SinoInsight 1
The Chinese authorities recently detained two Canadian citizens, International Crisis Group analyst Michael Kovrig and NGO worker Michael Spavor, on the suspicion of being involved in activities which “jeopardize China’s national security.”
In a press conference on Dec. 12, Chinese foreign ministry spokesperson Lu Kang suggested that Kovrig was arrested because the International Crisis Group was not legally registered with the authorities in accordance with a foreign organization law that was amended in 2017.
OUR TAKE
1. We believe that the People’s Republic of China very likely detained the two Canadian citizens in retaliation for Canada arresting Huawei CFO Meng Wanzhou.
The PRC has a history of holding foreigners as bargaining chips to pressure the other country. In July 2014, Canada arrested Chinese aviation entrepreneur Su Bin after the U.S. sought his extradition for stealing military data. In August 2014, the Chinese authorities suddenly arrested Canadian citizens Kevin and Julia Garratt, who were living in Dandong City, on charges of “stealing state secrets.” Julia Garratt was released on bail and allowed to leave China, but Kevin Garratt spent two years in prison. Mr. Garratt was released only after Su Bin was sent to the United States from Canada and sentenced to 46 months in prison.
2. The PRC’s reason for arresting Michael Kovrig and Michael Spavor is irregular because both men appeared to be known to Chinese officials.
In the case of Kovrig, overseas Chinese language media found a picture of him and CCP International Liaison Department deputy director appearing together at an official event on Aug. 7, 2018. The picture has since been deleted from the International Liaison Department’s website.
Michael Spavor runs Paektu Cultural Exchange, which promotes sporting, business and cultural exchanges with North Korea, in Dandong City. According to news reports, Spavor arranged former NBA star Dennis Rodman’s first trip to North Korea in 2014, an event where he met with North Korean leader Kim Jong Un. Given Spavor’s links with Pyongyang and the nature of his operations in China, we believe that Chinese officials are very likely to have a degree of familiarity with him.
3. We believe that the timing and nature of the Meng Wanzhou incident are very suspicious, and may be more complicated than appearances suggest. Both President Trump and Xi Jinping face a huge political test right at the start of a historic 90-day trade negotiation period, and have to tread carefully in the coming days to avoid torpedoing a Sino-U.S. trade deal.
SinoInsight 2
On Dec. 13, Xi Jinping chaired a Politburo meeting to discuss economic work for 2019, receive reports from discipline inspection members, and discuss Party building and anti-corruption work for 2019.
“We will promote steady growth, promote reform, adjust structure, benefit people’s livelihood and prevent risks in a coordinated way, and keep economic operation in a reasonable range,” the meeting said, according to a Xinhua report.
Key takeaways of the meeting include:
- The CCP recognizes a need to ensure healthy economic development and a stable social order “amid a complicated international environment”;
- 2019 is a “pivotal year” because it is the CCP’s 100th founding anniversary;
- The authorities must keep stable “employment, the financial market, foreign trade, foreign investment, domestic investment, and expectations” to “raise market confidence”;
- The meeting stressed that “changes in the international environment and domestic conditions should be looked at dialectically”;
- The meeting noted that since the 19th Party Congress, a “sweeping victory has been won in the fight against corruption and major outcomes achieved in exercising full and strict governance over the Party.” However, the “anti-corruption fight remains grave and complex,” and “strict discipline must be adhered to on a long-term basis”;
- The meeting said that the third plenary session of the 19th Central Committee for Discipline Inspection is scheduled for Jan. 11 to Jan. 13, 2019.
OUR TAKE
1. We believe that Xi Jinping is sending political signals during a Politburo meeting to discuss economic work because the CCP elite is divided on many issues cannot come to a consensus on Party direction. And if the CCP is fractured at the top, then Xi cannot hold a Fourth Plenum to officially set the tone for the coming year.
2. It is interesting that the Politburo discussed anti-corruption matters during an economic work meeting. We believe that Xi is signaling that those who seek to block the success of the 90-day Sino-U.S. trade discussions will be investigated for corruption.
