’t harbor wishful thinking either, having made various preparations to respond to impacts.”
Reaction from other countries to Trump’s tariffs
1. European Union: Plans countermeasures to protect its businesses, with prepared contingency plans. Warned of further action if U.S. talks fail, emphasizing its commitment to free trade.
2. Japan: Seeks negotiations with the U.S. to reduce the impact of reciprocal tariffs and a 25 percent auto import tariff.
3. South Korea: Seeks U.S. negotiations to mitigate the dual impact of reciprocal tariffs and a 25 percent auto tariff.
4. Canada: Secured a 30-day tariff suspension early by pledging cooperation on border security and drug issues. After the tariff announcement, Canadian prime minister Mark Carney vowed to retaliate “with purpose and with force.”
5. Mexico: Secured a 30-day tariff suspension previously by promising cooperation on border security and drug issues. After the tariff announcement, Mexico’s undersecretary for international trade Luis Rosendo Gutierrez said, “The instruction of President Claudia Sheinbaum was to work closely and cool-headed with the United States government looking for a fair and preferential treatment. And I think that strategy was best. To be close, to be constructive, and to bring proposals for the United States.”
6. Taiwan: Taiwanese president William Lai called the tariffs “unreasonable” and expressed concern about the possible impact on the global economy. On April 6, Lai said, “tariff negotiations can start with ‘zero tariffs’ between Taiwan and the United States, with reference to the US-Canada-Mexico free trade agreement.” He added that in addition to TSMC’s increased investments, other industries “such as electronics, information and communications, petrochemicals, and natural gas will be able to increase investment in the U.S. and deepen Taiwan-U.S. industrial cooperation.”
7. Vietnam: Trump and Vietnam leader To Lam spoke on April 4 and agreed to discuss a deal to scrap tariffs.
8. India: India announced that it would “remain in touch” with the U.S. over the tariffs.
9. United Kingdom: UK prime minister Keir Starmer said that the country would adopt a “calm and pragmatic” approach to the U.S. tariffs.
Our take
1. The steep U.S. tariffs on Chinese goods are likely to severely impact China’s exports and the Chinese economy on the whole:
i) Chinese exports to the U.S. will lose their price advantage. Products from labor-intensive sectors such as electronics, machinery, apparel (including fast fashion), and furniture could see significant cost increases.
ii) The Chinese economy would likely be affected in the following ways:
- Factories will lose export orders and export companies will see declining profits. This directly impacts China’s GDP growth.
- China’s overcapacity problem will worsen. Excessive competition (“involution”) among Chinese companies will intensify, and small and medium-sized enterprises will likely bear the brunt of such competition.
- Export-oriented coastal cities will likely take the first hit when the tariffs come into effect. Those regions could subsequently see increased business closures and a spike in unemployment.
- Beijing could allow the renminbi to depreciate against the U.S. dollar to boost export competitiveness. However, this comes at the risk of accelerated capital outflows and inflation.
iii) Trump’s broad tariff hike on all countries, and particularly those in the Southeast Asian region (Cambodia at 49 percent, Vietnam at 46 percent, Laos at 48 percent, Thailand at 36 percent, Indonesia at 32 percent, and Malaysia at 24 percent), effectively closes off pathways for Chinese manufacturers to reroute exports to the United States and mitigate costs.
The Trump administration’s formula for determining the tariff rate makes matters especially problematic for the PRC. The White House said it calculated the size of each country’s trade imbalance on goods with the U.S., divided the figure by how much America imports from the country, and made it into a percentage figure. It then halved that percentage to produce a new tariff rate. By that formula, the rerouting of Chinese goods through third countries will worsen the U.S. trade deficit with those countries and give the Trump administration an excuse to bump up the tariff rate. Those third countries could then decide to impose tariffs on Chinese goods or adopt other measures to impede the rerouting of Chinese products so as to improve their respective trade balance with the United States.
iv) Chinese companies could attempt to resolve their overcapacity problems by dumping products in other markets. Countries struggling to digest the flood of Chinese exports could impose additional tariffs on Chinese imports to protect local industries and jobs. This could intensify China’s trade conflicts not just with the U.S., but with several countries around the world.
2. The CCP authorities’ response to the U.S. tariffs was relatively restrained. The countermeasures that were deployed appeared to be geared towards appeasing the domestic audience and staying consistent with the PRC’s nationalistic rhetoric. Beijing also minimized attention to the U.S. tariffs by ensuring that reports of the development were not placed on the front pages of various state media outlets and producing commentary on the tariffs that portray China as the victim. The PRC’s language in statements critical of the U.S. tariffs was also comparatively less harsh and left room open for cooperation.
Beijing likely responded in the way it had to give itself room to both escalate and de-escalate trade tensions. The Xi leadership cannot remain silent or take minimal action lest it loses “face” domestically and undermines the CCP’s “quan wei.” Yet Beijing likely does not want to retaliate too hard lest it inadvertently cuts itself off the possibility of future negotiations with the U.S. and pushes Sino-U.S. relations to a breaking point. Regardless, President Trump’s social media post about the PRC’s retaliatory tariffs suggests that the Xi leadership could be in for more trouble despite its relatively “tempered” countermeasures.
The U.S. will likely be able to weather the PRC retaliatory tariffs and measures. Using Sino-U.S. trade data for 2024, the U.S. stands to collect $178.383 billion in tariffs from Chinese products while China would collect just $55.632 billion in levies. Hypothetically, the U.S. could offset the PRC’s countermeasures by allocating less than a third of its tariff revenue to supporting affected sectors (particularly agriculture), effectively neutralizing Beijing’s response.
3. The U.S. tariffs could potentially severely worsen the various risks plaguing the CCP regime, including local government fiscal shortfalls, credit contraction, debt crises, and social unrest (caused by unemployment and other factors). Over time, mounting economic and social risks could multiply and transform into political risks.
“Anti-Xi” elements in the regime could exploit growing public discontent with Xi and the CCP to undermine the Xi leadership and seek his ouster. Meanwhile, Xi would likely double down on the anti-corruption campaign and other measures to tighten his grip on the regime and wipe out lingering political enemies. Escalating factional struggle in the CCP elite could produce political Black Swans.