SinoInsight 1
Feb. 8
In a series of reports, the CCP’s Central Commission for Discipline Inspection noted that an investigation into the Ministry of Public Security found that efforts to “eliminate the poisonous influence of [former security czar] Zhou Yongkang, [former Interpol head] Meng Hongwei and [former public security deputy minister] Sun Lijun” were inadequate. Further, there was “not enough supervision and control over executive power in key areas and processes.”
The CCDI also noted that Shaanxi Province had underperformed in rooting out the “poisons” left by Zhao Zhengyong, the former Shaanxi boss, purged in January 2019.
Additionally, the CCDI said there was a need to target “big tigers” (senior CCP officials accused of corruption) and stay “totally loyal” to Xi Jinping.
Feb. 10
1. The CCP Central Committee hosted its annual Lunar New Year event at the Great Hall of the People. A thousand people were in attendance, including Xi Jinping, PRC vice president Wang Qishan, and all members of the Central Committee. According to an official picture of attendees applauding a theatrical performance used by mainland media outlets, everyone faced the stage save four young men in identical haircuts, who instead faced the attendees.
2. Various news outlets reported that Zhang Feng, a Tencent executive, was being detained and investigated by the authorities for allegedly sharing unauthorized personal data collected by Tencent’s WeChat app with Sun Lijun. Tencent confirmed that Zhang is being probed for “allegations of personal corruption.”
OUR TAKE
1. The 1,000-odd attendees of the CCP Central Committee’s Lunar New Year event belong to the regime’s elite. Most of them are in their sixties or seventies, and must pass extensive political and security screening before they attend the event. All attendees are almost certainly subjected to security checks at the Great Hall of the People to ensure they are unarmed. Regardless, Xi Jinping still deems it prudent to assign security personnel (the four young men with identical haircuts) to closely monitor the dignitaries during the event. Similar security personnel can also be spotted amongst the attendees of Lunar New Year events in recent years when reviewing state media footage.
The security overkill at the Central Committee’s Lunar New Year event indicates that the CCP leadership does not trust the regime’s elite. The paranoid-levels of security also hint at the “perish together” state of the CCP factional struggle.
2. Recent CCDI reports also shed light on escalation in the CCP factional struggle. Given the Jiang Zemin faction’s decades-long sway over the Party’s political and legal affairs apparatus and the entrenching of Jiang loyalists in the ranks, the CCDI is not exaggerating the “poisonous influence” of top Jiang lieutenant and security czar Zhou Yongkang even though it has been six years since the latter was purged. Since taking office in 2012, Xi Jinping has struggled immensely in “rectifying” the Party’s organs and replacing personnel with suspect loyalties, because he did not have his own faction and a large stable of ready allies to allocate to key positions. Instead, Xi has relied on a personnel reshuffle “formula” to make the best of a bleak situation, with mixed results.
Xi is currently paving the way to attempt a norm-breaking third term in office at the 20th Party Congress in 2022. The implicit aim of the ongoing “rectification” of the political and legal affairs apparatus is resolving factional struggle trouble before the 20th Party Congress. This means that the arrest of “big tigers” is a matter of when, not if.
Factional struggles are especially unforgiving in Communist China because the Party is an atheist, Marxist-Leninist organization that revels in struggle. “Unity” and “consensus” in the Party is largely propaganda framing used to deceive foreigners about the regime’s “authoritarian resilience” and advantage.
3. How the U.S. approaches China will hugely impact the CCP factional struggle in the lead up to the 20th Party Congress, especially if the Biden-Harris administration pursues an “anti-Xi, not anti-CCP” strategy (see SinoInsight 2). Such a strategy could bring about previously improbable scenarios.
One such scenario is a split between Xi Jinping and Wang Qishan, something we previously ruled out, as the two are long acquainted and Wang was instrumental in facilitating Xi’s power consolidation. However, should the “anti-Xi, not anti-CCP” strategy become more apparent in American actions toward the PRC, or if Xi suspects the U.S. of implementing such a strategy, then Xi will grow increasingly wary of Wang due to his history of work with American establishment elites.
Wang’s career presented him with many opportunities to forge connections with Wall Street and U.S. government officials. In the 1990s, Wang cooperated with Morgan Stanley to found the PRC’s first investment bank when he was governor of the China Construction Bank. In 2007, he drew even closer to U.S. financiers after becoming PRC vice premier in charge of finance and commerce and was tasked with overseeing deeper Sino-U.S. economic and financial integration. As vice premier, Wang “helped” Wall Street recoup losses stemming from the 2008 financial crisis and served as Hu Jintao’s special representative in the 2009 U.S.-China Strategic and Economic Dialogue. In 2018, Wang met with top Wall Street bankers to smooth out the Sino-U.S. relationship, which was then rocked by the onset of a trade war.
Strongmen throughout history tend to develop heightened levels of paranoia as they struggle to stay in power. Xi Jinping could become more guarded against Wang Qishan if he suspects the latter of collaborating with Western elites to oust him. Wang could also take precautions out of self-preservation, which could worsen Xi’s paranoia. A Xi-Wang split would further complicate the CCP factional struggle, and see Xi’s personal political risk levels skyrocket.
SinoInsight 2
Feb. 10
1. President Joe Biden spoke with PRC leader Xi Jinping for the first time since taking office. Biden said the call lasted two hours.
