SinoInsight 1
Feb. 1
Song Liang, the executive vice governor of Gansu and a member of the Standing Committee of the Gansu Provincial Party Committee, was placed under investigation for “severe violations of disciplines and laws,” according to the website of the Central Commission for Discipline Inspection (CCDI) and the National Supervisory Commission (NSC).
Feb. 2
1. The CCDI, NSC, and the CCP Organization Department jointed issued a notice on strengthening and maintaining Party discipline during personnel reshuffles (關於嚴肅換屆紀律加強換屆風氣監督的通知). According to state mouthpiece Xinhua, the joint notice listed “ten prohibitions,” including forming parties for private interests (結黨營私), office canvassing and bribery (拉票賄選), buying and selling office (買官賣官), soliciting superiors for promotion (跑官要官), individual officials having the final say on personnel reshuffles without intra-Party discussion and consensus (個人說了算), taking advantage of personal relations to secure appointments (說情打招呼), hiring staff in violation of regulations (違規用人), leaking information on personnel reshuffles (跑風漏氣), falsification and forgery of cadre personnel files (弄虛作假), and interference in personnel reshuffles, including working with “foreign forces,” “family,” and using “intimidation” to secure office (干擾換屆).
2. In 2020, the PRC’s discipline inspection and supervisory organs investigated 5,835 leading officials (一把手) at the county level and above, according to the lead article on the CCDI-NSC website on Feb. 2. The article added that more than a hundred leading officials in the Central Organization Department had been investigated since the 19th Party Congress in 2017; the investigated officials would be at least at the vice provincial/ministerial rank and above.
Feb. 3
According to the lead article on the CCDI-NSC website on Feb. 3, the PRC’s discipline inspection and supervisory organs investigated 7,292 Party organizations and “held accountable” (問責) 86,000 Party members, leading cadres, and supervisory targets in 2020. In the PRC context, officials that are “held accountable” usually committed or were reported by others as having committed minor disciplinary infractions, and are handed a slap on the wrist.
Feb. 4
The Supreme People’s Court issued a new judicial interpretation of the PRC Criminal Procedure Law regarding the trial of corrupt officials who have fled overseas. Officials charged with corruption, bribery, and “serious endangerment of regime security and terrorist activities” can be tried in absentia and the assets involved in such cases can be disposed of after a court judgement is passed. The new regulations will be effective starting March 1, 2021.
OUR TAKE
1. Xi Jinping is tightening Party discipline and regulating Party organization work with an eye on upcoming personnel reshuffles at the Two Sessions in March and the 20th Party Congress in 2022. Controlling the personnel reshuffle process is crucial in rooting out corruption in the regime and growing Xi’s advantage in the CCP factional struggle.
2. The purge of thousands of leading officials (一把手) at the county level and above in 2020 indicates that corruption remains an existential problem for the CCP regime, while factional fighting remains fierce in the CCP elite.
Since the start of the year, at least two officials at the vice ministerial level—Li Wenxi, former vice chairman of the Liaoning CPPCC and Gansu executive vice governor Song Liang—have been investigated. From Song Liang’s career, we believe that his corruption case could turn up “ammunition” for the Xi camp to use against factional rivals who are seeking his ouster.
Song Liang spent most of his career in the Inner Mongolia provincial government. He was chiefly involved in financial work, and was director of the Inner Mongolia government’s financial affairs office before being promoted to deputy Party Secretary of Chifeng City in August 2011. Song Liang remained a bureau-level official and was transferred to various bureau-level positions before being promoted to deputy governor of Gansu (vice ministerial rank) in March 2017. A year later, he was promoted to his final post of Gansu executive vice governor.
We believe that it is likely that Song Liang was investigated as part of the anti-corruption authorities’ “retroactive investigations” into the Inner Mongolia government announced last February. As an official who long served in Inner Mongolia’s financial sector, Song would be well aware of the corruption going on at the time, and could be made to hand over implicating material to the Xi camp as the latter looks for leverage in the factional struggle.
As we previously analyzed, the Inner Mongolia investigations could potentially implicate Hu Chunhua, a rumored “successor-in-waiting” to the CCP General Secretary position and someone whom both Xi’s rivals and allies could back to deny him a third term at the 20th Party Congress. Another former Inner Mongolia official who could get into trouble with the ongoing investigations is Liu Yunshan, a prominent member of the Jiang Zemin faction.
3. Xi Jinping’s concerns with corruption and the factional struggle can be gleaned from his official remarks in recent months and commentary in mainland media:
- On Jan. 23, Xinhua ran a lead article on its website titled, “(Xi) Mentions ‘Three Politicals’ Three Times in a Month,” a reference to Xi urging CCP officials to “improve” their “political judgement, political understanding, and political implementation” (政治判斷力、政治領悟力、政治執行力). The Xinhua article claims: “Political corruption is the biggest corruption. Some corrupt elements formed interest groups in a futile attempt to seize Party and state power, as well as engage in non-organizational activities to undermine the Party’s centralization and unity.”
