1 Analyzing recent senior public security personnel adjustments
Public security apparatus reshuffles
July 9
The PRC State Council announced the appointment and dismissal of several central government officials, including the dismissal of Chen Siyuan and Sun Maoli as vice ministers of public security and the appointment of Yang Weilin as vice minister of public security.
Some overseas Chinese commentators implied that the public security personnel reshuffles were further signs that Xi Jinping ally and public security minister Wang Xiaohong is in trouble, with the subtext that Xi is “losing power.” They claimed that Chen Siyuan and Sun Maoli were close allies of Wang, while Yang Weilin had no apparent ties to Wang. Previously, commentators claimed that the transfer of Hu Binchen, assistant minister and director of the public security ministry’s General Office, out of Beijing signaled that Wang was being sidelined.
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Chen Siyuan (age 60) is a career public security official. Chen began his career in the Beijing municipal public security system, where he served as deputy director of the Beijing municipal public security bureau, deputy secretary of the Political and Legal Affairs Commission of the Beijing municipal Party Committee, and director of the Beijing municipal stability maintenance office. In April 2020, Chen was promoted to director of the first bureau of the Ministry of Public Security, and later served as assistant minister of public security. In June 2021, Chen was appointed vice minister of public security and a member of the MPS Party Committee, with the rank of deputy chief superintendent.
Sun Maoli (60), is also a career public security official. Sun spent the bulk of his early career in the legal affairs bureau of the MPS and eventually became the bureau’s director in June 2009. In August 2022, Sun was promoted to vice minister of public security and a member of the MPS Party Committee, and concurrently served as the MPS legal affairs bureau’s director and Party Committee secretary.
Yang Weilin (56), spent the early part of his official career in the public security and legal system of Jilin Province. For 16 years, Yang was primarily tasked with handling economic crime investigations. Later, Yang was transferred to other provincial public security posts (likely to gain local leadership experience), including serving as director of the Siping City public security bureau and secretary of the Siping Political and Legal Affairs Commission from October 2014 to April 2019. Yang was then appointed vice president of the Jilin provincial High People’s Court (April 2019 to December 2021) and director of the Changchun City public security bureau (December 2021 to June 2023). Most recently, Yang served as director of the Guangxi provincial public security bureau.
Backdrop
There has been a wave of provincial public security chief reshuffles across the PRC since the beginning of 2025:
February
- Wu Lan, Party secretary of Benxi City in Liaoning Province, was transferred to the Ningxia Hui Autonomous Region to serve as public security chief.
May
- Chen Yuhuang, vice mayor and public security chief of Xiamen City in Fujian Province, was appointed public security chief of Jilin Province.
- Hu Dapeng, vice governor and public security chief of Yunnan Province, was promoted to a Standing Committee member of the Yunnan provincial Party Committee and secretary of the provincial Political and Legal Affairs Commission.
- Ye Hanbing, public security Chief of Sichuan Province, was placed under investigation.
July
- Huang Ruixue, vice governor and public security chief of Gansu Province, was transferred to Sichuan Province to serve as secretary of the provincial public security bureau’s Party Committee.
- Xia Fengjian, Party secretary of Ya’an City in Sichuan Province and a long-serving member of the Sichuan public security system, was transferred to Shandong Province to serve as deputy secretary of the Shandong provincial Political and Legal Affairs Commission and secretary of the Shandong provincial public security bureau’s Party Committee.
Why it matters
Xi Jinping’s control over the public security apparatus, or the “Party’s knife handle” (刀把子), partially reflects whether his grip on power is secure.
Our take
1. Contrary to the claims of overseas Chinese commentators, the recent high-level reshuffles at the Ministry of Public Security are in line with personnel reshuffle norms and do not necessarily indicate that regime public security chief Wang Xiaohong is being sidelined.
Chen Siyuan and Sun Maoli, the recently removed vice ministers of public security, both reached the retirement age (60) for vice ministerial-level officials this year. Therefore, there is nothing unusual about them being replaced by Yang Weilin (56) and other younger officials.
