Behind the Numbers: The Dire State of China’s Finances

Hello everyone, I'm just an ordinary person, I'd like to share my own experience. Lately, I've been seeing a lot of this type of content creators, and then I noticed some comments like these in the comment sections below. Let me talk about my personal experience. At first, it was because of a popular comment in the comment section that I got curious and bought the movie they mentioned to watch. Then, through Xiaohongshu, I added a friend who sent me a bunch of video clips. I hadn't had a chance to watch them yet because the download was taking too long, so I just left them there. A few days later, while I was sleeping at home, the police suddenly showed up. They knocked on my door, came in, and four officers told me to hand over my phone, then took it away. They went through my chat history and precisely found the person who'd sent me those videos. Because of this, the police put me in the squad car and took me away. I spent a night at the police station, and the next day, they said they'd send me directly to the detention center. Just like that, I ended up committing a crime without even realizing it. The charge was illegal possession and dissemination of items promoting terrorism and extremism. Because of this, I spent over a hundred days in the detention center. Everyone there would ask me, Why are you here? I told them I'm here because I watched a movie. Actually, I hadn't even watched it yet. No one believed me. No one believed me when I said I was in there for watching a movie. I just figured I was unlucky. Time inside felt like years. In the end, since I had a formal job with full benefits, in order to keep my job, I couldn't be sentenced. My family pulled every string they could and called in all kinds of favors. They spent a lot of money and managed to get me a conviction without prosecution. So I wasn't sentenced, and eventually I was released. But even now, I still haven't paid off all the debts I racked up because of this mess. My entire monthly salary isn't enough to cover it, and I even have to ask my family for several thousand more. So don't be curious. Don't just buy anything. When it comes to the cyber police, we have no privacy. This is my proof. I wasn't lying. I feel like I'm a pretty unlucky person. So let this video be a warning to everyone. Don't pay the price for things that aren't necessary. In China, under the CCP, all kinds of crimes, like disturbing public order or subverting state power, are already dizzying to keep track of. But who would have thought, living long enough, now you can even commit a crime just by watching a movie. The charge is called Illegal Possession and Promotion of Terrorist and Extremist Materials. It's such a mouthful I can barely say it, and I'm not sure if you all even understand what it means. This country really is just like what Dao Long sings about in Raksasa Kingdom. Right and wrong, black and white, all turned upside down. People are left completely confused. Some say Xi Jinping made four fatal errors that will ruin the country, leaving China near collapse. Per commentator Du Wen, Cai Qi told Xi that China's local finances are dry, and revenue generation has collapsed. This report is basically like delivering a critical condition notice to Zhongnanhai. Some even call it a death certificate. Today, let's talk about this death certificate, and also discuss exactly what the four deadly mistakes Xi Jinping has made are. Watching the world with YU. Hello everyone, I'm Chen YU. Many people think that Cai Qi is Xi Jinping's most loyal chief steward. But just in the past few days, a shocking piece of news has come out from the very core of Zhongnanhai. Cai Qi, Xi's trusted confidant, actually told Xi Jinping the naked truth that the emperor has no clothes. Before May 26, Du Wen, the deputy director of the legal advisory office of the Inner Mongolia Autonomous Region government, revealed on his YouTube channel that Cai Qi, a member of the CCP Politburo Standing Committee, had sent a confidential report to Xi Jinping. In it, he stated that local government finances across China are experiencing a complete systemic crisis, they're bleeding dry, and have totally lost their ability to generate revenue. This conclusion was based on an independent investigation team from the general office of the Central Committee. What does this mean? It means that even Xi Jinping's most trusted inner circle has had no choice but to speak this harsh truth. The report from the Ministry of Finance can only be described as shocking. Local governments are generally facing financial difficulties. Rigid expenditures, such as the three basic guarantees at the grassroots level, local government debt repayments, wages for off-staff personnel, project payments, and principal and interest payments, continue to rise. The problem of expenditures exceeding revenues is becoming increasingly severe. Even in provinces with relatively strong economies, these rigid expenditures already account for more than 90% of available fiscal resources. Local