Fang Lian Talks: The Onslaught of Taxes, the CCP Shows Signs of Impending Collapse! Mandatory Social Security | Pelagic Fishing | Offshore Tax Collection | Dynastic Cycle!

This article explores the severe fiscal crisis currently facing the Chinese Communist Party (CCP), analyzing phenomena such as the collapse of land finance, high debt, and frantic taxation through means like mandatory social security and long-distance fishing. It points out that this reflects the CCP's descent into a dead end similar to the dynastic cycle of Chinese history, contrasts it with solutions under Taiwan's democratic system, and argues that under a totalitarian system, it is impossible to escape this vicious cycle through reform.

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Recently, everyone should have felt the CCP's indiscriminate iron fist. It can be said that in today's China, regardless of your social class, there is a sickle exclusively for you. For grassroots working people, there is mandatory social security; for top-tier billionaires, the sickle of common prosperity began long ago; for average business owners, there is long-distance fishing and various retroactive taxes; and as for those who have already run, there are various offshore taxes as well. The CCP now undoubtedly exhibits the signs of a nationwide blood-sucking frenzy. So, will this nationwide blood-sucking become the new normal? Why do I say this phenomenon indicates that the CCP is showing signs of impending doom? Hello everyone, I am Toronto Fang Lian, and today let's talk about the CCP's taxes upon taxes.

As for why the CCP is now starting to frantically collect various taxes, the answer seems very obvious: it's out of money. In fact, saying that a lack of money is the reason the CCP has started collecting all these taxes is both true and not true. First, to say it is true is because the CCP is indeed very short of money right now. The direct cause of this money shortage is that housing prices in China have peaked. After housing prices peaked in 2021, China's fiscal revenue was severely impacted. The impact can be divided into two parts: one is the direct decline in land sales revenue, meaning the land finance revenue has begun to collapse; the other is that local government debt derived from land has begun to experience problems. The year 2021 was the year housing prices peaked, and also the peak year for land sales revenue. In 2021, China's land sales revenue reached 8.71 trillion yuan, hitting a historical high, after which it began to go downhill year by year, dropping to 4.15 trillion yuan by 2025, being cut in half. Of course, what is even more terrifying is 2026. From January to August 2026, the total land conveyance fee was only 1.38 trillion yuan. According to this trend, the land finance revenue in 2026 will even struggle to exceed 2 trillion yuan, which is equivalent to being cut in half yet again compared to 2025.

Of course, regarding land finance, one point to emphasize here is that while revenue has dropped from 8.7 trillion in 2021 to likely less than 2 trillion this year—a decrease of 6 trillion in land sales revenue—this does not mean the government's income has decreased by 6 trillion. This is because land sales are not without costs; often, land sales are accompanied by demolition, and the costs of demolition, such as compensation payments, are also covered by the government, which becomes the cost of selling the land. So, after deducting these land sale costs, how much money has the government actually earned from land sales over these years? There is no direct official data on this, but according to estimates by the International Monetary Fund (IMF), the Chinese Communist Party (CCP) sold a total of 8.7 trillion in land in 2021, with government expenditures of approximately 6.11 trillion, meaning a net profit of about 2.6 trillion. By 2025, the government sold 4.15 trillion in land, with expenditures of approximately 3.15 trillion, resulting in a net profit of about 1 trillion. Therefore, comparing 2025 to 2021, the government's net income from land sales has decreased by 1.6 trillion. Of course, this calculation does not mean that the government's revenue decline over these two years is limited, because direct land sale revenue is only a small part of how the government plays the land game. For a long time, there has been another source of income from land, which is mortgage loans, also known as local government financing vehicle (LGFV) debt.