There are currently four vice ministers of public security, including Qi Yanjun (60, ministerial-level), Xu Datong (55, vice ministerial-level), Wang Zhizhong (59, vice ministerial-level), and Yang Weilin (56, vice ministerial-level). Of the four, Qi and Wang have notable career overlaps with Wang Xiaohong and can be considered to be his allies. Qi is 60, but is eligible to stay on the job for another five years because he is at the ministerial rank. Wang is nearing retirement age, but could be promoted later or is allowed to remain in his position until the 21st Party Congress given that he runs the important special service bureau of the MPS (which counts providing security to top leaders among its duties) and is an ally of Wang Xiaohong.
Wang Xiaohong can be said to have a solid grip over the public security apparatus if Qi Yanjun and Wang Zhizhong retain their positions. But even if Qi and Wang are reshuffled out, Wang Xiaohong is in minimal danger of being sidelined as long as he does not challenge or is perceived as challenging Xi Jinping.
2. While Wang Xiaohong does not look like he is about to be ousted or has incurred Xi Jinping’s disfavor, it is possible that the appointment of Yang Weilin is part of Xi’s effort to check the power of one of his key allies.
Wang Xiaohong began grasping real power in the public security apparatus from March 2018 after his promotion to the ministerial level and appointment as deputy Party secretary of the MPS Party Committee and executive vice minister of public security. Wang would later stack key positions with his allies (see the case of Qi Yanjun and Wang Zhizhong) and begin grooming some MPS officials for higher positions. From March 2018 onwards, at least eight MPS officials, three of whom had previously served as director of the MPS’s General Office, were “parachuted” into provincial governments to serve as public security chiefs, including:
- Yang Dong (62 years old, appointed head of the Ningxia Autonomous Region public security bureau in January 2019; formerly served as director of the MPS’s criminal investigation bureau).
- Huang Ruixue (53 years old, appointed head of the Gansu public security bureau in June 2022; formerly served as director of the MPS General Office; currently a nominee for Sichuan public security bureau chief).
- Zheng Haiyang (55 years old, appointed head of the Henan public security bureau in January 2023; formerly director of the MPS’s 10th Bureau).
- Jia Lijun (55 years old, appointed head of the Guizhou public security bureau in February 2023; formerly political commissar of the MPS’s intelligence command center).
- Wang Yingwei (56 years old, appointed head of the Tianjin public security bureau in July 2024; formerly director of the MPS’s cybersecurity bureau).
- Hu Dapeng (58 years old, appointed head of the Yunnan public security bureau in June 2024; formerly director of the MPS General Office).
- Zhu Shouke (56 years old, appointed head of the Tibet Autonomous Region public security bureau in April 2025; formerly director of the MPS’s prison administration bureau).
- Hu Binchen (53 years old, appointed head of the Jiangsu public security bureau in May 2025; formerly assistant minister and director of the MPS’s General Office).
MPS officials who are “parachuted” into top provincial public security roles usually enjoy a boost in their authority, benefits, and prospects. For instance, MPS vice minister Wang Zhizhong was “parachuted” into Guangdong to serve as provincial public security chief from 2021 to 2023 before returning to the ministry to serve in his current position. Likewise, the bulk of the eight MPS officials listed above, and particularly younger officials like Hu Binchen and Huang Ruixue, are clearly sent to the provinces to gain experience and build credentials before going back to the central government to serve under Wang Xiaohong.
Given that quite a number of former MPS officials have been “parachuted” out, it is noteworthy that it was Yang Weilin, an official who never entered the central government, who got the nod to serve as MPS vice minister. Yang’s career also shows that he had barely any interaction with Wang Xiaohong, if any, which makes it highly likely that he is not an associate or ally of the latter. From the perspective of personnel reshuffles and factional considerations, it cannot be ruled out that the Central Organization Department (now run by Xi’s close ally Shi Taifeng) deliberately elevated Yang over other eligible candidates to prevent Wang Xiaohong from accumulating too much influence over the public security apparatus by having his political “clients” in the bulk of key positions. Xi Jinping has always been careful about personnel selection, and would have likely become even more careful and paranoid ever since he had to purge loyalists like defense minister Li Shangfu and foreign minister Qin Gang in 2023.
There are likely other considerations why the Xi leadership chose Yang Weilin to be vice minister of public security, including his experience in economic crime investigations. However, those considerations are likely minor.
3. The wave of public security apparatus reshuffles is not unusual given that the Xi leadership has not eased up on making public security personnel adjustments and purges since the 20th Party Congress. For instance:
- 2020–2022: Public security heads in six provinces were reshuffled.