governments have basically lost all room to maneuver their finances. Robbing Peter to pay Paul is no longer an option, and funds available for development have generally dropped to zero. Everyone, pay attention to the word generally. In the context of CCP politics, generally means that all local government finances are in trouble, but Kai Qi haven't even mentioned the scariest part yet. Kai Qi also admitted that the biggest current risk still lies in local government debt, with major public welfare projects facing severe cash flow shortages, and a wave of defaults could break out at any moment. This wave of work stoppages on government public welfare projects is already happening, and the political and social security risks triggered by collective rights protests from some contractors and migrant workers should not be underestimated. The period for local governments to pay their debts keeps getting extended, and some companies simply can't hold on and are going bankrupt. A wave of defaults could break out at any moment. This isn't just a warning anymore, it's like watching a great building about to collapse. What's even more intriguing is Kai Qi's political performance. According to Du Wen, when Kai Qi was giving his report, he started by singing Xi Jinping's praises, blaming the economic failures on historical responsibility. But at the same time, Kai Qi didn't hold back in reporting the systemic crisis in the CCP's finances to Xi Jinping. In effect, he handed Zhou Nanhai a critical condition notice. First he sings praises, then he hands over the diagnosis. This is the most sophisticated self-preservation tactic in officialdom. Kai Qi is telling Xi Jinping that these problems are all historical leftovers. You've already done what you should, and I've done my best too. This is the situation, so what should we do next? That's up to you. Behind this, in fact, is a deep wavering within Zhou Nanhai's inner circle regarding Xi Jinping's policies. Let's take a look at the specific numbers. These numbers are even more devastating than any political commentary. In 2025, the general public budget revenue at the local level in China will be about 12.21 trillion yuan, with central government transfer payments reaching as high as 10.19 trillion yuan, and local expenditures totaling 24.4 trillion yuan. They're spending 800 billion yuan. In other words, nearly half of the money local governments spend has to come from central government transfer payments, and the central government's money is collected from the provinces in the first place. It's basically just moving money from one pocket to another. But the problem is that money is continuously leaking out of the whole system. Out of 28 provinces and municipalities nationwide, excluding Hong Kong, Macau, and Taiwan, about 70% of the provinces have a financial self-sufficiency rate of less than 50%. Shanghai used to be the last province in the country with a fiscal surplus, but now it too has completely fallen. Strong eastern provinces like Guangdong, Jiangsu, and Zhejiang have self-sufficiency rates between 67% and 77%. In many places in the central and western regions, the self-sufficiency rate is below 20% to 30%, or even lower. Tibet is only about 10%. This means that for every yuan most provinces spend, they can only earn 0.2 to 0.5 yuan themselves. The rest all depends on financial support from the central government. In other words, under the banner of common prosperity, what's actually being achieved is common poverty. And land finance, the last lifeline for local governments, has also been cut off. In 2025, China's land transfer revenue dropped to its lowest point in 10 years. From January to November 2025, national revenue from the transfer of state-owned land use rights fell by 10.7% year-on-year. The government deficit has expanded to 5.66 trillion yuan, an increase of 1.6 trillion yuan over the previous year. This is exactly what Kai Qi referred to as the reality of the blood-making function being completely exhausted. What's even more frightening, in 2026, the authorities plan to add 11.89 trillion yuan in new government debt. Of this, the central government will issue a total of 6.69 trillion yuan in national bonds, while local governments will issue and borrow 5.2 trillion yuan in local government bonds. But the CCP can no longer climb out of this trap. Borrowing new debt to pay off old debt, the more they borrow, the deeper they sink. This is essentially a Ponzi scheme in public finance. Since the beginning of 2026, several analysts familiar with China's economic and political operations have warned that the Chinese Communist Party may face a concentrated outbreak of multiple deep-rooted structural crises. Seven key indicators are under comprehensive pressure. The gap in the pension system continues to widen, local governments' ability to sustain their own finances is collapsing, and the real estate market is reversing across the board. Small and medium-sized banks are under increasing pressure, the industrial sector continues to weaken, and the demographic structure is