Wait… Did Xi Jinping just hit the panic button?
For years, China crushed billionaires, squeezed private businesses, and pushed “Common Prosperity.” Now? Xi is suddenly begging entrepreneurs to get rich again.
Stocks are surging, AI is China’s new gold rush, and real estate is getting a lifeline. So… what’s really going on? Did China’s grand plan just fall apart?
Let’s dive into the shocking policy U-turn that could change everything.
Table of Contents
Mao’s Big Dream (And Bigger Mistakes)
1. China has had six leaders: Mao Zedong, Hua Guofeng, Deng Xiaoping, Jiang Zemin, Hu Jintao, and Xi Jinping. But if we’re talking real power moves, the list shrinks to three—Mao, Deng, and Xi.
2. Mao was great at speeches, bad at economics.
3. In 1958, after winning the civil war, he kicked off the <Great Leap Forward> to boost China’s economy.
4. The goal? Beat the UK in 7 years and the U.S. in 15. Spoiler: It didn’t work.
The Sparrow War That Backfired
5. Mao launched a pest-killing campaign, targeting mosquitoes, flies, rats… and sparrows.
6. Killing mosquitoes and rats? Smart. But,,, Killing sparrows? Dumbest move ever.
7. Sparrows weren’t just stealing grain—they were also eating locusts.
8. With no sparrows left, locusts took over and destroyed China’s crops.
9. In just one year, 210 million sparrows were gone, and China faced a biblical-level locust invasion.
Homemade Steel = Homemade Disaster
10. Meanwhile, Mao had another bright idea: Every village should make its own steel.
11. China didn’t have enough big steel factories, so Mao thought, “Why not make tiny ones?”
12. He ordered villages to build backyard furnaces to smelt metal.
13. This had two major problems.
14. First, farmers weren’t steel experts—they had no idea how to actually make strong metal.
15. Real steel needs proper heat treatment and carbon control, not just melting scrap metal.
16. Villagers, who only knew how to make hoes and shovels, failed miserably.
17. The result? Brittle, useless “pig iron” that broke like glass.
18. Local officials, desperate to hit quotas, melted down farming tools, making everything worse.
19. To fuel the furnaces, entire forests were chopped down, turning mountains into bald hills.
20. Then came floods and mudslides, washing away what little farmland was left.
Famine Hits: When Everything Fell Apart
21. With locusts eating crops, floods ruining land, and no farming tools left, food production collapsed.
22. Then Mao doubled down with collectivized farming, making things even worse.
23. Private farms were banned, and everyone had to work on state-run communes.
24. Farmers woke up to whistles, worked the fields together, and shared the harvest equally.
25. The problem? Hard workers got the same food as lazy ones, so nobody wanted to work hard.
26. People found loopholes—walking slowly, taking breaks, and pretending to “forget” tools.
27. Farming productivity hit rock bottom.
28. The result? The Great Famine. 30 million people—10% of China’s population—starved to death.
Mao Falls, Deng Rises
29. Mao’s authority stayed, but people started questioning his decisions.
30. Before dying, Mao picked Hua Guofeng, a loyalist from his hometown, as his successor.
31. Hua had a simple strategy: “Mao was always right. Period.”
32. His slogan was “Two Whatevers”—whatever Mao said and did must always be followed.
33. Translation? “No thinking allowed.”
34. But Hua had one big problem—no revolutionary experience.
35. The Communist Party’s old veterans saw him as an inexperienced kid.
Deng Xiaoping: Time for a Reality Check
36. Enter Deng Xiaoping, who came in with a fresh slogan.
37. “Seek truth from facts.”
38. Meaning? “Mao was great, but let’s do what actually works.”
39. This was a sneaky way of saying, “Time for reforms, but let’s not blame Mao.“
40. People were fed up with Mao’s failures, so Deng’s message became wildly popular.
41. On December 22, 1978, Deng officially took power.
42. He introduced three big policies.
43. These were: “Let some get rich first,” “Keep a low profile,” and “Collective leadership.”
44. “Get rich first” meant: Let the wealthiest lead, and prosperity will trickle down.
45. This led to massive investment in cities like Shanghai while rural areas were left behind.
46. “Keep a low profile” meant: China should stay quiet, grow strong, and not challenge the West too soon.
47. At the time, the Soviet Union was collapsing, and the U.S. was the world’s top superpower.
48. Deng’s strategy? Make friends with the U.S. and Japan, take their money and technology, and build China up.
49. It worked.
China Gets Rich—And Corrupt
50. Deng’s third policy was “Collective leadership”, meaning China would be ruled by a group, not just one man.
51. Instead of a dictator, a seven-member Politburo made key decisions.
52. This was meant to prevent another Mao-style disaster by spreading out power.
53. Deng’s “Get rich first” strategy led to insane economic growth.
54. In just 10 years, China’s GDP exploded from $1.6 trillion to $8.5 trillion.
55. But while the economy boomed, the rich got richer—especially Communist Party elites.
56. Powerful families and their friends got first dibs on new wealth.
57. Ordinary people became obsessed with making money.
58. Money replaced ideology—capitalism, but with “Chinese characteristics.”
59. This triggered a gold rush mentality—get rich at all costs, ethics be damned.
60. Bribery, political favors, and corruption became the norm.
61. The economy soared, but so did corruption, greed, and inequality.
Xi Jinping Tries to Fix It (And Maybe Breaks It Instead)
62. Deng’s plan included a second step: “Common Prosperity”, where the rich would later share the wealth.
63. Xi Jinping rebranded this idea, saying “It’s time for wealth redistribution!“
64. But instead of waiting for voluntary donations, he started forcing companies to give money back.
65. China’s government summarized “Common Prosperity” into three points:
- Rewarding hard work with wealth.