- 2023: Public security heads in nine provinces were reshuffled, including seven within the first three months of the year.
- 2024: Public security heads in six provinces were reshuffled.
- 2025: Public security heads in nine provinces were reshuffled. So far, four of the nine positions are vacant and one of the nine public security heads has been placed under investigation.
Of the current 27 provincial public security chiefs, five (Inner Mongolia, Fujian, Jiangxi, Qinghai, and Hubei) are 58 years old or older, which means that they are near retirement age. Barring unforeseen circumstances, those five public security heads will likely be replaced before the 21st Party Congress.
And of the 27 provincial public security heads, 13 are from the public security apparatus, three are from the political and legal affairs system, and 11 have no prior experience in political and legal affairs. These proportions are roughly consistent with those before the 20th Party Congress.
Xi Jinping can be said to retain a firm grip over the Party’s “knife handle” as long as there are no significant deviations in public security personnel changes in the provinces and the central government. The Xi leadership will likely continue to chop and change public security personnel going forward to ensure the compliance of the public security apparatus.
2 China’s auto industry sees growing signs of crisis
Neta files for bankruptcy
June 19
Chinese new energy vehicle startup Neta Auto filed for bankruptcy.
In 2022, Neta was the top-selling NEV startup with 152,000 annual vehicle sales, outperforming NIO, XPeng, and Li Auto. At the time, Neta was also among the first companies to obtain “dual credentials” (manufacturing qualifications and product qualifications) to produce and sell passenger cars in China.
BYD ends plan to build Mexico plant
July 2
Bloomberg News reported that top Chinese NEV maker BYD had scrapped plans to build a major plant in Mexico due to geopolitical tensions and uncertainty stemming from President Donald Trump’s trade policies.
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BYD announced plans in 2023 to build a factory in Mexico that would produce around 150,000 vehicles annually and create 10,000 jobs in the country. At the time, BYD stated that the plant would serve both the Mexican and Latin American markets, and eventually export vehicles to the United States.
GAC-FCA files for bankruptcy
July 8
GAC Fiat Chrysler Automobiles (GAC-FCA), the joint venture of GAC Group and Stellantis, announced its inability to reorganize per a court-appointed administrator. The Changsha Intermediate People’s Court then declared GAC-FCA bankrupt as it had insufficient assets to cover its debts and had no prospects for restructuring or reaching a settlement.
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As of Sept. 30, 2022, GAC-FCA’s total assets were 7.322 billion yuan and total liabilities were 8.113 billion yuan, resulting in net assets of negative 791 million yuan.
At its peak in 2017, GAC-FCA adopted an aggressive “channel stuffing” strategy in an effort to reach its target of selling 200,000 vehicles annually. It forcibly pushed excessive inventory onto dealers, leading to an inventory-to-sales ratio of 1:7 that was far above healthy industry standards.
GAC-FCA’s short-sighted approach backfired disastrously when the market environment shifted in 2018. Most dealers were saddled with overwhelming inventory that they could not sell, straining their cash flow to the breaking point. They were also not only unable to take on new vehicles but also lacked the resources to offer proper sales and after-sales service, further damaging customer experience and GAC-FCA’s brand image.
GAC FCA’s sales plummeted as consumer trust and the sales network collapsed simultaneously:
- 2018: 125,200 units.
- 2019: 74,000 units.
- 2020: 41,000 units.
- 2021: 20,400 units.
- 2022 H1: Fewer than 2,000 units (down 85 percent year-on-year).
MIIT revokes some NEV subsidies
July 11
Mainland media reported that a review by the PRC Ministry of Industry and Information Technology found that some NEV subsidies that automakers like BYD and Chery applied for between 2016 and 2020 were non-compliant. The authorities proceeded to revoke 864 million yuan (about $120 million) in NEV subsidies, including 240 million yuan to Chery for about 8,760 electric and hybrid vehicles, and 143 million yuan to BYD for around 4,900 vehicles.
The MIIT said in documents that the subsidies were revoked due to companies failing to provide vehicle operational data and meet required mileage standards.
Only 15 NEV makers left in China by 2030?
July 3
According to a report by international market research firm AlixPartners, only three out of 129 NEV manufacturers in China are profitable and the unhealthy situation could lead to a wave of bankruptcies.
