China's Economy: Mediocre Performance 'Good Enough for Xi,' Says Leland Miller

China's Q4 2025 Economic Performance

• 📊 The Chinese economy in Q4 2025 was thoroughly mediocre, deviating from official data that showed earlier strength for geopolitical reasons and later weakness that wasn't observed.
• 💡 Official data projections often masked the true economic trends, with strength reported during trade war periods and weakness later in the year that the China Beige Book did not corroborate.
• 📉 Statistical normalization is occurring across Chinese data, particularly in fixed investment, leading to apparent sharp drops that are actually rectifications of previously inflated numbers.

Xi Jinping's Economic Priorities

• 🎯 Leland Miller states that China's economy is "not very good" but "good enough for Xi Jinping," implying a lack of urgency for major stimulus measures.
• ⚠️ Weakness in the data, especially in the fall, did not prompt larger stimulus because the economy wasn't perceived as critically weak by leadership, and some data was intentionally smoothed.
• 🌐 While there are stresses on the export side, it's not seen as a reason for an economic collapse, but rather a cooling trend as data adjusts.

2026 Economic Outlook and Stresses

• 📉 The outlook for 2026 is "more of the same, but more weakness," contrary to optimism driven by advancements in AI and technology.
• 🛍️ Consumption remains extraordinarily weak, with trade-in programs only providing temporary boosts, indicating a limited capacity for further pulling forward of demand.
• 🚧 Exports, a long-standing growth driver, face increasing political frictions, creating obstacles for China's limited growth drivers.

Data Interpretation and Trends

• 🔍 The China Beige Book filters out official data manipulations to reveal underlying trends, such as the rectification of fixed asset investment numbers that appeared to plummet in October 2025.
• 🧐 The perceived economic downturns are often a result of data adjusting to more realistic levels from previous years, rather than an actual economic collapse.
• 📈 The focus is on filtering out these adjustments to understand the true economic trends beneath the official projections.