- Preventing extreme inequality.
- Encouraging companies to “voluntarily donate.”
66. The first two sounded nice, but the third was easier to enforce.
67. The day after Xi’s speech, Alibaba and Tencent “voluntarily” pledged $18 billion in donations.
68. Rich tech CEOs and celebrities became public enemies.
69. The people loved it—“Take down the billionaires!”
70. But billionaires saw the writing on the wall—“If we make too much money, the government will take it.”
71. So what did they do? Move their money out of China.
72. Bitcoin, gold, foreign investments—money started fleeing the country.
Xi Jinping’s U-Turn: From Crackdowns to Comebacks
73. Over 1.2 million wealthy Chinese packed their bags and left the country, fearing their money wasn’t safe anymore.
74. As capital fled and the economy slowed, Xi Jinping still insisted China could hit 5% growth.
75. But there was one big problem: China’s economy is built on real estate, with 70% of household wealth tied to property. If real estate doesn’t recover, neither does China.
76. On March 4, 2025, China kicked off its most important political event: The Two Sessions, a week-long government meeting.
77. But this time, the real headline wasn’t the meetings—it was what Xi Jinping said.
Xi’s Big Pivot: The Return of Private Business
78. Since 2018, China had been pushing “State Advances, Private Retreats”, where state-owned companies took over while private firms got sidelined.
79. The government started replacing private CEOs with government-friendly executives—especially at big tech firms like Alibaba.
80. Slowly, China’s biggest companies became state-controlled or heavily monitored.
81. But then, on February 17, 2025, Xi Jinping suddenly switched gears and met with China’s top business leaders.
82. He told them: “The private economy has huge potential. We need entrepreneurs to lead growth first—then later, we can focus on common prosperity.”
83. Translation? “Forget state-owned enterprises—private businesses, start making money again!“
84. Xi also ordered all Communist Party officials to actively support private companies.
85. At the meeting, six major business leaders spoke publicly.
86. They were:
- Ren Zhengfei (Huawei, tech giant)
- Wang Chuanfu (BYD, electric vehicles)
- Liu Yonghao (New Hope Group, agriculture)
- Yu Renrong (Weir Semiconductor)
- Wang Xingxing (Unitree Robotics)
- Lei Jun (Xiaomi, smartphones)
87. This was a clear signal: These companies had Xi’s official approval to grow and expand.
88. But one big name was missing from the speaker list—Alibaba’s Jack Ma, showing he’s still not fully back in Beijing’s good graces.
China’s New Plan: Stimulus, Stocks, and AI Hype
89. The National People’s Congress (China’s legislative body) scheduled a vote for March 24-25, 2025, to pass a “Private Economy Promotion Act.”
90. Meanwhile, China prepared a massive economic stimulus package.
91. The government raised its fiscal deficit target from 3% to 4%, meaning more government spending was on the way.
92. Translation? Beijing was ready to flood the economy with money to boost growth.
93. But talking about “saving private businesses” openly would be too embarrassing for the government.
94. So instead, they announced huge investments in AI, making DeepSeek AI (China’s version of OpenAI) a national priority.
95. At the same time, China rolled out strict new rules for its stock market under a policy called “The New National Nine Rules” (新国九条)
China’s Stock Market Playbook: Make Prices Go Up
96. The New National Nine Rules were designed to tighten stock market regulations and boost investor confidence.
97. One key rule? If a company’s total dividends over the last three years are less than 30% of its net profits, it will be placed under “special supervision.”
98. Companies under “special supervision” will be forced to undergo extra audits twice a year.
99. And if a company fails to meet the dividend requirement? Its major shareholders will be banned from selling their stock.
100. At the same time, China’s state-owned financial institutions were quietly ordered to increase their stock market holdings—a classic move called “window guidance.”
101. For the first time, state-owned enterprises (SOEs) will have their market cap factored into their official performance evaluations.
102. Translation? Even state-backed companies must now care about their stock prices.
103. Bottom line: China is now using every trick in the book to boost the stock market.
Money Printing, Real Estate Fixes, and Tax Cuts
104. The government also announced plans to inject more money into the economy.
105. One method? Issuing 1.3 trillion yuan ($180 billion) in ultra-long-term special bonds to boost domestic spending.
106. Another method? Cutting real estate taxes to encourage home sales.
107. Example: If a homeowner sells a property after living in it for five years, their capital gains tax was slashed from 20% to 0%. Meanwhile, the property purchase tax was cut from 3% to 1%.
The ‘Loosen & Squeeze’ Game: China’s Economic Yo-Yo
China’s economy runs on a cycle called the “Fang-Shou” (放-收) Model—a never-ending game of loosen and squeeze.
When growth slows, Beijing loosens control (放), letting businesses breathe. But when things heat up too much, they clamp down again (收).
Right now? China just flipped the switch to ‘Fang’ mode. The government is backing off, money is flowing, and stocks are rising.
Long term? Who knows. But short term? China’s stock market is riding the wave—and it’s not slowing down just yet.
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