AlixPartners estimated that only 15 NEV manufacturers in China are likely to survive by 2030.
China’s PPI plummets in June
July 9
The National Bureau of Statistics announced that China’s producer price index fell 3.6 percent from a year ago in June. This was the largest drop since July 2023 and marked the 33rd consecutive month of declines.
Specifically, the auto industry PPI fell by 2.2 percent year-on-year in June.
Our take
The crisis in China’s automotive sector is becoming increasingly apparent, with BYD ending plans to build a factory in Mexico and GAC-FCA’s bankruptcy serving as stark indicators of broader industry challenges. Intensifying price wars, supply chain financial risks, and fraudulent sales practices are undermining the sector’s sustainability. Coupled with deflationary pressures and export barriers, these factors could precipitate a systemic crisis.
Meanwhile, Beijing’s newly enacted regulations mandating government agencies, public institutions, and large enterprises to pay small and medium-sized enterprises within 60 days could accelerate the bursting of the auto industry’s financial bubble.
1. China’s auto industry faces mounting growth challenges due to constrained overseas expansion and sluggish domestic demand. Should current trends persist or worsen, many Chinese NEV companies are at risk of failure as their financial strategies break down.
We noted in our June 30, 2025 newsletter that BYD and other auto companies follow the playbook of delaying payments to suppliers to secure interest-free financing and securitizing these debts through asset-backed securities (ABS). To sustain this model, automakers need to have robust production and sales growth. However, China’s domestic markets do not seem able to absorb the auto industry’s “involution”-driven capacity. Domestic auto sales declined from 29 million units in 2017 to below 26 million in 2019. Sales stagnated further to around 25 million units during China’s three years of stringent “zero-COVID” controls. By 2024, auto sales had failed to recover to 2019 levels, reflecting zero growth over five years. Meanwhile, total auto production rose from nearly 26 million units in 2019 to 31.3 million in 2024, with the increase almost entirely matching export growth.
Chinese automakers might have been able to sustain their “financial engineering” model if they could reliably export their excess capacity. However, countries concerned about PRC subsidies, overcapacity, and national security issues have sought to restrict Chinese NEV exports through enacting tariff and trade measures in recent years. In particular, the European Union, which is the largest market for Chinese NEV exports (40 percent of NEV exports by value in 2023), imposed provisional countervailing duties (ranging from 17 percent to 35.3 percent) on Chinese NEVs starting July 5, 2024 for five years.
Concurrently, China’s persistent deflation is exacerbating the auto industry’s unsustainable “involution.” Recent bankruptcies among Chinese automakers and the “epic” price competition in the food delivery sector underscore further weakening of domestic demand.
2. We previously outlined how automakers and dealers have been selling so-called “zero-mileage” vehicles to inflate sales figures, bolster capital market performance, and create the illusion of strong demand. The “zero-mileage” vehicle strategy also allows automakers to obtain subsidies from the CCP authorities and secure financing from institutions.
Chinese automakers will likely find it harder to continue with the “zero-mileage” vehicle strategy as the authorities step up scrutiny of subsidies fraud. With the MIIT recently revoking NEV subsidies for some automakers, Chinese financial institutions could adopt greater caution in lending to the sector. Reduced access to liquidity will intensify the auto industry’s woes.
3. Chinese automakers could see their troubles escalate quickly if the CCP authorities strictly enforce the State Council’s regulations requiring large enterprises to pay SMEs within 60 days. Much like how Beijing’s “three red lines” policy punctured the real estate bubble, the SME payment regulations could pop the auto industry’s financial bubble as liquidity-constrained automakers are forced to pay their suppliers within a tight window (two months as opposed to a year or more) instead of dragging things out through “financial engineering.”
Per mainland media reports, Chinese banks’ exposure to the auto industry reached 1.2 trillion yuan in 2024. Should the auto industry’s financial bubble burst, the banking sector’s non-performing loan ratio could surge from 1.9 percent in 2024 to 2.5 percent, severely impacting the financial system and potentially triggering financial risks.
What’s next
More bad news about China’s auto industry could be forthcoming this year, especially starting from the end of the third quarter when automakers are due to pay their suppliers to keep in compliance with the State Council’s SME payment regulations.