SinoInsight 1
Nov. 11
Sun Dawu, founder of Dawu Agricultural and Animal Husbandry Group, was arrested in the early hours of the morning by public security officers from Hebei’s Gaobeidian City. Hundreds of policemen were dispatched to detain Sun, members of his family, and other senior Dawu executives. Sun is accused of “picking quarrels and provoking trouble,” as well as “sabotaging production and business operations.” The authorities also took over his company.
Sun Dawu has been convicted numerous times in the past two decades by authorities, mostly for speaking up for farmers and rural businesses. A 2009 profile of Sun in the mainland publication Southern Metropolis Weekly said that he “deeply understands the unspoken rules of the officialdom and the business world, but never wallowed himself in the mire … in an era where morality is lacking and money is worshipped, Sun has become an ‘infidel’ and has been imprisoned for it.” The profile also noted that Sun lived like an “ascetic” despite being a billionaire, and listed his efforts at charity, including establishing free technical schools for farmers and providing them with affordable medical cooperative schemes.
Dawu Agricultural and Animal Husbandry Group is one of China’s 500 largest private enterprises. The company employs over 9,000 workers, has 2 billion yuan (about $304.739 million) in fixed assets, and has an annual output value of over 3 billion yuan.
Nov. 14
According to The Nikkei newspaper, the PRC authorities “nationalized” 20 private companies in 2018, 30 in 2019, and 51 so far this year, or over 100 companies in a three-year span.
Nov. 19
Xu Lin, deputy minister of the Central Propaganda Department and director of the State Council Information Office, attended the opening ceremony of the 2020 China New Media Conference in Changsha City and delivered a speech. In his speech, Xu emphasized the “promotion of integrated development of traditional media and new media” as proposed by Xi Jinping. He also warned that all media outlets must be “oriented towards one standard, with no extralegal territory or public opinion enclave.” Further, media outlets should “resolutely prevent the dilution of Party leadership in the name of integrated development, and resolutely guard against the manipulation of public opinion using capital.”
Nov. 20
Li Huaiqing, a private entrepreneur from Chongqing City, was sentenced to 20 years in prison on charges of “incitement to subvert state power,” “fraud,” “extortion,” and “illegal imprisonment.” The indictment against him accused him of “inciting subversion of state power” by “spreading rumors and slander” seven times on WeChat from October 2017 to January 2018. The PRC authorities also froze over 100 million yuan worth of assets belonging to Li and his family members, who are not involved in his case.
According to overseas Chinese language media, the true reason behind Li Huaiqing’s arrest is his public remarks about corruption in the Ministry of Public Security during a charity event in 2017. Li’s remarks offended Sun Lijun, then deputy minister of public security. Deng Huilin, then director of Chongqing’s Public Security Bureau, reportedly interrogated Li personally, and is said to have proposed to release the latter if he either paid a “fine” of 200 million yuan or “sold out” sub-provincial level and above officials in the Chongqing government.
Sun Lijun and Deng Huilin were investigated on corruption charges this year in April and June respectively.
OUR TAKE
1. The CCP’s recent moves to squeeze the private sector and sway public opinion reflect its fears of losing control as crises accumulate for the regime.
By targeting private entrepreneurs, Beijing’s objective is to intimidate China’s wealthy capitalists to acquiesce to the Party instead of challenging authority. Arresting private entrepreneurs and expropriating their assets also replenishes the CCP’s coffers and mitigates the regime’s immediate political and financial risks.
We warned in September that the CCP, in recognizing “unprecedented and increasingly severe economic, social, and ideological threats to the regime,” is tightening its control over society, “particularly [over] the capitalist class.” We wrote, “The CCP coddles one moment and carries out naked intimidation the next. Private entrepreneurs may be ‘one of us’ to the Party, but they must also be obedient and not challenge its authority to thrive in the regime. Otherwise, private entrepreneurs will simply be ‘educated and guided,’ or subjected to Xinjiang-style ‘re-education’ (brainwashing and persecution).”
2. The CCP has long promoted the false narrative that “China is not communist” abroad to facilitate its ideologically driven push for global hegemony. Beijing’s dedication to Marxism-Leninism, however, manifests plainly within PRC borders, particularly in the realms of politics and societal control.
When times are good, the CCP adopts a “tolerant” attitude towards capitalists and “relaxes” its grip somewhat over the financial sector and society in general. This is evidenced from the later half of Jiang Zemin’s tenure and for most of Hu Jintao’s time in office. However, the CCP gradually tightened its control over society during Hu’s second term in office, once China’s economy began to deteriorate and social problems proliferated. Party control is particularly tight under Xi Jinping now, because the CCP is plagued with a “perfect storm” of problems. Crises are only a touch away from exploding, if they have not already detonated. For example, the recent default of bonds issued by state-owned enterprises could, in hindsight, be seen as the start of China’s debt crisis blowing up in slow-motion.
The world is being shaken by the coronavirus pandemic and the 2020 U.S. presidential election outcome. Unexpected developments on either or both fronts (a serious second wave, a Trump victory, etc.) will likely result in global economic turmoil. China is not the “financial safe haven” that CCP propaganda claims, and further financial shocks will trigger regime-threatening financial crises. Businesses, investors, and governments with investments in China need to prepare contingencies to sidestep political and financial risks on the mainland before the CCP resorts to extremes in responding to crises.