deteriorating. This isn't just a cyclical downturn in a single sector, it's a systemic resonance spanning finance, banking, demographics, and the real economy. With such a mess on his hands, how much longer can Xi Jinping hold on? Come on, let me know in the comments, how much longer do you think Xi Jinping can last? One year, three years, or ten years? The ex-account New Heights posted an article mentioning that the well-known writer Hao Jingfeng summarized the four major taboos of doomed rulers throughout Chinese and foreign history in her science fiction novel Ipeng Palace. Seizing the talents of women, taking the lives of the poor, silencing the voices of scholars, and suppressing the nature of the gifted, if a ruler commits all four of these taboos, then his days are numbered. Root cause of the fiscal collapse lies in the system itself, and the underlying problem with the system is precisely the series of harmful policies under Xi Jinping's leadership, which have systematically undermined market confidence and seized private capital. Under the banner of common prosperity, Xi Jinping launched an unprecedented purge of wealth targeting private enterprises and the wealthy elite. Jack Ma of Alibaba was silenced and disappeared from the public eye. Zhu Zhiyan of Evergrande ended up behind bars with his assets falling apart. The entire private education industry was wiped out overnight, leaving millions unemployed, and tech platforms were hit with antitrust actions. Heavy-handed crackdowns and massive fines followed one after another. So what was the result of all these actions? Private entrepreneurs lost confidence. They stopped investing, stopped expanding, and instead tried every possible way to move their money out. Capital flight from China accelerated, foreign investment withdrawals intensified, and the willingness of private investors to invest hit rock bottom. Without private investment, there's no tax revenue growth. Without tax revenue growth, the government has no way to replenish its finances. Without the ability to generate its own revenue, the government can only survive by taking on more debt. This is the vicious cycle directly caused by Xi Jinping seizing the wealth of the rich. And what's even more absurd, this isn't about robbing the rich to help the poor. The wealth that's been taken hasn't ended up in the pockets of ordinary people. It's quietly accumulated within state-owned monopoly groups and circles of elite interests. This is robbing the rich while completely ignoring the idea of common prosperity. Now, the period for local governments to pay their debts keeps getting longer and longer, and some businesses just can't hold on and end up going bankrupt. And most of these bankruptcies, they're mostly private, small, and medium-sized enterprises. Xi Jinping has stifled China's economic dynamism. As the saying goes, a nation relies on its people and people on their wealth. Stripping the rich of their wealth shakes the nation's foundation. It is a historical law. If taking away the wealth of the rich destroys economic vitality at the top, then taking away the lives of the poor is like lighting a bomb at the bottom that could explode at any moment. Right. While we're recording this show, a shocking mining disaster is unfolding. In China, at the Liu Shenyu Coal Mine in Qingyuan County, Chengdu City, Shaanxi Province, a major gas explosion occurred on the night of May 22nd. After the accident, the death toll quickly climbed in a short period of time, from the initial report of eight deaths to the official announcement at one point of 90 people killed, and then later revised to 82. As for the real number of deaths, I believe it's much higher than that. Because in reality, there were actually 247 people underground, but only 124 were officially registered. When miners enter the mine, they're supposed to register and carry a personal tracking card. But you see, I heard that some of the workers underground didn't even have tracking cards with them. This mining disaster is the most serious coal mine accident in China since 2017. These miners risk their lives just to earn a little money. And in the end, even the number of deaths has to be repeatedly changed by the government. This is the value of poor people's lives under Xi Jinping's rule. The mining disaster is just the tip of the iceberg. Those missing students, the organs of young people, have already become spare parts, now part of the bodies of retired officials. Taking the lives of the poor doesn't always mean killing them directly. It could be making you too poor to afford medical care when you're sick, making you unable to find a job when you're unemployed, having the police beat you when you try to collect your wages, or making it impossible for your kids to go to school. When the basic survival line for those at the bottom keeps getting crossed, so-called social stability becomes nothing but a joke. When people reach the depths of despair, they end up doing extreme things. On May 24th and 25th, the ex-account China Tragedy Archive repeatedly reposted