On the Chinese internet, there has always been a stale meme mocking the short terms of leaders in democratic countries, claiming it leads to a situation where every new ruler brings their own staff, causing policies to change too frequently and lacking continuity. However, in reality, according to statistics, the average tenure of a municipal-level top official in China is only 1.8 years. For a top official who is only in office for 1.8 years, auctioning land through bidding and planning to earn land transfer fees is too slow. Especially considering that for a local government in China to sell a piece of land, it must go through layers of reporting and requires approval from the provincial and central governments. Often, the approval process is not even finished and the land has not been sold before the official is transferred. Therefore, more local officials have thought of a faster way to get money, which is issuing debt. The standard mode of debt issuance is local government debt, which is borrowing money with the credit of the local government as a guarantee. However, local government debt also faces similar problems: the scale of the debt and the use of the debt are both restricted by the central government. Therefore, clever local officials invented the method of using land as collateral, using expected land sale proceeds as collateral to obtain loans. Of course, after some packaging, this became the LGFV. As for how much LGFV debt local governments in China have borrowed through these companies over the years, it is not as easy to find public data as it is for land sale revenue, because this is a gray debt, and local governments have elements of concealment from their superiors. Not only do I not know, but Xi Jinping does not know either. The CCP has repeatedly ordered the investigation of the scale of all LGFV debt, but progress has been limited. Regarding the scale of LGFV debt, major investment banks currently estimate that the lowest figure is 60 trillion, and the highest is 90 trillion. We will continue to use the more moderate IMF data here for discussion.

According to IMF calculations, 2021 was the peak of growth for LGFV (Local Government Financing Vehicle) bonds in China, when the government added 6.5 trillion yuan in new debt solely through LGFV bonds. Note that this is not the cumulative debt, but the scale of newly added debt. At the same time, local governments added another 4.8 trillion yuan in official local government debt that year, meaning the cumulative new debt for that year reached 11.3 trillion yuan. Although this 11.3 trillion yuan is newly added debt, you can actually treat it as direct government revenue. After all, for a mayor with a tenure of 1.8 years, what do debts decades from now have to do with them? This kind of debt revenue is much larger and faster than making money directly by selling land, and it was also the major source of revenue derived from land. Of course, as everyone knows what happened later, with land prices starting to fall in 2021 and the prices of collateral dropping, the government's borrowing capacity began to decline. The peak of this decline was in 2024, when the scale of newly added LGFV bonds was only 1.8 trillion yuan. Of course, it should be noted that the decline in debt scale in 2024 was not because local governments could not borrow money—even gamblers can borrow usurious loans, let alone local governments. After the collapse of housing prices, the real problem facing local governments was that government collateral began to become worthless, and the cost of borrowing increased. LGFV bonds that could previously be borrowed at an annualized interest rate of 3% or 4% now required 8% or even over 10%. Seeing this, the central government decided it would not do; if this continued, local governments would do nothing but pay off debts. So in 2023, the central government intervened. In September 2023, the central government issued Document No. 35, which explicitly stipulated that newly borrowed LGFV bonds could only be used to repay interest and could not be used for messy other matters. Of course, what was the consequence of this intervention? Everyone should be able to tell from the news. Everyone likely remembers that in 2024, China experienced a massive wave of wage arrears for civil servants, with public sector salaries in many places running into trouble. Likewise, 2024 was the inaugural year of "pelagic fishing" (arbitrary cross-jurisdictional law enforcement and asset seizure), which became a new buzzword in 2024. As for the root cause of all this, it actually lies in the shrinkage of this new debt scale. Of course, we can also see from the data that the scale of newly added LGFV bonds later rose again as the central government reopened the floodgates; by 2025, the scale of newly added LGFV bonds reached 5.1 trillion yuan once more.

