Editor's Note

Editor's Note CLM Issue 86 December 2025.pdf

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At its Central Economic Work Conference in December 2024, the Chinese government made an unprecedented call for a “comprehensive rectification of involutionary competition.” The party’s invocation of a term that until then had been mostly applied to China’s test-based education system, whereby students spend many after-school hours cramming to gain an edge over their classmates. Unfortunately, because virtually all students engage in this same arms race, such an exercise costs time and money, but it makes everyone worse off. From the Chinese leadership’s perspective, China’s excess capacity–plagued economy has also fallen victim to wasteful and pointless “involuntary competition” as companies engage in destructive price wars and fuel deflation. Only decisive administrative intervention can end this downward spiral. Official rhetoric from Beijing easily creates the impression that the Chinese government is cracking down on “involutionary competition” for economic reasons. However, as Patricia Thornton’s analysis shows, the Chinese government has simply rebranded a social media buzzword to shift popular blame away from the center to misbehaving companies and their patrons in local governments. Beneath the surface of the “anti-involution” campaign there is a more ambitious effort to centralize power and control in the name of constructing a “unified national market.”

As expected, the Chinese Communist Party’s Central Committee unveiled its “proposal” for the 15^th Five-Year Plan (FYP) at its 4^th plenum held at the end of October 2025. Like the committee’s proposal for the 14^th FYP approved five years ago, this document reaffirms the party’s commitment to a security-centered development strategy. But because of the party’s more pessimistic assessments of China’s external environment, the proposal for the next FYP contains references to new investments in a wide range of industrial, technological, and military capabilities. Although most specific measures listed in the proposal are part of existing policy, their prominence in this authoritative party document signals that the Chinese leadership will stay the course despite the difficulties and risks. At the same time, the proposal also reveals the significant challenges China will face in implementing its strategy. Contrary to the perception that the West’s technological chokeholds constitute China’s greatest vulnerability, what is holding back China is the party’s lack of success in reinvigorating the broad economy. But the proposal contains few credible measures to suggest that within the next five years the party will actually undertake needed radical reforms.

Chinese leaders often cite the country’s middle class as a favorable factor in generating domestic demand. But the exact size of the Chinese middle class is difficult to estimate. This issue of the China Leadership Monitor contains one of the latest scholarly efforts to measure the share of the Chinese population that meets the conventional criteria of “middle class.” Relying on household survey data and defining “middle income” as being neither poor nor rich in the developed countries, Terry Sicular and her colleagues find that China has successfully grown a prosperous middle-income class (roughly 336 million as of 2023). However, expansion of the middle-income class has slowed, and its propensity to consume out of income has declined. Perhaps more worryingly for policy-makers counting on consumption to be a driver for growth, China’s middle-income population is not overly consumption-oriented. This finding offers a clue why at present the Chinese economy appears to be stuck.

Although the 21^st National Congress of the Chinese Communist Party (CCP) will not be held until the fall of 2027, its most important outcome – a fourth five-year term for party chief Xi Jinping – seems a foregone conclusion as he has effectively abolished both the term and age limits that had been in place since the 1990s. But this does not mean that Xi has no worries about stability at the top, as demonstrated by the recent purges of incumbent Central Committee members and high-ranking People’s Liberation Army (PLA) generals. Guoguang Wu’s article provides a preview of the reshuffling of elite personnel that will take place around the time of the next congress and considers the potential for an escalation of factional rivalry as well as the likely composition of the forthcoming Central Committee.

Tim Heath offers an unorthodox assessment of the impact of China’s new national security doctrine on the mission of the PLA. He argues that the elevation of “national security” to a top priority has redefined the military’s role in protecting the country. With the National Security Commission assuming responsibility for managing external dangers, the role of the PLA has shifted to one of support. Although the military continues to ensure combat readiness and nuclear deterrence, its contribution to national security primarily consists of non-war actions to augment civilian-led efforts. Despite U.S. fears about a possible conflict, Chinese authorities regard Taiwan primarily as a political, not a military, problem, and they have shown little interest in risking a war.