several related videos. The post said the incident took place in Tangdeku Town, Xiaoyang County, Xiaoyang City, Hunan Province. During a bank robbery where someone used explosives, the military opened fire to suppress the situation, resulting in three deaths. One of the videos shows what appears to be a pedal-powered tricycle overturned on the side of the road with its contents scattered everywhere. Not far away, a person in white is lying motionless in the middle of the street while a man in black stands nearby. Another video shows, under the cover of night, a military transport vehicle parked next to a building on the street. Several soldiers with guns get out of the vehicle first, then form up and enter the building together. The man filming the video mentions twice that someone at the scene was killed by a bomb. In another video, a uniformed officer and a man walk up to a building. The officer tells the man to put on a bulletproof vest, apparently preparing him to enter the building and negotiate with the kidnappers. On the surface, this incident looks like a crime, but behind it, it reflects the deep sense of powerlessness that runs through the lives of ordinary people at the bottom of Chinese society. In recent years, China's economy has continued to slow down. Difficulties in finding jobs, the pressure of mortgage payments, have left countless ordinary people struggling to breathe. Extreme actions are, of course, unacceptable. But incidents like this serve as a wake-up call, reminding everyone that the pain points of those at the bottom can't just be suppressed by maintaining stability and certainly can't be covered up by censoring information. No matter how tightly you try to put the lid on, you can't hold back boiling water. For a country to correct itself, two conditions are needed. First, that people can speak the truth, and second, that those who speak the truth are not punished. In Xi Jinping's China, neither of these conditions exists. Under Xi, the internet firewall has grown ever higher. Real-name registration and grid-style surveillance are everywhere, and vague charges like historical nihilism, picking quarrels and provoking trouble, and inciting subversion run rampant. This has left scholars, journalists, and independent media figures too scared to speak out. Just like the video I showed you at the beginning of today's program, now even watching a movie can be considered a crime. Intellectuals who dare to criticize are, at best, demoted, and at worst, thrown into prison. In the field of education, Xi Jinping thought on socialism with Chinese characteristics for a new era has been fully integrated into textbooks and classrooms. From kindergarten to university, these children are being raised to be followers of the party and even worshippers of Xi Jinping himself, rather than independent-thinking citizens. This kind of comprehensive control over speech has the most direct consequence. Silencing the people is considered more important than guarding against floods. Decision-makers can't hear the truth, mistakes can't be corrected in time, and problems just keep piling up. In the end, this leads to systemic collapse. And the very fact that Cai Qi had to secretly report this issue shows just how serious the problem really is. Even the highest-ranking members of the Politburo Standing Committee have to rely on independent investigative forces. Only then can they get accurate data and explanations. The normal channels for passing on information have long since broken down. On platforms like Daoyin and Xiaohongshu, netizens are posting anti-Xi and anti-communist content, either in subtle ways or outright. The CCP's censorship system is overwhelmed and scrambling to keep up. This cat-and-mouse game with censorship itself proves one thing. Repression has never been able to silence the stars. The voices of intellectuals may be silenced, but the seeds of public resentment are quietly spreading in every censored post and every deleted comment. A system that doesn't allow any voices of criticism is like a pressure cooker with no vent. It's just waiting for that final moment to explode. Domestically, it's all about maintaining stability. But what about abroad? Xi Jinping abandoned Deng Xiaoping's policy of keeping a low profile and instead adopted a tough wolf-warrior diplomacy. He went on the offensive on issues like building artificial islands in the South China Sea, military drills around Taiwan, border clashes with India, and the Belt and Road debt traps, pushing former partners one by one into opposition. Now there's the Quad Alliance between the US, Japan, India, and Australia. Export controls on semiconductors and containment measures are gradually forming an international encirclement against China. Confidence in investing in China has collapsed in Europe. Foreign capital is pulling out faster, and supply chains are moving to Southeast Asia. The days when China had friends all over the world are gone. Now it's surrounded on all sides. Although the Xi-Biden summit did take place, beneath the surface smiles