SinoInsight 1
The “610 Office,” a security agency responsible for coordinating the persecution of the Falun Gong, was dissolved as part of Beijing’s recently implemented Party and state institutional reforms. The Central Political and Legal Affairs Commission and the Ministry of Public Security have now taken over the 610 Office’s functions.
OUR TAKE
This is a significant development in accounting for political risk in China.
1. Without the 610 Office, the persecution of Falun Gong will lose drive and focus. While the Chinese Communist Party (CCP) hasn’t abandoned its “stability maintenance” policies, the persecution is undoubtedly weakened by the recent reform.
2. Two likely reasons for the reform include the CCP factional struggle (Xi Jinping reversing policies of the Jiang Zemin era in defiance of the Jiang faction) and China’s economic woes. Indeed, the Xi administration is tackling massive local debt and a practical way to cut cost is dissolving the 610 Office, whose operations cost the regime hundreds of millions of dollars a year according to a Freedom House study.
3. The Xi administration has subtly shifted the CCP’s stance on Falun Gong over the past five years. Should this trajectory continue, China would see tremendous changes:
- There were 100 million Falun Gong adherents when Jiang launched the persecution campaign in 1999. For the past 18 plus years, these adherents, their family and friends, and sometimes co-workers, were targeted for suppression. In other words, the persecution affected a huge segment of Chinese society, and many would demand justice after years of suffering. Already, the CCP struggles to cope with tens of thousands of petitioners traveling to Beijing every day seeking redress of more minor abuses.
- After the March 21 reforms were announced, we learned from sources in China that Falun Gong adherents in some districts were shocked to find 610 Office agents visiting them at home not to make arrests, but to offer sincere apologies. Some agents even asked the adherents to sign them up for a grassroots initiative to “quit the Party” (tuidang).
- The Jiang faction, which maintained the persecution, would be finished if the persecution is called off. Many Chinese lawyers note that the persecution is illegal by Chinese law in their defense of Falun Gong adherents, and Jiang faction members are at high risk of being prosecuted as the Xi administration advances the “rule of law” in China.
- The United States would want China to answer for the gross human rights violations carried out during the persecution. In 2016, the U.S. House of Representatives unanimously passed H.Res 343, a resolution that condemns the CCP’s forced organ harvesting of prisoners of conscience, the bulk of whom are Falun Gong adherents.
4. Companies in good relations with the CCP regime are at risk if Xi reverses the anti-Falun Gong policy because the regime would be in grave danger. The Falun Gong issue is a must-watch in the coming years if firms are seeking to sidestep risks and uncover opportunities in China.
SinoInsight 2
Guo Shuqing, head of the China Banking and Insurance Regulatory Commission (CBIRC), will be named People’s Bank of China (PBoC) Party secretary, according to reports in major U.S. media outlets on March 25.
OUR TAKE
A very unusual personnel arrangement. Just two days before the news broke, Guo was named as Party secretary of the CBIRC.
Guo as central bank Party secretary is not impossible. In fact, we have constantly been saying that he is the best candidate to serve as PBoC president. (Link 1, Link 2)
If the move is confirmed, this indicates two things:
1. China’s financial situation is extremely severe. A trade war with America could trigger a debt crisis in China.
2. Xi Jinping lacks trusted high-level financial officials. Guo Shuqing could be appointed to monitor new central bank chief Yi Gang.
