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Xi signals a fresh round of purges; decoding the call for the PBoC to buy A-shares

SinoInsight 1
Zhang Shuguo, the political commissar of the Central Military Commission Logistic Support Department, recently missed many key meetings and may be investigated for corruption, according to Hong Kong media reports on Jan. 17.

Zhang Shuguo is also suspected of bribing Zhang Yang, the former director of the CMC Political Work Department who committed suicide in late 2017.

OUR TAKE
1. Zhang Shuguo is part of the younger generation of military officials born in the 1960s. He rose quickly up the ranks after Xi Jinping came to office.

2. Previously, overseas Chinese language media reported that Zhang was involved in the suppression of a mutiny in March 2014 while he was political commissar of the 39th Army Group (now 79th Army Group) in Liaoning. Coincidentally, former CMC vice chair Xu Caihou, who climbed the ranks in units in Northeastern China, was investigated in March 2014.

3. In 2017, we noted that Zhang Shuguo was first elected to and then removed from a list of military delegations to the 19th Party Congress. His non-attendance at the 19th Congress meant that he failed to be elected as a member or an alternate member of the 19th Central Committee, an abrupt halt in his career progression.

Two other generals, CMC Logistics Support Department head Song Puxuan and former CMC Political Work Department deputy director Du Hengyan, were also left off the 19th Congress delegation list and were not elected to the new Central Committee.

4. We believe that there is a good chance that Zhang Shuguo will be publicly investigated. Song Puxuan may be demoted and forced to retire early in the best case scenario. However, if Xi Jinping wants to “kill the chickens to scare the monkey,” then Song and Du Hengyan could also be openly investigated.


SinoInsight 2
Xi Jinping spoke to domestic security and judicial agencies at the annual political and legal affairs work meeting in Beijing from Jan. 15 to Jan. 16.

Key points in Xi’s speech include:

  • The ongoing anti-Mafia campaign will have to meet a three-year term target;
  • Law enforcement and judicial agencies must keep an eye on major pernicious cases, and target the “financial foundations,” “networks,” and “protective umbrellas” of organized criminal elements;
  • Law enforcement and judicial agencies must build a “safety protection system” to safeguard the rights and interests of the regime’s overseas institutions and working staff;
  • Law enforcement and judicial agencies must “turn the blade towards themselves, scrape the poison off their bones, and resolutely eliminate the black sheep.”

OUR TAKE
1. We believe that the CCP’s anti-Mafia campaign, which began in 2018, will mainly focus on cleaning out the political and legal affairs apparatus in 2019. Presently, Supreme People’s Court chief justice Zhou Qiang faces the highest political risk among officials in the domestic security apparatus and judicial organs.

2. The CCP is establishing an overseas “safety protection system” likely as a precautionary measure to handle efforts by the United States and its allies to curb CCP infiltration and espionage in their respective countries.

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