Does that mean everything is actually getting better? Not really. Although we say that LGFV (Local Government Financing Vehicle) debt is a form of revenue and a mayor with a 1.8-year term can just walk away, there is a saying that "the predecessor plants the trees, and the successor suffers the consequences." Debt has one problem: it carries interest. Especially after the decline in real estate prices in 2021, that wave of high-interest borrowing has made the interest burden for many local governments extremely high. Here, we can actually compare the land and debt-related revenue between 2021 and 2025. In 2021, new local government debt was 4.8 trillion, new LGFV debt was 6.5 trillion, and land sale revenue was 8.7 trillion, bringing the total revenue to 20.01 trillion. On the expenditure side, land sale expenditure was 6.11 trillion, LGFV debt interest was 2.7 trillion, and local government debt interest was 0.9 trillion. Ultimately, after cumulative calculation, the new disposable funds for local governments amounted to 10.3 trillion. By 2025, new local government debt was 5.3 trillion, new LGFV debt was 5.1 trillion, and land sale revenue was 4.15 trillion, bringing the cumulative total revenue to 14.55 trillion. However, on the other hand, expenditures have increased significantly, especially the interest portion: land sale expenditure was 3.15 trillion, LGFV debt interest paid was 3 trillion, and local government debt interest paid was 1.5 trillion. In the end, the cumulative new disposable amount dropped to 6.9 trillion, which is about 3.4 trillion less than in 2021. This 3.4 trillion is the current fiscal deficit of the Chinese government. Of course, the main deficit lies with local governments. But even with this 3.4 trillion hole, to say that this 3.4 trillion hole is the root cause of the Chinese government starting to impose "ten thousand taxes" is not quite accurate, because for the CCP, there are ways to fill this gap. So, what is the way to fill this gap? It is for the central government to borrow money to subsidize local governments. Compared to the collapse of local credit after the collapse of land prices, where they cannot borrow money, the CCP's current credit is still relatively good, so the central government still maintains a relatively high borrowing capacity and can borrow money at lower interest rates, just like the one-year treasury bonds issued in August, which had an interest rate of only 1.07%. In 2021, China's new statutory debt was 7.2 trillion, and by 2025, it rose to 11.9 trillion, with a new debt scale of 4.7 trillion. This 4.7 trillion can fully be used to cover the deficit caused by the decline in land finance. This is also why I say that China is now entering an era of "ten thousand taxes"—it is because of a lack of money, but also not entirely because of a lack of money. The CCP is indeed very short of money now, but relying on issuing debt can relatively easily fill the hole. So, if that is the case, why does this chaotic situation of "ten thousand taxes" still occur? This brings us to the fundamental problem: China's fiscal system.

China's fiscal system in history has actually gone through three major stages: 1949 to 1994, 1994 to 2021, and 2021 to the present. In the stage from 1949 to 1994, China was basically in a state of chaos. Before Mao Zedong passed away, China was practicing communism, and at that time, there was naturally no concept of modern finance; it followed the old path of dynasties, the logic that "under the whole heaven, there is no land that is not the king's." By 1994, under the leadership of Zhu Rongji, the tax-sharing reform began to be implemented, and tax revenue was divided into local taxes and central taxes to be shared. The original intention of this system was to build a modern tax system similar to the West, a fiscal revenue system dominated by value-added tax, personal income tax, and corporate income tax, but it failed. Paying taxes is something that belongs to a democratic society; after all, "no taxation without representation," which is not something the CCP can touch. But seeing that taxes could not be collected, this tax-sharing reform eventually distorted into a land finance model. Land finance and local government debt actually became new taxes and became the main source of fiscal revenue for the Chinese government, especially local governments. Of course, although the goal failed, the world is sometimes just a huge amateur stage. The land finance model, which was stumbled upon by accident, was seen by the central government as a viable path, and they did not interfere much afterwards. This system was maintained until the collapse of land prices in 2021.

