The Trivium China Podcast Ep 48 - How Xi Jinping thinks about the rule of law + explaining why capital investment is tanking
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Nov 21, 2025 In a deep dive, Joe Peissel, Head of China macroeconomic research at Trivium, sheds light on China's alarming drop in fixed asset investment and what it means for the economy heading into 2026. He reveals that a 23% plunge in real estate investment is significantly dragging down overall figures. The discussion touches on local governments diverting infrastructure funds, reshaping the landscape of economic growth. Joe also navigates the complexities of China's rule by law and its implications for governance and investment strategies.
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Xi's Obsession With Rules
- Xi Jinping prioritizes building and enforcing rules to impose control rather than abandoning rule-bound governance.
- The Party practices rule-by-law: laws are tools of governance while the Party remains effectively above them.
China's Foreign-Legal Toolkit Matures
- China is building a 'foreign-related legal toolkit' to counter and mirror US sanctions and export controls.
- Beijing is shifting from creating these tools to improving capacity and willingness to use them against foreign actors.
Japan-Taiwan Comment Sparks Major Row
- Japanese PM Kishida's statement that an attack on Taiwan threatens Japan raised legal and diplomatic stakes sharply.
- China responded with coordinated punitive measures, suggesting Xi personally signaled a hardline stance.