SinoInsight 2
Nov. 19
1. Trump campaign lawyer Rudy Giuliani and Sidney Powell held a press conference to make the case for President Donald Trump’s legal challenge of the 2020 presidential election result.
Giuliani said that the Trump legal team has hundreds of sworn affidavits that attest to election fraud, and read out excerpts from various lawsuits. He also claimed there was a “centralized” plan “to execute these various acts of voter fraud specifically focused on big cities and specifically focused on big cities controlled by Democrats,” with the goal of swinging the election result in favor of Joe Biden, the former vice president.
Powell focused on fraud involving voting machines. The Trump legal team uncovered “the massive influence of community money through Venezuela, Cuba, and likely China, in the interference with our elections here in the United States,” she said. “The Dominion voting system, the Smartmatic technology software and the software that goes in other computerized voting systems here as well … were created in Venezuela at the direction of Hugo Chavez to make sure he never lost an election after one constitutional referendum came out the way he did not want it to come out,” Powell added. During the Q&A session, she confirmed that servers in Germany belonging to Scytl, an electronic voting system company allegedly involved in the fraud case presented by the Trump campaign, were seized by the U.S. government.
2. After the Trump legal team’s press conference, The New York Times published a news analysis titled, “Trump’s Attempts to Overturn the Election Are Unparalleled in U.S. History,” as one of the top articles on its website. The piece was eventually made the lead article. The article said President Trump’s “chances of succeeding” in overturning the election “are somewhere between remote and impossible, and a sign of his desperation,” but the fact that he is “even trying has set off widespread alarms, not least in Mr. Biden’s camp.”
Nov. 20
After Dominion canceled a scheduled appearance before the Pennsylvania State Government Committee, state representative Seth Grove, the interim chairman for the State Government Committee and chair of the Government Oversight Committee, said: “Last evening, Dominion Voting Systems lawyered up and backed out of their commitment to the people of Pennsylvania to provide input in a public format in which 1.3 [million] Pennsylvanian’s entrusted.”
Grove added, “Why after weeks of accusations has Dominion Voting Systems not released any analysis of the success of their voting machines to the public in order to stop their accusers in their tracks? If they have nothing to hide, why are they hiding from us? I am sad to report to the taxpayers of Pennsylvania, the 1.3 million voters who trusted Dominion Voting Systems with their ballots, that Dominion Voting Systems has hung you out to dry and slapped you in your faces.”
Nov. 21
- In an interview with Newsmax, Sidney Powell made additional claims about the Dominion voting system and the Trump legal team’s next moves:
- The Dominion system added 35,000 votes to every Democratic candidate from the start in at least one state, and perhaps elsewhere.
- The Dominion algorithm weighted votes for Biden, e.g. a Biden vote is worth 1.23, and a Trump vote is worth 0.77.
- The Dominion algorithm facilitated a Hillary Clinton victory over Bernie Sanders in the 2016 Democratic primary.
- Both Democrats and Republicans previously used Dominion. The Georgia governor, as well as the Georgia Secretary of State and his family, likely benefited financially from purchasing and instituting the voting system for his state at the eleventh hour.
- The burden of proof in court for a civil case, what the Trump legal team is filing, is only “a preponderance of evidence, not beyond reasonable doubt. That’s the criminal standard.”
- The Trump legal team will file lawsuits on Wednesday or Friday this week.
OUR TAKE
1. Since Nov. 7, legacy media and the Biden team have been selling the 2020 U.S. presidential election as a fait accompli for the Biden camp. Despite the existence of numerous sworn affidavits, media outlets have been dismissing serious allegations of election irregularities and fraud without appearing to investigate, claiming instead there is “no evidence” of “widespread voter fraud.”
Both the Biden camp and the mainstream media, however, might be far less confident about Joe Biden’s chances than appearances suggest. The New York Times’s effort to frame the Trump legal team’s filing of lawsuits and his meeting with Michigan Republicans at the White House (later revealed to be focused on COVID assistance rather than an attempt by Trump to get them to “ignore the popular vote outcome”) as an “unparalleled” attempt to overturn the U.S. election is shrill hysteria, not unbiased “news analysis.” Further, the Times’s claims of “widespread alarms” at Trump’s “subversion” of the election is somewhat odd; if Biden has already won, why the grave concern over Trump’s “remote and impossible” attempt to overturn an election? Also disquieting is the blanket effort by legacy media to discredit the issue of voter fraud as “baseless” when hundreds have submitted sworn affidavits alleging fraud under penalty of perjury.
2. The 2020 U.S. presidential election outcome has not been decided, regardless of what legacy media claims. We expect to see more twists and turns ahead, including a political Black Swan after legal and constitutional challenges are resolved.
U.S. policy towards China will differ drastically depending on who is in the White House on Jan. 20, 2021. Businesses, investors, and governments who bet on the wrong horse too early will incur unnecessary political and financial risks.
