SinoInsight 1
On July 8, a National Political and Legal Affairs Team Education and Rectification Pilot Work Mobilization meeting was held in Beijing. The meeting was chaired by Chen Yixin, Secretary General of the Central Political and Legal Affairs Commission and head of the National Political and Legal Affairs Team Education and Rectification Pilot Office.
Chen made the following points during the meeting:
- “Rectification education” is a new measure allowing the Central Political and Legal Affairs Commission (CPLAC) to “strictly control” the Party and the police. “Rectification education” is also a continuation of the CCP’s “sweeping black” campaign.
- CCP cadres must carry out “‘scraping poison away from the bones’-style self-revolution” (刮骨療毒式的自我革命) and a “Yan’an Rectification Movement” to “eliminate vice and exalt virtue” (激濁揚清式的“延安整風”). (In decoding Party speak, the first phrase calls for cadres to check themselves and be self-disciplined while the second phrase instructs cadres to exercise ideological control.)
- All disloyal and dishonest “two-face persons” and “protective umbrellas” in the Party must be ferreted out.
- The meeting also announced that “rectification education” will be piloted in five cities, four counties, and two prisons from July to October 2020. In 2021, “rectification education” will be rolled out throughout the political and legal affairs apparatus, and nationwide “rectification education is expected to be completed by 2022.
On July 9, the Ministry of Public Security convened a national-level public security meeting on “rectification education” for “persevering with the political construction of the police and strictly governing the police” (堅持政治建警全面從嚴治警). Public security minister Zhao Kezhi chaired the meeting and delivered a speech.
OUR TAKE
1. The above developments indicate that Xi Jinping is preparing to clean out the CCP regime’s political and legal affairs apparatus of disloyal elements. The powerful political and legal affairs apparatus had been in the hands of the Jiang Zemin faction for nearly two decades, and Xi’s “rectification” of the apparatus was always going to be a long and difficult process. Indeed, key personnel reshuffles (or lack thereof in some cases) in the past eight years and some questionable actions of the apparatus indicate that Xi still has not been able to completely purge rival elements from the political and legal affairs apparatus and bring it more fully under his sway.
We anticipated Xi’s clean up of the political and legal affairs apparatus in our China 2020 Outlook. We wrote: “Officials from the following apparatuses are at high risk of being purged: Political and legal affairs, propaganda, intelligence, finance, and Hong Kong and Macau affairs.”
2. “Rectification education” of the political and legal affairs apparatus is scheduled to be completed by 2022, or before the important 20th Party Congress is scheduled to be held. Xi is already facing stiff pushback from his factional rivals over removing term limits for the PRC presidency, and will be expecting the CCP factional struggle and pressure on him to steeply intensify closer to the 20th Party Congress when he is “supposed” to step down per Jiang-era Party norms. Thus, Xi has a strong incentive to “rectify” and tighten his grip over the political and legal affairs apparatus two years in advance of the 20th Party Congress to minimize political risks and pave the way to keep himself in office for a third term.
Xi’s move to reform the People’s Armed Police and carry out sweeping Party and state institutional reforms in 2018, consolidate his control over the intelligence apparatus in 2019, as well as audit senior military officials and bring the reserve forces under direct leadership of Party Central are likely linked with Xi’s effort to clean out lingering Jiang faction elements in the Party and state apparatus and consolidate control over the regime ahead of the 20th Party Congress in 2022.
3. Xi appears to be stepping up efforts to “rectify” the public security apparatus this year. Four senior officials have either been removed or retired in the first five months of the year, while one senior official was purged. Meanwhile, the public security apparatus’s leadership shrunk from 12 members to eight.
- March 2020: Deng Weiping, head of the Discipline Inspection and Supervision Team dispatched from the Central Commission for Discipline Inspection and the National Supervisory Commission, retired and was replaced by Sun Xinyang, Party secretary of the Jiangxi Discipline and Inspection Commission.
- April 2020: Sun Lijun, vice minister of public security and former deputy director of the central “610 Office,” was investigated.
- June 2020: Deputy ministers of public security Meng Qingfeng and Liu Yuejin left their post. Because both officials were past the retirement age of 60, it is likely that they retired.
- July 2020: Nie Furu, deputy minister of public security and Party Secretary of the ministry’s General Office, left his post. While no information has yet been released about his whereabouts, it is possible that he was transferred to another department in the political and legal affairs apparatus and could even be promoted to the deputy ministerial rank.
Xi appears to have completely “rectified” the public security ministry’s leadership ranks. Aside from Xi ally and public security ministry deputy Party Secretary Wang Xiaohong, all other members of the public security ministry’s leadership were appointed to their position after the 19th Party Congress in 2017.
