China’s rubber-stamp legislature, the National People’s Congress (NPC), concluded its annual ten-day conference in Beijing on Tuesday.
The meeting included extravagant promises from Chinese Communist Party leaders that they could boost consumer spending, revive their moribund economy, and win a trade war against the United States using artificial intelligence (AI) as their secret weapon.
The NPC, technically the only branch of government in the Chinese Communist system, is a purely theatrical organ that exists to make the decisions of a few authoritarian leaders look like they were reached through debate and informed consensus. The annual NPC conference is a window into the thinking of dictator Xi Jinping and his top henchmen, and occasionally offers a glimpse of political skulduggery among the vast Chinese bureaucracy.
The NPC appeared to have a solid grasp of low consumer spending as one of the biggest problems facing China’s economy, although it may not have fully appreciated the danger of raising prices through a trade war with the United States when so many Chinese consumers have already lost confidence in the economy.
Premier Li Qian promised a massive increase in domestic stimulus spending, coupled with “an appropriately accommodative monetary policy,” but he offered few details of how that money would be spent, or how his government would scrounge up the funds if a tariff war with the United States – on top of the lower-intensity tariff war over product dumping and electric vehicles China is already fighting against the U.S. and Europe – squeezes billions in income out of China’s export-focused economy.
Ideas for boosting consumer spending floated during the NPC included lowering personal income taxes, and even cutting half a day off the work week so Chinese workers have more time to go out and spend money – a seemingly bizarre proposal that some commentators think might actually work, although it frankly seems like a mortal insult to communism. China reduced its standard work week from 48 hours to 40 in 1995, and it did indeed boost consumption, although one of the products they consumed dramatically more of was alcohol.
The NPC continued China’s recent trend of betting heavily on artificial intelligence technology to increase economic growth, a faith inspired largely by the sensational debut of DeepSeek, an AI system ostensibly developed at a fraction of the cost of heavyweight Western contenders.
Even though skeptics have challenged some details of the DeepSeek success story, and international consumers have discovered it to be a nightmare of surveillance and censorship, DeepSeek remains the most exciting thing to happen to Chinese industry in years.
“We will support the extensive application of large-scale AI models and vigorously develop new-generation intelligent terminals and smart manufacturing equipment, including intelligent connected new-energy vehicles, AI-enabled phones and computers, and intelligent robots,” Li declared at the NPC conference.
As with Li’s promise to spend trillions of yuan to stimulate the economy, details of his AI plan were thin, and skeptical observers doubted China’s AI sector could truly thrive when the United States restricts so many exports of high-end chips.
The one market where China has a serious claim to global leadership is AI-enhanced surveillance, where the Communist government’s lack of ethical boundaries is leading it to pioneer monitoring technology that Western nations find creepy or offensive. Despots around the world who want to buy cameras that can track the movements of despised ethnic groups between their cities will find China eager to sell them.
The Economist on Tuesday said the effect of the AI boom on Chinese markets has been truly “staggering” since DeepSeek’s debut at the beginning of the year, with the Hang Seng index posting over 40 percent gains.
The prospect of getting dirt-cheap AI from China has prompted numerous enterprises to advance their timetables for incorporating artificial intelligence by ten years or more. Support industries like cloud data storage are ramping up to accommodate the demand for AI. As The Economist noted, even “food and beverage peddlers” in China are talking about buying DeepSeek technology. Investors have become so focused on DeepSeek that every prospectus must include a “DeepSeek” angle to receive attention.
Unfortunately for Chinese business and government, this focus on AI is beginning to resemble a swarm of lemmings headed for a cliff. As one Chinese investor put it, “The economy is not good, and there’s not many opportunities elsewhere, so we have to go into AI as fast as possible.”
The result is an AI bubble that some fear could pop in a matter of months, even though every industry that seems even peripherally related to AI is currently seeing explosive growth. To put it bluntly, few of China’s tech visionaries – or political officers – have come up with a concrete plan to monetize cheap AI, and if China really does have a lead in bang-for-the-buck right now, it will likely evaporate as supplies of high-end chips from the United States and Taiwan dry up.
The Chinese Communist Party might be tempted to solve that problem by invading Taiwan. A good deal of emphasis at the NPC conference was placed upon “reconciliation” with Taiwan, along with triumphalist narratives about how Beijing has thoroughly conquered the Tibetans, Uyghurs, and other troublesome minorities.
NPC delegates were told China has defeated Tibetan “separatism” by thoroughly “Sinicizing” – that is, politically corrupting – Tibetan Buddhism. The culture and Islamic religion of the Uyghurs has been likewise subjugated. Chinese Communist Party dogma has mutated into a pseudo-religion known as the “Three Consciousnesses” that subsumes all other faiths and cultural identities.
Some of this talk might have been the Chinese regime trying to convince itself that it has no more serious domestic opposition, so its empire will not fly apart under the stress of a trade war and continued economic decline. China will ramp up military spending again this year, its fourth consecutive year of growth over seven percent, so it does not sound like Chinese Communist leadership seriously expects the Taiwanese to “reunify” voluntarily.
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