According to a White House readout of the call, Biden “affirmed his priorities” of “preserving a free and open Indo-Pacific.” He also “underscored his fundamental concerns about Beijing’s coercive and unfair economic practices, crackdown in Hong Kong, human rights abuses in Xinjiang, and increasingly assertive actions in the region, including toward Taiwan.” Biden and Xi discussed the COVID-19 pandemic and “shared challenges of global health security, climate change, and preventing weapons proliferation.” Finally, Biden said he is “committed to pursuing practical, results-oriented engagements when it advances the interests of the American people and those of our allies.”
Per the Xinhua report on the call, Xi Jinping stressed that the PRC and the U.S. “both gain from cooperation and lose from confrontation; cooperation is the only right choice for both sides.” Xi added that both countries should “follow the spirit of no conflict, no confrontation, mutual respect and win-win cooperation, focus on cooperation, manage their differences, and work for the sound and stable development of China-U.S. relations.”
2. President Biden launched a Pentagon China task force to review the U.S. strategy towards the PRC. According to news reports, the task force will be composed of military and civilian officials in the Department of Defense and is expected to give recommendations to Defense Secretary Lloyd Austin in early summer.
Speaking to Pentagon staff, Biden said that countering the PRC will “require a whole-of-government effort, bipartisan cooperation in Congress and strong alliances and partnerships. That’s how we will meet the China challenge and ensure the American people win the competition in the future.”
Feb. 11
According to a report in Nikkei Asia, the Indo-Pacific directorate will be the largest contingent in President Joe Biden’s national security team, “a sign of how this [National Security Council] is prioritizing China and broader Indo-Pacific policy issues,” NSC spokesperson Emily Horne said.
Horne added, “National security adviser Jake Sullivan is personally focused on China as a priority, building capacity across departments and agencies and running processes that break down old silos between foreign and domestic policy.”
The team led by Indo-Pacific Coordinator Kurt Campbell is “filled with experts who have advocated a tough stance on China,” the Nikkei article notes, citing some articles by those experts in recent months.
OUR TAKE
1. The White House readout of Biden’s call with Xi suggests some continuity in China policy between the current administration and previous administrations. “Preserving a free and open Indo-Pacific” is a Trump administration initiative, while talk of “pursuing practical, results-oriented engagements” sounds like a repackaged version of America’s longstanding “engagement” China policy.
While the Biden-Harris administration has said it would unlikely “downgrade links” with Taiwan “in order to please China,” subtle changes in official rhetoric are not assuring. The condemnation of the PRC’s “increasingly assertive actions in the region, including toward Taiwan” in the White House readout of the Biden-Xi call is phrased awkwardly, as though Washington does not wish to discuss Taiwan as a standalone issue like Xinjiang and Hong Kong. Taiwanese officials have also noted that recent statements from the Biden-Harris administration “avoided calling Tsai president, as had become the norm under Donald Trump”; instead, the administration refers to “Taiwan’s democratically elected representatives” rather than its leader or government.
SinoInsight 3
- China Mobile had 941.918 million users at the end of 2020, a net decrease of 8.359 million users throughout the year.
- China Unicom had 305.8 million users at the end of 2020, a net decrease of 12.664 million users over the course of the year.
- China Telecom had 351.02 million users at the end of 2020, a net increase of 15.45 million users during the year.
OUR TAKE
1. The massive demand for chrysanthemums in Wuhan is unusual because the flower is offered to the dead per modern “Westernized” Chinese customs. It is likely other flowers sold out because too many people wanted to commemorate the first-year death anniversary of their friends and relatives, and once chrysanthemum supply was depleted, they had to make do with other types of flowers. The brisk sale of flowers in Wuhan on Feb. 12 indicates that the coronavirus death count in the city far exceeds the CCP’s official figures; as of Feb. 13, the PRC government only acknowledges 3,869 COVID-19 deaths in Wuhan, and 4,636 deaths nationwide.
The CCP’s penchant for deception, data manipulation, and “saving face” means that official figures cannot be trusted as a rule of thumb. Observers, however, can grasp a rough approximation of the actual situation by reading other indicators. For instance, economists track the so-called “Li Keqiang Index” (electricity consumption, rail cargo volume, bank lending) to get a better idea of how China’s economy is really performing. In tracking COVID deaths last year, we analyzed crematorium data, ash boxes, and cell phone user data (see here and here).
2. Last year, several news outlets reported that China’s top three telecom companies lost 21 million users during the January-February period, a figure that indicates the actual number of COVID cases and deaths was potentially much higher than what the CCP announced at the time.
The drop in mobile users at the end of 2020 and sharp decrease in cell phone shipments also partially corroborate estimations of significantly higher coronavirus deaths/cases in China. Worse for the CCP, its own “healthy” economic recovery in the second half of 2020 (fourth quarter GDP increase of 6.5 percent) and for the whole year (2.3 percent GDP growth) does not quite match the scale at which cell phone users decreased (5.573 million users).
Businesses, investors, and governments should be very skeptical of legacy media narratives of how the PRC “beat” the virus and experienced “economic recovery” in 2020. In accounting for CCP censorship and cover up, we estimate China ranks within the top five countries hardest hit by COVID-19.
