SinoInsight 1
On Aug. 11, the South China Morning Post reported that the CCP instructed its military personnel “‘not to fire the first shot’ as Beijing looks to de-escalate tensions with the United States in the South China Sea,” citing sources familiar with the matter. The Post’s sources also said that “Beijing had ordered pilots and naval officers to exercise restraint in the increasingly frequent stand-offs with US planes and warships.”
On Aug. 13, the People’s Liberation Army Eastern Theatre Command announced that its troops recently held military drills near Taiwan. The announcement came after U.S. Secretary of Health Alex Azar’s four-day visit to Taiwan.
On Aug. 14, People’s Daily published an article titled, “Why the Communist Party’s Absolute Leadership Over the Military Cannot be Challenged” (黨對人民軍隊的絕對領導制度為何動搖不得). Key points in the piece include:
- The CCP Fourth Plenum in 2019 established that the Chinese Communist Party’s absolute leadership over the PLA (referred to as the “people’s military” in the article) is a fundamental aspect of socialism with Chinese characteristics.
- The Party’s leadership of the military is a core aspect of Marxism and the CCP’s absolute leadership of the PLA is the military’s “lifeline and soul.”
- Party central has supreme leadership and command of the PLA, and the “Central Military Commission’s chairman responsibility system” (i.e. Xi’s rule over the military) is the fundamental embodiment of the Party’s absolute leadership of the PLA.
- The PLA must obey the commands of Party central, the CMC, and General-Secretary Xi Jinping.
- “De-Partyization, depoliticization, and nationalization” of the military should be rejected. Promotion of the aforementioned theories is political conspiracy of hostile forces.
- The Party’s absolute leadership and command of the PLA concerns the fate of the CCP regime.
The aforementioned article is the 12th in a new series, “China System Face-to-Face” (中國制度面對面), that aims to explain the workings of the CCP system to the masses. According to a primer published in July by the CCP Propaganda Department’s Theory Bureau, articles in the series are “popular accessible writings” by CCP experts and scholars guided by “Xi Jinping Thought on Socialism with Chinese Characteristics for the New Era.”
OUR TAKE
1. News that the CCP had instructed military personnel “not to fire the first shot” and “exercise restraint” in stand-offs with U.S. warships and planes suggest, as well as timing the Eastern Theater Command’s announcement of military drills to after Secretary Azar wrapped his Taiwan trip, suggest America and her allies’ increased presence in the Indo-Pacific region is effectively compelling the CCP to curb its aggressive behavior.
Indeed, the CCP is revealing itself to be a “paper tiger” in the face of firm U.S. challenges and efforts to expose the communist regime’s lies and propaganda. For example, the CCP has been downscaling its South China Sea activity after Secretary of State Mike Pompeo’s statement opposing the PRC’s maritime claims in the region and stepping up naval activity by the U.S. and her allies.
The CCP’s military “restraint,” however, does not mean it will slow down its military or abstain entirely from mischief in the Indo-Pacific. Also, “near miss” or minor military incidents could still happen due to overly-zealous or nervous PLA military personnel. “Near miss” incidents, however, are unlikely to trigger “hot” war, both due to the coronavirus pandemic and the poor economic conditions in the PRC and the United States.
2. The Aug. 14 People’s Daily article on the CCP’s absolute leadership over the PLA is a sign Xi Jinping is enduring substantial political pressure, with his “quan wei” being severely challenged.
Xi is PLA supreme commander and has done much since taking office in 2012 to consolidate his control over the military. While Xi’s grip over the PLA is far from total (see the downsized CMC at the 19th Party Congress and Xi’s “rocket promotion” of over a hundred “new guard” generals in recent years), the Aug. 14 article’s repeated emphasis on the obvious—his and the Party’s “absolute leadership” of the PLA—suggests he is perturbed by challenges from within the military and whether the military will remain loyal, come crunch time (confrontation with America, factional struggle coups, etc.).
Challenges to Xi Jinping from inside the military are to be expected. After all, Xi upended the previous loyalty incentive model with his sweeping anti-corruption campaign (corruption was rife in the PLA under the “CMC vice chairman responsibility system” of Jiang faction members Boxiong and Xu Caihou) and antagonized many with his “rectification” of the military apparatus. Also, Xi’s “rocket promotion” of certain generals but not others would engender jealousy in the senior officer ranks and lower morale; the fact that Xi only promoted one general before the PLA founding anniversary on Aug. 1 this year instead of handing out numerous promotions (10 full generals were promoted in July 2019) as in years past hints at an attempt to address brewing discontent and “stabilize” Xi’s grip on the Party’s gun.
