SinoInsight 1
On Oct. 24, Yili Group, a state-owned dairy producer, published a long essay on its website and WeChat about the corruption of its former chairman Zheng Junhuai. The essay accuses Zheng of conspiring with “protective umbrellas,” or Chinese officials who cover up or collude with criminal elements, to embezzle state-owned assets. The essay also asserts that Zheng’s case involves former national-level, provincial-level, and bureau-level officials, but does not provide any names.
Party media later interviewed Yili Group, and the company revealed that it has officially submitted all relevant material of Zheng Junhuai’s corruption to the central inspection team in Inner Mongolia. At present, Yili’s essay on Zheng has been deleted from its website.
OUR TAKE
1. Based on our research, the Zheng Junhuai case is linked with the CCP factional struggle. Former Politburo Standing Committee members may be in trouble soon, and the domestic security and legal apparatus will likely be further scrubbed.
The “former national-level” official mentioned in the Yili Group essay is likely referring to former propaganda apparatus head and Politburo Standing Committee member Liu Yunshan.
In 2013, several overseas Chinese language media reported that online complaints had been filed against Liu for corruption. The reports claim that the Liu clan had secretly secured a portion of Yili Group legal person’s non-tradable shares before China’s 2004 equity reform. After the reform was enacted, the shares owned by the Liu clan came to be worth hundreds of millions of yuan.
In December 2004, former Yili Group chairman Zheng Junhuai was arrested on suspicion of misappropriating public funds. He was sentenced to six years in prison, but his sentence was later reduced twice and he served less than three years of jail time. At the time, Jia Chunwang was the chief procurator of the Supreme People’s Procuratorate (Dec. 2003 to Dec. 2008, and Jia’s daughter was then Liu Yunshan’s daughter-in-law.
The Yili Group essay on Zheng lists a “former Supreme People’s Procuratorate deputy chief procurator” as one of Zheng’s “protective umbrellas.” At the time of Zheng’s imprisonment, the deputy chief procurator (a ministerial-level position) was Zhang Geng (Oct. 2003 to June 2010). Zhang was Jia Chunwang’s deputy for Jia’s entire time at the Supreme People’s Procuratorate.
3. If our analysis is accurate, then this means that the Jiang Zemin faction (Liu Yunshan was the former propaganda apparatus head) has been swaying public opinion to attack Xi Jinping on economic issues. The Xi camp has recently been pushing back against the Jiang faction, likely in preparation for the CCP Fourth Plenum. (See our article below.)
SinoInsight 2
On Oct. 25, Japanese prime minister Shinzo Abe visited China and was received with high honors. Japanese flags were even hung in Tiananmen Square.
Abe attended an informal dinner with Chinese premier Li Keqiang on his first night. On Oct. 26, Abe is scheduled to have breakfast with Li and his wife, and dinner with Xi Jinping and his wife.
Before traveling to Beijing, Abe said that Japan is discontinuing its 40-year official development assistance for China. Meanwhile, CCP media changed its anti-Japanese propaganda tune and instead thanked Japan for its years of aid. State media also said that Japan, who has donated over $320 billion to China over the years, is China’s greatest supporter.
OUR TAKE
1. The Sino-U.S. trade war has forced the CCP to get off its high horse and start cultivating friendlier relations with other countries. However, the CCP’s strident anti-Japan propaganda will make developing relations awkward. Growing the Sino-Japan relationship will prove difficult for Beijing, and explaining the need to be friends will be even harder to explain to the Chinese people.
2. The CCP has long censored news that Japan is aiding China and instead fans anti-Japan sentiments as a tactic to divert attention away from domestic woes. Meanwhile, China’s economy has been deteriorating in recent years and many Japanese companies have already pulled out of the mainland. Abe is more likely to urge China not to block Japanese capital outflow instead of building better economic ties during his Beijing trip.
Japan’s recent withdrawal of aid signals and fresh trade negotiations with the United States signals a shift towards America, and not China.
3. Shinzo Abe is due to host Indian prime minister Narendra Modi in Japan on Oct. 28. Japan and India are looking to strengthen cooperation in maritime strategy and regional security. Improving Japan-India ties are in line with America’s new Indo-Pacific strategy.