So after 2021, what kind of model is China following? Although it hasn't been explicitly stated, at its core, it has started to adopt a variant of the American model—or rather, a more extreme version of it. What is it like? We often hear statements nowadays that U.S. debt is harvesting the world, that U.S. debt is skyrocketing, and that the U.S. government is about to collapse. It is indeed true that the scale of U.S. debt is skyrocketing, and the U.S. fiscal system actually generates revenue through a dual-track system. One track is conventional taxation—such as U.S. sales tax and income tax—while the other track relies on the continuous issuance of U.S. debt. For the U.S. government, newly added U.S. debt can also be seen as a form of revenue, and China is actually doing something similar now, but in an even more distorted way. The reason it is called distorted is because China's scale is larger and its growth rate is faster. According to IMF statistics, in 2025, China's local government debt plus LGFV (local government financing vehicle) debt plus central government debt will have a newly added debt scale of 19.7 trillion yuan, which is equivalent to about 2.74 trillion U.S. dollars. This means that China's newly added debt scale in a single year is now nearly 4 times the value of its GDP growth. Meanwhile, the newly added U.S. debt in 2025 will be 2.18 trillion dollars. Although at first glance, China's newly added annual debt scale is only more than 600 billion dollars higher than that of the U.S.—which doesn't seem like much—considering that the U.S. total GDP is twice that of China, China's debt growth rate is actually twice that of the U.S. Moreover, looking at the total scale of debt, the situation is similar. The debt-to-GDP ratio from China's official channels is 73.2%, which looks relatively healthy. However, if local government debt and LGFV debt are all included, according to IMF estimations, the debt-to-GDP ratio has already reached 126.6%, which is basically on par with the U.S.'s 128%. With a total debt scale similar to that of the U.S. and a growth rate twice as fast, can this possibly work? Under the premise of the U.S. dollar hegemony, the current scale of U.S. debt growth has already caused Musk to loudly proclaim that the U.S. is finished and to call for budget limits; let alone China.

Of course, while Xi Jinping is evil, he is not stupid. He is well aware that the current model of relying on borrowing to plug fiscal holes can solve immediate problems and temporarily alleviate the funding shortfalls caused by falling land prices—it can resolve an urgent crisis for the moment, but it can only resolve it for the moment. Following this trend, it may not take many years before China's economy runs into trouble. Of course, this trouble is not the kind where people imagine the Chinese Communist Party's credit will go bankrupt, that it won't be able to borrow money anymore, or that the RMB will turn into waste paper; rather, it lies in the fact that the potential for economic development will be locked down. A typical example of this locked-down economic development potential is present-day Japan. Although through the Japanese government's efforts over so many years, the Japanese government's debt-to-GDP ratio has decreased somewhat, Japan remains the country with the highest debt-to-GDP ratio among all developed nations, with its debt scale reaching a staggering 207% of GDP. So under these circumstances, how does the Japanese government manage to avoid bankruptcy? One factor is relying on the credit of the Japanese government, and the other is mainly relying on low interest rates. Japan's long-term government borrowing rates have been maintained below 1%, which allows the Japanese government—despite its massive debt scale—to pay very low interest each year. Recently, Sanae Takaichi has repeatedly opposed raising interest rates, clearly stating that Japan will no longer experience inflation, and even clashing with U.S. Treasury Secretary Bessent. In reality, all of this is because Japan's government debt is simply too high. Do not underestimate the constraint that debt places on interest rates. If Japan's current total debt scale is converted into RMB, it is roughly 60 trillion. If the annual interest rate is 1%, then the interest is 600 billion; but if the interest rate is 2%, then it is 1.2 trillion. Japan's entire annual GDP growth value is only 1.3 trillion, meaning an interest rate of 2% could completely swallow up Japan's entire year of GDP growth. If this is simplified and viewed from the perspective of a single household, it is equivalent to the annual wage increase being exactly equal to the new interest that must be paid that year—how could anyone endure that? Of course, this is also why Trump has been battling back and forth with the Federal Reserve. The U.S. has also fallen into a similar dilemma to a certain extent, except it is not as exaggerated as Japan's and its tolerance is higher; the U.S. can still stomach a 4% interest rate, but any higher interest rate is something the U.S. government would be unable to face.

