The latest data shows signs of comprehensive economic decline in multiple areas of the Chinese economy. Against this backdrop, the Chinese Communist Party (CCP) has issued a document on “activating county-level consumption,” attempting to find ways to promote economic growth outside of urban areas amid the spreading real estate crisis. However, as the cornerstone of the CCP’s power structure, county-level economies have deteriorated and collapsed.
According to data released by the National Bureau of Statistics of China on August 17, the year-on-year growth in the value added of the industrial sector nationwide in July was 4.5%, slowing down from the 5.3% growth in June. Total retail sales of consumer goods increased by 0.6% year-on-year, lower than the 1% growth in June. Additionally, national fixed-asset investment shrank by 6.7% in the first seven months of this year, falling short of expectations, reflecting continued weak investment. Real estate development investment in the first seven months declined by 19.2% year-on-year, indicating that the crisis in the real estate sector remains unresolved.
Prime Minister Li Keqiang stated in a State Council meeting on August 17 that China’s economy still faces the issue of inadequate domestic demand, emphasizing the need for policies to expand domestic demand and more.
On August 18, the CCP’s Ministry of Commerce and 9 other departments held a press conference on the “Opinions on Further Stimulating the Vitality of Market at the County Level to Activate County-Level Consumption,” proposing key support measures to activate county-level consumption.
The document outlines support measures for activating county-level consumption, including upgrading county-level consumption, renewing existing commercial facilities and layout, driving innovation in county-level commercial formats and brand building, redirecting county-level goods and service supply, promoting the integrated development of agriculture, commerce, culture, and tourism, enhancing urban-rural circulation network efficiency, and strengthening consumer protection capabilities, such as supporting the establishment of branches by headquarters or platform enterprises in qualifying counties.
Upon closer examination, the 18 specific measures proposed in the document lack novelty and only incorporate terms like “accelerate” and “strengthen” onto existing commercial forms and consumption patterns.
County-level economy refers to a regional economy centered around county towns, linked to townships, and located in rural hinterlands.
Official data indicates that counties constitute the most resource-rich areas in China, covering 90% of the national land area, currently hosting 52% of the permanent population and accounting for 40% of the national economic total.
From the high-profile meetings of the CCP, it is evident that economic pressure in various fields has been increasing in recent years:
On July 30, 2018, the CCP Political Bureau meeting first proposed the “Six Stabilities”: stable employment, stable finance, stable foreign trade, stable foreign investment, stable investment, and stable expectations.
On April 17, 2020, the CCP Political Bureau meeting further introduced the “Six Guarantees”: guaranteeing residents’ employment, basic livelihoods, main market entities, food and energy security, stable industrial and supply chains, and grassroots operation.
In 2022, due to factors such as the CCP’s implementation of the “zero-COVID” policy, economic pressures suddenly increased, leading to the CCP losing comprehensive control over the economy. The CCP Central Economic Work Conference transformed “Six Stabilities” and “Six Guarantees” into key focal points of “Three Stabilities” and “Three Guarantees”: “Ensure stable growth, stable employment, and stable prices, effectively prevent and defuse major risks”; “Increase the transfer payment intensity from central to local governments, promote financial decentralization, and carry out grassroots ‘Three Guarantees’ work.”
According to the revised “Measures for the Management of Award Grant Funds under the Central Finance County-level Basic Financial Security Mechanism” issued by the CCP Ministry of Finance at the end of 2023, the larger the necessary expenditures for financially troubled county-level finances, such as the ‘Three Guarantees,’ the greater the size of the central finance funds.
According to public data released by the CCP Ministry of Finance, the budget for the award grant funds under the county-level basic financial security mechanism has been steadily increasing, reaching 446.2 billion yuan in 2024, rising to 479.5 billion yuan in 2025, and further increasing to 489.5 billion yuan in 2026.
Data shows that in the first half of 2026, none of the 31 provincial-level administrative regions in China achieved a self-sufficiency rate of 100%, with the total local financial self-sufficiency rate for all provincial-level administrative regions standing at 56.3%. Local own-source financial revenue cannot cover the enormous financial expenditures, especially for economically hollowed county-level areas, making their financial strength even weaker.
In reality, the county-level financial and economic crisis has long been brewing.
An audit report released by the CCP National Audit Office at the end of 2013 revealed that in China, the debt ratio of 3 provincial-level organizations, 99 city-level governments, 195 county-level governments, and 3,465 township governments exceeded 100%. Subsequently, as debt levels increased at all levels of government, the CCP National Audit Office has not issued subsequent debt reports categorized by region and administrative level, thereby obscuring the description of implicit local government debt.
The mismatch between regional scale, population size, and economic scale also illustrates the challenges faced in the development of county-level economies in China. The lack of attractiveness in county-level economies leads to a mass influx of labor towards large cities, creating high unemployment rates and rapidly escalating living costs in these urban centers, resulting in a dilemma for many people.
Among the five levels of administrative regions, such as municipalities directly under the central government, provincial capitals, prefecture-level cities, county towns, and townships, migrant workers in county towns have the highest willingness to purchase houses. However, due to the existing challenges in county-level economic development, the employment opportunities and quality of public products that county towns can provide are insufficient to meet the needs of young people, making the real estate market in county towns more of a “white elephant.”
Earlier industry insiders revealed that in a county town with a population of 50-60 thousand, there are five to six large residential projects under construction, with the largest project covering an area of over 1 million square meters, enough to accommodate all existing residents of the county town. Dozens of high-rise buildings stand in desolate land, resembling chopsticks inserted into a field.
If the CCP regime is viewed as a top-down system, county-level areas essentially serve as a crucial window to observe the functioning status at the grassroots level, similar to the base of a pyramid. If this base is not “stabilized,” it is foreseeable that the fate of this system is to collapse. While central finance can alleviate grassroots financial pressure through transfer payments, these policies cannot directly create new sources of revenue and economic growth, indicating that the CCP’s attempt at “activating county-level consumption” is nothing but wishful thinking.