SinoInsight 1
On Jan. 13, the CCP Central Commission for Discipline Inspection held its fourth plenary session. All members of the Politburo Standing Committee attended the meeting key conclave, and Xi Jinping delivered a speech.
Noteworthy points in Xi’s speech include:
1. Xi stressed the need for continuous effort in cracking down on “tigers” (high-ranking corrupt officials) and “flies” (low-level corrupt officials).
2. Xi said that the “anti-corruption fight” is “grave, complex, long-term and onerous,” and that there is a need to guard against risks.
3. Xi said that “tough steps should be taken to address corruption behind various risks.”
4. Xi said there is a need to “strengthen the anti-corruption effort” in the financial sector and state-owned enterprises.
5. Xi said that there is a need to “fight corruption hidden in local government debt risks.”
6. Xi said that “efforts are needed to investigate and punish insurance fraud in medical institutions.”
7. Xi said that there is a need to “strengthen the administration of state resources and assets.”
8. Xi stressed the need to strengthen oversight over leading cadres (“一把手”) at all levels.
OUR TAKE
1. The points which we listed above from Xi Jinping’s speech affirm several trends in CCP elite politics which we have covered in recent articles:
- The CCP factional struggle between the Xi camp and his political opponents has reached an impasse;
- Xi lacks “quan wei” (權威) to ramp through his policies and has been striving to boost his “quan wei” through various political gestures;
- To sign “phase one” of the Sino-U.S. trade deal with minimal incident, Xi needs to crack down on his political opponents and force them to make compromises (the “fight first, talk later” approach);
- Xi faces very high levels of political risk.
2. Xi’s speech to the CCDI suggests that he is once again resorting to the approach of “strictly governing the Party” (從嚴治黨) ahead of the “phase one” deal signing on Jan. 15. By threatening to “turn the blade inward” on the Party, Xi could be looking to intimidate his political opponents and dissuade them from engaging in “improper discussions of Party Central” (妄議中央), or accusing him of selling out the country by making huge concessions to the United States.
3. To break the impasse in the CCP factional struggle and tackle the various crises in the regime, Xi needs to again turn to the anti-corruption campaign to purge those who oppose him. And at the CCDI’s fourth plenum, Xi has essentially listed the sectors and institutions where he plans to bring down the Party’s sword: the financial sector, state-owned enterprises, local government, medical institutions, and state resources and assets.
The Jiang Zemin faction, who opposes the Xi camp even before Xi took office in 2012, retains influence and powerful networks in the financial sector, medical institutions, and state-owned enterprises.
4. There is a possibility that Xi Jinping is being more “sound than substance” (雷聲大雨點小) with his rhetoric at the CCDI fourth plenum and the coming anti-corruption investigations turn up many “flies” but few “tigers.”
If Xi, however, decides to end a compromise made at the 19th Party Congress to not go after high-ranking cadres and pursues the anti-corruption campaign with a vigor similar to that of his first term in office, then there is a very good chance that most of our predictions about CCP elite politics in our China 2020 outlook could be verified this year.
SinoInsight 2
On Jan. 15, Hu Xijin, the editor-in-chief of the nationalistic Party media Global Times, took to WeChat to air his thoughts on the Sino-U.S. “phase one” trade deal.
Hu wrote: “First, this [the trade deal] is good news and was hard-won. Second, this is a fragile ‘ceasefire.’ Third, the future peaceful co-existence between China and the United States is not something that can be negotiated; China can only continue to do our own things well, strengthen our economy, and keep playing the game.
Hu continued: “Today I’d like to say, be more united, Chinese people. There will be greater pressures ahead; such is the fate of being ‘number two’ in the world. Unity and development are the only options for China to get through this strategically sensitive period. Also, the various local governments should rely more on pragmatism than principles in developing the economy. We don’t have the capital to indulge in all kinds of formalism, and China needs to concretely improve the people’s living standards and consumption power, expand China’s markets, and break America’s strategy to suppress China’s development. We need to race against time.”
OUR TAKE
1. In a nutshell, Hu Xijin’s WeChat post contains similar messaging to a Taoran Notes article published on Jan. 13.
Below we look at what Hu is really saying in his WeChat post.
“First, this [the trade deal] is good news and was hard-won.”
- The speed and scale of the deterioration of the Chinese economy has endangered the CCP regime to a point where the CCP has to “surrender” to the U.S. to avoid incurring additional tariffs and see a greater and more rapid worsening of the economy.
“Second, this is a fragile ‘ceasefire.’ “Third, the future peaceful co-existence between China and the United States is not something that can be negotiated; China can only continue to do our own things well, strengthen our economy, and keep playing the game.”
- Hu’s statement affirms our analysis that the CCP is very clear that the Sino-U.S. rivalry is not limited to a trade war, but is in fact a zero-sum “new cold war.” Thus, the CCP is making concessions now to survive this phase of the “new cold war” and will take the “breathing space” and time it has bought to continue surviving U.S. pressure while making preparations for future domination.
- Hu’s “assessment” carries a similar message to the Taoran Notes piece on Jan. 13.
“Today I’d like to say, be more united, Chinese people. There will be greater pressures ahead; such is the fate of being ‘number two’ in the world … China needs to concretely improve the people’s living standards and consumption power, expand China’s markets, and break America’s strategy to suppress China’s development. We need to race against time.”
- Hu’s remarks can be interpreted to mean that the CCP plans to continue with its delaying tactics as it strives to survive and dominate.
2. Based on our preliminary assessment of the “phase one” trade deal, the CCP regime will likewise be endangered if it attempts to fulfill all aspects of the deal. On top of that, we assess that the trade deal will only have a limited impact in helping the CCP in its efforts to rescue the Chinese economy. Put another way, the CCP regime has not bought itself a substantial amount of time to “right the ship.”
Time, economic, and political pressures could lead the CCP to ramp up efforts to decisively influence and interfere in the 2020 U.S. presidential election. Should the CCP succeed in manufacturing or exploiting incidents to widen the divide in American society and incite domestic chaos, then it would gain opportunities to pull off a “Pearl Harbor” against the United State.