On the other hand, high growth rates and high interest rates are sometimes linked. If interest rates are very low but growth is very high, what happens? People will borrow money without limit, and companies will borrow money without limit for reproduction. If my annual growth rate is so high and making money is so easy, and borrowing money is so cheap right now, then I will definitely borrow heavily to expand factories or consume, which will inevitably lead to an economic bubble. The U.S. economy is very hot right now, so interest rates must be high, otherwise the economy would explode. For a country that wants to boost its economic growth rate, interest rates must also rise. Excessive debt makes Japan unable to accept high interest rates, which is actually an important reason for Japan's long-term economic stagnation. Similarly, China is now facing the exact same problem. We often see people asking when China will be able to get out of deflation. The answer to this question is actually better phrased as: does the current fiscal structure allow China to get out of deflation? The answer is actually no. Because getting out of deflation and returning to a period of economic prosperity also means that interest rates must rise. Can the Chinese government handle this interest rate right now? It cannot. If it gets out of deflation and inflation returns to normal levels, it would be equivalent to returning to 2018, when the one-year treasury bond rate was 3.5%, which is 2.5 percentage points higher than it is now. According to IMF estimates, China's total debt scale is currently 177.5 trillion, and a 2.5% increase in interest rates represents an additional 4.4 trillion in interest. This increase in interest is already close to China's current GDP growth, after all, China's GDP growth value in 2025 is only 5.3 trillion. Of course, not to mention the interest rate increase, in fact, China cannot handle it now. Because of the early problem of a large amount of local government financing vehicle (LGFV) debt, although the interest rate of newly issued debt is only a little over 1%, the comprehensive debt interest has still reached about 3.2%, far higher than Japan's 1% interest. This has led to the Chinese government spending as much as 5.6 trillion in interest alone in 2025, which is already more than China's GDP increase in 2025. If a family's annual salary increase is not as high as the interest on the loan they have to pay, doesn't that mean the salary increase was for nothing? Can you stand this? Not to mention that interest rates will rise in the future. Therefore, if China's current economy wants to recover, re-enter high growth, and get out of deflation, it is actually urgent to reduce the total scale of debt. Even if the total scale of debt does not increase, at least the growth rate of debt must be controlled. This is the reason why the CCP still has to levy all kinds of taxes even if it can still borrow money to alleviate the fiscal hole. If the debt continues to expand like this, China's economy will definitely have no future. From a fiscal logic perspective, there are two ways to reduce the scale of debt: the best policy is to cut spending, that is, spend less money; the middle policy is to increase revenue, that is, collect more taxes. But unfortunately, the CCP has taken a third path, which is the worst policy: increasing revenue while simultaneously increasing spending.

When examining the rise and fall of a dynasty in Chinese history, we tend to judge them by the appearance of wise rulers or foolish ones. Founding rulers are always wise, while the ultimate collapse of a dynasty is blamed on the emergence of foolish ones. However, the scholar Huang Yanpei once proposed the concept of the dynastic cycle. He believed that Chinese dynasties generally have a lifespan of no more than 300 years, which is not an accidental phenomenon caused by a few foolish emperors, but rather an inevitability. Later, scholars further divided the dynastic cycle into five stages based on this concept. The first stage is the founding stage, which is a period of peace following major chaos. Due to the turmoil, the population and the number of officials are reduced, resulting in low government expenditures and an overall low tax burden. The second stage is the golden age. During this stage, the population begins to recover, the number of bureaucrats increases, and government expenditures start to rise. However, thanks to the large amount of abandoned land from the wartime period, there is plenty of wasteland available for reclamation, and overall social productivity is increasing. Therefore, tax revenues increase even without raising tax rates, and the growing bureaucracy does not drag down the financial system. The third stage is different; it is the stage of decline. In this stage, land reclamation reaches its limit, social productivity can no longer be enhanced, and tax revenues cannot be increased. Meanwhile, however, the bureaucratic class continues to expand. This sharp conflict begins to cause financial problems for the dynasty. The fourth stage is the twilight stage. For ancient imperial dynasties, facing such a financial crisis without the possibility of a technological explosion to boost productivity, the only way to meet the demands of an expanding official class and court expenditures, and to maintain fiscal balance, was to constantly raise individual tax rates when productivity reached its limit. Ultimately, this massive tax burden made the lives of the people unbearable, pushing the dynasty into the fifth stage: collapse and reset. The tremendous fiscal burden and heavy exploitation became too much for the people to bear, leading either to frequent peasant uprisings or to a lack of military funds, leaving the dynasty unable to resist foreign invasions. Regardless, the end result was always the same: large-scale warfare and the overthrow of the bureaucratic taxation system, restarting the cycle back to the founding stage.