Xi very likely wants to ensure that the PLA remains loyal as he battles challenges from factional rivals. Xi’s rivals face political extinction should the latter secure a third term in office (see SinoInsight 2). Thus, they will belligerently pressure Xi at the Beidaihe conference in the lead up to the Fifth Plenum over the rapidly worsening U.S.-China relationship, including increased American military presence in the Indo-Pacific and efforts to confront the CCP across the board. Xi will not be able to easily deflect or ignore his rivals’ challenges, because it is precisely his adherence to Party orthodoxy in power consolidation (a political necessity to differentiate his rule from that of Deng Xiaoping and Jiang Zemin) that led to policies and actions (“Chinese dream,” “One Belt, One Road,” “Strong Military,” “Wolf Warrior diplomacy,” etc.) that alerted and convinced America to confront a CCP that is rapidly reverting to its Maoist roots.
3. Political Black Swans are on the horizon if Xi Jinping is struggling with the PLA and the CCP factional struggle. Businesses, investors, and governments need to act quickly to minimize political risks in China and prepare for the CCP’s “Berlin Wall” moment.
SinoInsight 2
On Aug. 12, The New York Times reported that relatives of Xi Jinping, Li Zhanshu, and Wang Yang own luxury houses in Hong Kong worth more than $51 million.
On Aug. 14, Reuters reported the United States and China postponed a scheduled six-month compliance review meeting for the Sino-U.S. “phase one” trade deal. No new meeting date has been agreed upon. Reuters cited a source saying the “delay was related to a conference of senior Communist Party leaders at the seaside town of Beidaihe on China’s northeast coast,” but the postponement “did not reflect any substantive problem with the trade deal.” Another source told Reuters the U.S. wanted to give the Chinese side more time to make the agreement purchases.
The Beidaihe meetings appear to be still on-going based on publicly available information. With the exception of Li Zhanshu, who attended a scheduled meeting of the National People’s Congress Standing Committee, none of the CCP’s Politburo Standing Committee members have made public appearances since Aug. 1.
OUR TAKE
1. The above information (including the news items in SinoInsight 1) indicates that factional fighting in the CCP elite has sharply intensified around the Beidaihe period.
The New York Times’s Aug. 12 report follows a pattern of damaging information about the CCP elite being released or leaked around the period of major political meetings (see here and here). For instance, in the lead up to the Fourth Plenum in October 2019, The Times and German newspaper Süddeutsche Zeitung published damaging information in the form of Deutsche Bank’s efforts to establish relations with family members of senior CCP officials. Interestingly, damaging information released last year and this year only implicate members of the Xi camp, which benefits Xi’s factional rivals during the current Beidaihe session and ahead of the CCP’s Fifth Plenum in October. As we analyzed last year, “because leaks are the most effective when made public just before major political meetings, it is fair game to be especially skeptical about all news articles published in the aforementioned period that reveal damaging information about the CCP elite, and the information in those articles should be assessed for its impact on the ‘you die, I live’ factional struggles in the Communist Party.”
Meanwhile, if Reuters’s information about the “phase one” six-month compliance review being postponed due to the Beidaihe meeting is accurate, this suggests that recently ramped up U.S. pressure against the PRC has become a sticking point in the CCP elite. In other words, the PRC’s external problems are now also internal problems, as we previously analyzed.
2. The “perish together” CCP factional struggle and the regime’s security crisis directly threaten Xi Jinping’s personal interests and compel him to push for an unprecedented (in post-Mao PRC) third term in office at the 20th Party Congress in 2022. To secure a third term, Xi must survive the “new cold war” crisis and the Trump administration, show no weakness in the intra-Party struggle, and abate China’s rapidly declining economy and other domestic woes. Going forward, we can expect Xi to take steps to bolster his “quan wei,” double down on authoritarianism to keep his political rivals and the Chinese people in check, and deal with increasing U.S. pressure with as much “finesse” as Party orthodoxy allows him to without appearing too weak.
As for Xi’s rivals, and particularly the Jiang faction, a third office term for Xi means complete political annihilation (nearly all the senior members of the “anti-Xi coalition” would have either retired or be far too old by 2026), crushing their vital interests. Thus, Xi’s rivals have an exceptionally strong incentive to challenge Xi at every turn, especially at major political meetings, from now until the 20th Party Congress. Xi’s rivals will almost certainly attack him for bringing disaster upon the regime with his various policies and use that as a pretext to demand he designates a successor to realign the Party to the “collective leadership” model (de facto abandoned by Xi, but officially still on the books) instead of the “Mao model” (strongman rule).
Escalating factional struggle in the CCP regime will sharply increase political risks in China for businesses, investors, and governments who support the PRC or have substantial interests in China. There is a very good chance that regime-endangering political Black Swans will emerge in China before the year is out. Businesses, investors, and governments should prepare contingencies for a post-communist China.