4. We noted in February 2020 that the CCP factional struggle has shifted from “you die, I live” (你死我活) to “perish together” (同歸於盡). Xi Jinping’s moves to consolidate control over the political and legal affairs apparatus will pressure his factional rivals into escalating the factional struggle. We believe that there is a good chance of political Black Swans emerging in China in the second half of the year.
SinoInsight 2
Since the passage of the PRC’s Hong Kong national security law on June 30, several countries have issued statements condemning the CCP for its action. Two of America’s allies, Australia and Canada, also announced that they are suspending their extradition treaty with Hong Kong over the national security law, which contains a provision that allows the CCP to exert extraterritorial jurisdiction over all persons in the world via Hong Kong.
Some observers have noted that the U.S. has been relatively low-key action-wise in retaliating against the CCP over Hong Kong. Days before the national security law was enacted, the Trump administration began eliminating policy exemptions giving Hong Kong special treatment under U.S. law, as well as impose visa restrictions on current and former PRC officials who are responsible for or complicit in undermining Hong Kong’s high-degree of autonomy, fundamental freedoms, and human rights. However, aside from statements of condemnation, the U.S. has yet to move against the CCP after the legislation was passed. According to news reports, some top advisors to President Donald Trump want the U.S. to undermine Hong Kong’s dollar peg, scrap America’s extradition treaty with Hong Kong, and stop working with the Hong Kong police.
OUR TAKE
1. Remarks from U.S. Secretary of State Mike Pompeo after his meeting with Politburo member Yang Jiechi in Hawaii indicate that the Trump administration will take the PRC to task for crossing red lines. Trump’s growing anger at China over the coronavirus pandemic and his currently less than certain re-election prospects also suggest that he will more likely than not approve of strong retaliatory measures against the CCP over Hong Kong and other issues.
The Trump administration’s recent China-related actions suggest that the U.S. is preparing bold actions against the PRC, but needs more time to educate the American public on the “China challenge” so that they can be on the same page. The administration is also likely hoping to persuade/incentivize American businesses and investors to pull their funds out from China before the hammer is inevitably dropped on the CCP:
- July 1: The U.S. Department of State, U.S. Department of the Treasury, U.S. Department of Commerce, and U.S. Department of Homeland Security issued a joint advisory to “caution businesses about the risks of supply chain links to entities that engage in human rights abuses, including forced labor in Xinjiang and elsewhere in China.”
- July 6: When asked about whether the U.S. will consider a ban on Chinese social media apps like TikTok on Fox News, Secretary Pompeo said that the Trump administration is “taking this very seriously” and are “certainly looking at it.” The following day, President Trump told reporters that his administration is looking into the matter of banning TikTok. “It’s a big business. Look, what happened with China with this virus, what they’ve done to this country and to the entire world is disgraceful,” he said.
- July 7: FBI director Christopher Wray delivered a hard-hitting speech titled, “The Threat Posed by the Chinese Government and the Chinese Communist Party to the Economic and National Security of the United States.” Wray referenced White House National Security Advisor Robert O’Brien’s earlier speech on the CCP’s ideology and global ambitions, and noted that U.S. Attorney General William Barr and Secretary Pompeo would also be delivering speeches on the “China challenge.”
- On July 7, National Security Advisor O’Brien and National Economic Council director Larry Kudlow warned in a letter to the U.S. Railroad Retirement Board that its China investments were exposing its retirees to “unnecessary economic risk.” Kudlow and O’Brien also noted the “the possibility of future sanctions or boycotts” on the PRC that “may arise from a wide range of issues, including the culpable actions of the Chinese government with respect to the global spread of the Covid-19 pandemic, the suppression of Hong Kong’s democracy,” and other factors.
- On July 9, the U.S. State Department and U.S. Treasury Department sanctioned senior CCP officials over human rights abuses in Xinjiang Province. The sanctioned officials are Xinjiang Party Secretary Chen Quanguo, Xinjiang public security chief Wang Mingshan, former Xinjiang Party Secretary and former Xinjiang deputy Party Secretary Zhu Hailun.
We believe that it is a matter of when, and not if, the Trump administration goes after the PRC over Hong Kong, the coronavirus, and other issues. The administration also seems to be considering actions that would hurt the PRC economically and financially, with likely repercussions for American businesses and investors that have funds in China. We do not rule out the possibility that the U.S. could sanction Chinese and even Western financial institutions in Hong Kong for supporting the CCP’s national security legislation. The Trump administration will also likely target individual CCP officials with sanctions.
The impact of U.S. retaliatory measures against the CCP will likely lead to escalations in the CCP factional struggle and the emergence of political Black Swans in China.
2. We have been warning about the shift in U.S. policy on China and the Sino-U.S. “new cold war” from 2018. Businesses, investors, and governments must prepare for increasing political risks in China as the “new cold war” intensifies.