So why do dynasties eventually fall into this state of collapse? Did any visionary monarchs see through this? Actually, some did. For example, Zhang Juzheng in the late Ming Dynasty implemented the 'Single Whip Law' to increase revenue and reduce expenditure. However, these reforms ultimately came to nothing, and in fact, all reforms eventually headed down the same path: increasing revenue while also increasing expenditure. To put it bluntly, the tax revenue from the 'increasing revenue' part increased, but the 'reducing expenditure' part always failed. Bureaucratic costs were never enough, and the treasury was always in short supply. The reason for this is that the emperor, after all, rules the world in partnership with the scholar-officials. The emperor needs to rely on the bureaucratic group to help him suppress the people. After a fiscal crisis erupts, the emperor can count on the bureaucratic group to help him collect taxes, but he cannot count on reducing expenses by suppressing the bureaucratic group, because suppressing the bureaucratic group would cause him to lose control over the empire. Especially after entering the third stage of decline, raising taxes leads to boiling public resentment. Once public resentment boils over, more bureaucrats are needed to help suppress it, and as the number of bureaucrats increases, the dynasty's expenditures also begin to rise. Therefore, in the late stages of a dynasty, a vicious cycle emerges where the more the treasury is depleted, the more taxes are collected, the more public resentment boils, the higher the official expenditures become, and the more severe the exploitation becomes. And isn't China like this today? Let's take the pension insurance within social security as an example. Because of China's rapidly aging population, the amount of contributions has always been insufficient to cover expenditures. Starting in 2021, the CCP's subsidy for pensions reached 1.6 trillion yuan. Now, the central treasury is tight and debt-ridden. Logically, the optimal solution would be to optimize distribution, increase the social security income of ordinary people, thereby increasing everyone's willingness to pay, and thus 'increasing revenue.' The reason why people are currently unwilling to pay social security is actually very simple: for most ordinary Chinese people, social security means paying Nordic-level taxes while enjoying African-level benefits. China's pensions are actually divided into three groups: enterprise employees (ordinary workers), urban and rural residents (farmers), and government agencies and public institutions (public servants). There is a vast difference in pension income among the three. According to the 2021 Ministry of Human Resources and Social Security bulletin, the average monthly pensions for the three were 191 yuan, 3,100 yuan, and 5,890 yuan, respectively. The high income of retirees from government agencies and public institutions is entirely due to subsidies. If subsidies were deducted, the pension amount for government agencies and public institutions would be only 3,633 yuan per month, only 533 yuan higher than that of enterprise employees. The CCP should at least bridge this gap to increase everyone's willingness to pay, reduce government subsidies, and lower debt; this would be the best strategy. But the CCP clearly did not do that. The middle strategy should have been to increase revenue and reduce expenditure, requiring everyone to pay more social security while reducing government subsidies. The CCP did this, but only halfway. After five years of continuous efforts to force people to pay social security, the pension contribution amount has indeed risen significantly, from 4.57 trillion yuan in 2021 to 6.22 trillion yuan today, an increase of 1.65 trillion yuan. The vast majority of this increase comes from the increased contributions of ordinary people. In 2025 compared to 2021, the contribution amount from enterprise employees increased by 1.31 trillion yuan, and the contribution amount from urban and rural residents increased by 190 billion yuan, while the contribution amount from government agencies and public institutions increased by only 160 billion yuan, the least of the three. With 1.65 trillion yuan more collected than in 2021, theoretically, the CCP should have the money to alleviate the debt problem and reduce subsidies for social security, but it hasn't. In 2021, the government's subsidy for pensions was 1.6 trillion yuan, and by 2025, the subsidy had risen to 2.15 trillion yuan. More money was collected, but the subsidies did not decrease. So where did the extra money go? Part of the extra money did indeed become pension payments due to China's aging problem, but another part became pensions for public servants. Four years have passed; enterprise employees have paid a large amount of new pension contributions, but the average pension for enterprise employees has only risen from 3,100 yuan per month to 3,404 yuan, an increase of 304 yuan. Meanwhile, government agencies and public institutions rose from 5,890 yuan to 6,500 yuan, an increase of 600 yuan. This led to the situation in 2025 where, due to the surge in contributions from enterprise employees, excluding subsidies, the funding gap for enterprise employees is only 110 billion yuan, which can basically maintain self-operation. However, the deficit for government agencies and public institutions rose from 595.6 billion yuan in 2021 to 724.1 billion yuan. Originally, the purpose of increasing taxes was to alleviate fiscal pressure, but while taxes were increased, they did not end up in the hands of the people, nor did they even end up in Xi Jinping's pocket; they ultimately became the cost of maintaining the system. 'Increasing revenue and reducing expenditure' turned into 'increasing revenue and increasing expenditure.'