there are powerful undercurrents at play. According to reports, after the Xi-Biden summit, Beijing is facing a crisis of trust from all sides. The deep-rooted structural conflicts between China and the US were not resolved by the summit. What is the price of taking away your neighbor's good fortune? It's a shrinking international market, technological blockades, and diplomatic isolation. A China that is not trusted by the world's major economies, even if its internal finances don't collapse, will inevitably head toward decline. But Xi Jinping has chosen to use ideological control to make up for diplomatic isolation and to use heavy-handed stability maintenance instead of institutional reform. But this will only make the vicious cycle spin faster and faster. Actually, there's a detail here that's worth our deep consideration. Why did Kai Qi decide to start from scratch and use an independent investigative team from the general office to collect local fiscal data? Because the reports from local officials simply can't be trusted. Falsification and officialdom has actually become a systemic problem. Local governments, in order to keep their positions and avoid being held accountable, inflate numbers at every level and falsify data. This means that the decision-making information Xi Jinping has relied on for so long is seriously distorted. He thinks he's steering a giant ship, but in reality, the dashboard of that ship has long since broken and all the numbers it shows are fake. The historical lesson of this phenomenon is extremely profound because during Mao Zedong's great leap forward, as everyone knows, it was precisely because local officials lied about grain production at every level that it ultimately led to the three-year Great Famine. Xi Jinping is following in Mao Zedong's footsteps, surrounded by lies, making decisions based on lies and living in lies. Heading straight for the cliff. What's even more frightening is this. When Cai Qi was giving his report, he started by singing Xi Jinping's praises, attributing the economic failures to historical responsibility, and claimed that under General Secretary Xi Jinping's leadership, things are overall moving steadily in a positive direction. Even Cai Qi, who dares to speak the truth as a secret informant, still has to sing Xi's praises first before getting to the real report. This is the political environment that Xi Jinping has personally created. Because no one dares to truly speak the truth anymore. And even if they do, it has to be wrapped in flattery and praise. Let's get back to Cai Qi's secret report. What is this report telling Xi Jinping? Xi is lying on top of a volcano. On the surface, the high-pressure stability measures seem to have things under control, but underneath, the magma is already surging everywhere. If the chain reaction from the fiscal crisis to a social crisis gets out of control, any local incident could become the one that breaks the camel's back. The final straw. Could the Shanxi mining disaster become that straw? Could unpaid wages for civil servants become that straw? One day, maybe a massive flood, a factory explosion, or the death of a child quickly goes viral online. Any of these could become the spark that ignites everything. Even Xi Jinping, the head of the Chinese Communist Party, has admitted that the CCP is in a period of increasing uncertainty and unpredictability. When such words come from the top leader himself, it's an admission in itself. The situation is already beyond his control. History never lies. Qin Shi Huang conquered all under heaven, but his dynasty fell after just two generations. Emperor Yang of Sui accomplished grand feats, yet the people could barely survive. Emperor Cheng Zhen was diligent and self-disciplined, but when Beijing fell, he hanged himself on Coal Hill. They all committed what the police call the four seasons of a doomed nation. Xi Jinping, in every season, seizes the talents of women, drains private investment, and takes the lives of the poor, leaving the grassroots filled with resentment and complaints. Silencing the voices of scholars, causing the decision-making system to break down, suppressing the spirit of the gifted, ultimately leading to isolation on all sides. This isn't just a temporary policy mistake, but a systemic and irreversible course of misguided actions. The moment Kai Qi signed that death certificate in Zhongnanhai, history's verdict had already been quietly written. This Thursday, I'll be making a prediction about Xi Jinping and the ultimate fate of the Chinese Communist Party. In the show, three spiritual and metaphysical bloggers from both the East and the West, without consulting each other, all mention that something major might happen between June and August. One of the predictions is that there will be a glass ceiling event in June. Another says there will be a huge transformation, possibly even a revolution in August. All of this, of course, refers to China. If you're interested in the details, you can check out my Mysteries of Time show that will be released this Thursday.