- On Jan. 24, Xi Jinping told officials attending the Fifth Plenary Session of the 19th CCDI to be “resolute in winning the fight against corruption, a political struggle that cannot and must not be lost.”
- On Sept. 3, 2020, Xi “emphasized the art of struggle” in a speech to young and middle-aged officials who were attending a training program at the Central Party School in Beijing. He also encouraged leading cadres to “struggle” to protect the Party and the regime.
- On Oct. 2, 2020, Qiushi Magazine ran an article calling on CCP officials to “dare to carry out self-revolution, dare to turn the knife inward, dare to scrape poison off bone, and dare to break one’s own wrist” to forestall intra-Party crisis, as well as the Party’s “suicide and self-destruction.”
4. The Supreme People’s Court new judicial interpretation regarding the trial in absentia of corrupt officials who have fled abroad is almost certainly aimed at intimidating CCP officials at home and prominent defectors or dissidents. For instance, Xi Jinping could charge defectors or dissidents (e.g. Ling Jihua’s younger brother Ling Jingcheng, Guo Wengui, Cai Xia, etc.) with serious crimes like endangering regime security, convict them by trial in absentia, then get Interpol to issue Red Notices targeting them.
Specific to the CCP factional struggle, allowing officials to be tried in absentia and have their assets seized could deter Xi’s factional rivals from leaking sensitive information abroad that would embarrass Xi and his allies. How effective this deterrence will be remains to be seen.
5. There is a possibility that Xi Jinping is ramping up anti-corruption efforts to quickly shut down factional struggle issues and counter the emerging “anti-Xi, not anti-CCP” strategy mooted by Western establishment elites. Xi’s tightening grip on the Party, however, could end up quickening the escalation of the factional struggle as stifled rivals are pressured to act fast before they run out of space and time to do so.
SinoInsight 2
On Feb. 5, the People’s Bank of China’s “PBoC Research” cross-platform column published an article on “protecting consumer financial data on large-scale internet platforms” (大型互聯網平台消費者金融信息保護問題研究).
Notable points in the article, which was written by the research team of the PBoC’s financial consumer rights protection bureau, include:
- Large-scale internet platforms weaken the “informed consent” agreement with users through general authorization clauses, and restrict financial consumers’ ability to opt out of the agreement. Further, the scope of “necessary data” collected by large-scale internet platforms is too wide, giving them “absolute discourse power” over the collection of user data.
- The authorities need to strengthen supervision over large-scale internet platforms to protect user personal information.
- Some large-scale internet platforms improperly use data-driven “precision marketing” strategies for commercial gains and end up “trapping” users in excessive debt consumption, thereby creating financial risks.
- Large-scale internet platforms fail to guarantee the “affordability” of their credit products, thereby falling short of the “foundation of digital inclusive financial services.”
- Large-scale internet platforms should be subjected to “penetrating supervision” to establish the concept of “responsible finance.” Also, large-scale internet platforms should establish and improve their consumer financial information protection mechanisms. Further, these platforms should strengthen the standardization of consumer financial information protection.
- The data collected by large-scale internet platforms have the attributes of public goods, and hence it is recommended that such data should be included in macro-prudential management and be regulated in accordance with public goods providers.
- Large-scale internet platforms should be subjected to anti-monopoly review.
- The scope of institutions with access to the PRC’s financial credit information database should be broadened to include all institutions involved in the lending business. All lending business data should also be submitted to the database.
- The financial marketing and publicity behavior of large-scale internet companies should be regulated.
OUR TAKE
1. The Feb. 5 “PBoC Research” article essentially outlines how the CCP regime views China’s “Big Tech” firms like Alibaba, Ant Group, and Tencent, and lays out how the regime intends to regulate them. The article is consistent with the regime’s recent crackdown on Ant and its financial regulation policies, and confirms our earlier analysis of how the CCP believes that the power and data wielded by large technology companies now endangers the regime’s political and financial security (see here, here, and here).
2. The “PBoC Research” article notes that large technology companies in China collect vast amounts of personal data from its users. Reading between the lines, the central bank appears to recognize that these companies may be collecting more information and data from the Chinese people than the PRC government—which directly threatens the CCP’s absolute control over society. Thus, the report recommends categorizing the data collected by large-scale internet platforms as “public goods” so that the data will come under the CCP’s management. The submission of lending business company data to the PRC’s financial credit information database will also boost the competitiveness of state-owned banks while strengthening the CCP’s monitoring capabilities.
3. The flurry of PRC policies and regulations governing internet platforms and financial holding companies like Ant Group should serve as a stark warning to foreign businesses, investors, and governments about the lengths to which Beijing will go to preserve regime security. Communist China may talk about greater “reform and opening up,” but it can be expected to modify its “liberal” policies at will and even confiscate assets when it feels threatened.
