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State propaganda reveals Xi Jinping’s political status; CCP strengthens exploitation amid economic downturn

SinoInsight 1
On Aug. 13, China’s finance ministry published fiscal data for July. The national general public budget revenue was 1.7461 trillion yuan, an increase of 6.1 percent from a year earlier. Tax revenue was 1.6081 trillion yuan, a year-on-year rise of 11.4 percent.

On the same day, the People’s Bank of China announced that the scale of social financing in July was lower than anticipated. The fixed asset investment figures released by the National Bureau of Statistics on Aug. 14 showed a 5.5 percent increase over the same period last year, a 20-year low. Meanwhile, retail sales, an important indicator for measuring domestic consumption, grew 8.8 percent, or lower than market expectations of 9.1 percent. Industrial production also failed to meet market expectations, growing only 6.0 percent instead of the forecasted 6.3 percent. Finally, the unemployment rate in China reached 5.1 percent, higher than the expected 4.8 percent.

OUR TAKE
The July economic figures show that the main economic indicators of investment and consumption in China are doing worse than forecasted, but tax revenue is seeing double-digit growth. This indicates that local governments are stepping up the exploitation of enterprises and worsening the decline of the real economy just when the national economy is deteriorating.

The pernicious operations of authoritarian regimes often become more obvious during an economic downturn. The vicious cycle will continue to play out until it becomes inoperable.

SinoInsight 2
Several recent commentaries by Xinhua are revealing of the Chinese Communist Party (CCP) elites’ view of the Sino-U.S. trade war and Xi Jinping’s political standing.

Aug. 12: The commentary “Declaration: Immense Space for Reform and Opening Up” claims that the CCP would persist in so-called “reform and opening up with Chinese socialist characteristics” to cope with crises.

Aug. 15: A commentary calling on Chinese intellectuals to do their patriotic duty suggests that intellectuals should behave like model CCP cadres in the face of crises.

Aug. 16: A commentary on advancing the People’s Liberation Army’s rebuilding stresses that the military must obey the leadership of CCP “core” Xi Jinping.

OUR TAKE
In recent weeks, both Chinese and English language media have been circulating rumors about how Xi is in trouble with Party elders or other elites over his leadership’s missteps. The Xinhua commentaries appear to be aimed at dispelling the negative speculation about Xi and send a signal that the various CCP factions have reached a consensus on handling the crises facing the regime. To cope with the Sino-U.S. trade conflict, CCP propaganda is emphasizing Xi’s paramount position in the Party and the need to be united in dealing with an external foe.

The CCP has resorted to the above-mentioned propaganda tactics to escape past crises. Also, the CCP seems to be confident enough in its penetration of the United States and its belief that the Republican Party would cede enough ground during the midterm elections to pressure President Donald Trump to end the trade war with China. However, we believe that the CCP has made a serious strategic misjudgment about the state of U.S. politics and Trump’s resolve.

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