Of course, Xi Jinping once wanted to emulate Zhang Juzheng to solve this problem, but like Zhang Juzheng, he ultimately failed to achieve his goal. The wave of local debt tightening in late 2023 and early 2024 was actually Xi Jinping's attempt, but it quickly met with a collective counterattack from the bureaucratic group. This counterattack took the form of long-distance fishing law enforcement, civil servant wage arrears, and the silver-haired revolution. If you don't give me money, local officials will show you how society operates without money and how we make revolution. Xi Jinping can punish corrupt officials, but he is powerless to fight against the entire bureaucratic apparatus, forcing him to abandon the suppression of local government revenue generation. This is also why I say China has fallen into the late stage of a dynastic cycle. The financial problems of the late dynastic period and that end-of-days feeling are now unmistakably clear in the CCP. It has just changed its form: in the past, land reclamation reached its limit and productivity could not be improved; now it has turned into the middle-income trap. Various miscellaneous taxes of the past have now turned into social security and corporate income tax. The scholar-bureaucrat class of the past has now become government and public institution personnel. Is Xi Jinping a foolish ruler, you might ask? Certainly, but the end-of-days era producing foolish rulers is, to some extent, also constrained by the system. So what is the antidote to this dynastic cyclical rate? In fact, the answer is democracy. Of course, this is not just my personal view, nor is it the leader of the Seven-Steps Democracy Cult starting to flex their muscles again or blindly touting democracy once more. Democracy is the answer. Even the CCP's own leader, Mao Zedong, said so. People might not expect under what circumstances Huang Yanpei, who proposed the theory of the dynastic cycle, raised this question. He proposed it in 1945 during a conversation with Mao Zedong in the Yan'an cave dwelling. At that time, Mao Zedong highly agreed with this dynastic cycle theory and also provided a way to break it. The answer he gave in 1945 was the two words: democracy. Of course, apart from such empty words, we can also look at this issue from an actual case to see why democracy is the antidote to the dynastic cycle. Taking government spending reduction as an area, Taiwan is a model among models. Taiwan's government fiscal discipline is exceptionally good. In 2025, government debt as a percentage of GDP is only 22%, which is basically having no debt at all. But we must know that culturally, Taiwan shares the same roots as China, and Taiwan initially practiced the autocratic rule of Chiang Kai-shek and Chiang Ching-kuo. At that time, just like China, to maintain their rule, they gave great policy inclinations to Taiwan's civil servant group, whose pensions were frighteningly high compared to ordinary people. Of course, this scholar-bureaucrat class and civil servant group in Taiwan is called the military-civil-education group, namely soldiers, civil servants, and teachers. However, starting from the Lee Teng-hui era, Taiwan gradually began to lower the special treatment of the military-civil-education group. Chen Shui-bian continued this effort, and finally, during Tsai Ing-wen's first term, a pension reform for the military-civil-education group was carried out, eventually evolving into its complete form. In fact, implementing a policy is not difficult, but the key is what gave Tsai Ing-wen, Chen Shui-bian, and Lee Teng-hui the confidence. The source of this confidence was that they were democratically elected leaders. They did not share the governance of the realm with the scholar-bureaucrat class, but with the people. Tsai Ing-wen was not afraid of offending the scholar-bureaucrat class. She promoted the military-civil-education reform during her first term. This reform made her completely lose the support of the military-civil-education group and even caused the Democratic Progressive Party to offend them to this day. Now in Taiwan, they are entirely the Kuomintang's ironclad voting base, and the DPP cannot win their votes at all. But this did not prevent Tsai Ing-wen from winning re-election for a second term, nor did it prevent the DPP from winning subsequent elections. The resistance of the scholar-bureaucrat class cannot contend with the public opinion of the whole society. This is something determined by the system that Xi Jinping cannot do, and also something no Chinese leader can ever do.

Of course, Xi Jinping is not stupid. Seeing that the reform of the military, civil service, and education sectors in China is immovable, Xi Jinping simply adopted a 'broken-pot-broken-fall' (give up and let it rot) mode, carrying out the policy of 'opening sources and increasing revenue' to the end. His current line of thinking is to spend huge sums of money, using the power of the whole nation to engage in a 'Great Leap Forward' in technology, striving to skip the middle-income trap directly. In the context of the dynastic cycle, this attempt to skip the middle-income trap is equivalent to a final gamble: forcibly launching a war abroad in an attempt to expand territory. If they win, it means there is plenty of new fertile land waiting to be cultivated, which would boost productivity and solve the fiscal deficit. But if they lose, the surge in spending brought about by militarism will only cause the dynasty to collapse faster, accelerating the completion of the dynastic cycle. Looking at the current situation, under the various operations of Chairman Xi, it is equivalent to a failure in expanding territory. A lot of money has been spent, and there has been progress in technology, but it has not brought about a substantial increase in productivity. Therefore, calling the General Secretary the 'Chief Accelerator' is indeed reasonable. According to the dynastic cycle and General Secretary Xi's acceleration, what can be expected is that as the CCP dynasty begins to enter its end times, all the exploitation we are facing now is just the beginning. Mandatory social security and tax increases are, to this day, far from enough to cover the fiscal deficit, let alone satisfy Xi Jinping's ambition for a 'Great Leap Forward' in technology. There are more, larger, and more ingenious taxes waiting for the Chinese people. Every year in the future, we will suffer from various taxes. Of course, when such a late-dynastic period truly emerges, its rate of decline will be faster than we imagine, because it is a vicious cycle. Take social security, for example: from 2021 to 2025, the additional payment amount for pension insurance reached 1.65 trillion yuan. The CCP is still not satisfied with this, and is still calling for 'mandatory payment of all social security contributions.' But this 'mandatory payment' comes at a price. According to estimates, if the CCP wants to achieve comprehensive social security coverage in Chinese society and all Chinese enterprises comply with the requirements, enterprises would have to pay an additional 2 to 2.6 trillion yuan a year. This is already the total annual profit of all private enterprises above a designated size in China. Ultimately, this mandatory social security payment is very likely to lead to a large-scale bankruptcy period for China's private enterprises. This is equivalent to destroying the fields that could be cultivated in the past just to collect taxes. It can be said that the CCP's tax collection in the late dynastic period has become increasingly irrational, entering the fast lane of a spiral collapse. Everyone knows that excessive taxation is wrong, everyone knows that 'ocean fishing' (extralegal cross-regional law enforcement) is wrong, and even Xi Jinping knows it, but no one can stop the inertia of the system. If the collapse of a late dynasty is compared to a brilliant firework, then from a fiscal perspective, the fuse of this Chinese firework is about to burn to the edge of liftoff. On the road to the end of the dynasty, the Communist Party will eventually either fall due to popular protests or fall due to foreign invasion—that is, the so-called invasion of Taiwan, leading to defeat by the United States and other countries. But I hope that when this CCP dynasty ends, what awaits the Chinese people is a democratic China, not the start of a new dynasty. The Chinese people really do not need, do not want, and should not have to go through the dynastic cycle again. I hope the CCP will be the last dynasty for the Chinese people. Finally, thank you all for watching today's program.

I am Toronto Fang Lian.

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