SinoInsight 1
Jan. 28
Xi Jinping presided over the 27th group study session of the Politburo of the 19th Central Committee. In a speech delivered at the start of the group study session, Xi said:
- The Party should “take a good first step to ensure a good result” (開好局起好步), seeing as 2021 marks the first year of the 14th Five-Year Plan’s implementation, and the CCP is due to celebrate its centennial anniversary this July.
- CCP officials at all levels should “fully implement the new development concept,” a “very important political requirement.”
- The CCP should make contingency plans for “Black Swans” and “Gray Rhinos.”
Jan. 29
Lai Xiaomin, the former chairman and Party Secretary of the state-owned China Huarong Asset Management, was executed per the Jan. 21 order of Tianjin No. 2 Intermediate People’s Court. “The amount of bribes received by Lai Xiaomin was extremely large, the crime’s circumstances were particularly serious and the social impact was particularly severe,” wrote the PRC’s Supreme People’s Court in reviewing and approving the execution order.
The PRC judicial authorities alleged that Lai embezzled more than 25 million yuan in public funds between 2009 and 2018, and had extramarital affairs.
OUR TAKE
1. Xi Jinping’s latest speech to the Politburo touched on political and financial security, two issues he has repeatedly brought up in recent public addresses. For instance, Xi called on 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) during a “democratic life meeting” from Dec. 24 to Dec. 25, a seminar for leading provincial and ministerial-level officials on Jan. 11, the Fifth Plenary Session of the 19th Central Commission for Discipline Inspection running from Jan. 22 to Jan. 24, and in his Jan. 28 speech to the Politburo. And in his CCDI Fifth Plenum speech, Xi noted that the intertwining of political and economic problems in China threaten the CCP regime’s political security.
Xi is preoccupied with political and financial security because political and financial problems represent the greatest threats to his leadership in the short-term (1 to 2 years) and survival of the CCP regime. Xi is likely very aware that crucial windows of opportunity are opening up for his factional rivals and their allies to mount a serious challenge to his rule and whether he deserves a third term in office in the lead up to the 20th Party Congress in 2022. Xi’s rivals and their allies could potentially seek to embarrass Xi or move against him around “sensitive” periods like the CCP’s centennial anniversary celebration, this year’s Beidaihe meeting where more intense 20th Party Congress personnel reshuffle discussions and horse trading will likely take place, the Sixth Plenum in late 2021, and the Beijing Winter Olympics in early 2022. Further, Xi’s rivals and their allies could seize upon specific issues to engineer his removal, including but not limited to significant financial or economic deterioration in China, the investigation into the origins of the SARS-CoV-2 virus and whether the coronavirus leaked from a lab, as well as crises pertaining to Taiwan, Hong Kong (National Security Law), and Xinjiang (particularly the U.S. designating the CCP’s persecution of Uyghur Muslims a genocide and a crime against humanity).
2. The official reasons for executing Lai Xiaomin, namely, “severe corruption” and “particularly severe” social impact, are merely excuses.
First, virtually the entire CCP officialdom engages in corruption of some sort, varying only in degree and scale. “Revelations” of a guilty official’s corruption by mainland media are almost always watered down because the true scale of the crime would ruin the Party’s image.
Second, it is rare for CCP officials at Lai Xiaomin’s rank (sub-ministerial level) to receive the death sentence over corruption charges, and even rarer for them to be executed. For instance, of the 378 sub-ministerial/provincial/deputy corps leader rank officials found guilty of corruption since the 18th Party Congress in 2012, five (Bai Enpei, Zhu Mingguo, Wu Changshun, Xing Yun, and Zhao Zhengyong) were handed “death sentence with reprieve” (a two-or-more year suspended death sentence) and only two were sentenced to death.
Of the two officials on deathrow, Zhao Liping, the former vice chairman of the Inner Mongolia Autonomous Region Chinese People’s Political Consultative Conference and former director of the Inner Mongolia Public Security Bureau, was also found guilty of “deliberate murder” alongside corruption charges and was executed about three-and-a-half months after the court order. Meanwhile, former Luliang City deputy mayor Zhang Zhongsheng, whose corruption case involved 1.17 billion yuan, is apparently still held in a detention facility because the Supreme People’s Court has yet to review a May 2019 order by the Shanxi High Court reaffirming his death sentence.
In contrast, Lai Xiaomin was executed a mere eight days after his Jan. 21 court appeal failed (compared with Zhao Liping’s three-and-a-half months), and he is officially accused of “only” embezzling over 25 million yuan in public funds (compared with Zhang Zhongsheng’s 1.17 billion yuan). The fact that Lai was executed after Xi Jinping stressed political and financial security during the CCDI’s Fifth Plenum (Jan. 22 – Jan. 24) and the 19th Politburo’s 27th group study session (Jan. 28) suggests that the former’s execution is entirely a political matter.
3. A review of Lai Xiaomin’s career indicates that he belongs to the Jiang Zemin faction.
Lai, 59, was born to a poor rural family in Jiangxi’s Ruijin City. Good grades earned him a spot at the Jiangxi University of Finance and Economics, from which he graduated in 1983. After graduation, Lai found employment with the People’s Bank of China, and worked his way up to deputy director of the central bank’s credit management department in 1997, a mid-ranking position analogous to the deputy bureau rank.
Subsequently, Lai Xiaomin’s career development and decline seemed to be closely tied with former PBoC governor Zhou Xiaochuan, a Jiang faction member.
In December 2002, Zhou was appointed PBoC governor. Five months later, Lai was transferred to the China Banking Regulatory Commission’s second supervisory department. In July 2003, Lai was heading the Beijing Banking Regulatory Commission’s Supervision Bureau preparatory team, and by September, he was director of the Beijing Banking Regulatory Bureau and promoted in rank (analogous to bureau rank).
The 2008 global financial turmoil resulted in a rise in non-performing assets held by state banks, and provided a promotion opportunity for Lai Xiaomin. In January 2009, Lai was transferred to Huarong, one of the PRC’s four largest state-owned asset management companies at the time, serving as director and deputy Party Secretary (a promotion). In September 2012, he was promoted to Party Secretary and chairman of Huarong. Under Lai, Huarong managed the most assets of the four state-owned asset management companies, and the company was listed in Hong Kong in October 2015.
Lai Xiaomin’s fortunes nosedived almost immediately after his former boss and political patron Zhou Xiaochuan retired in March 2018. The following month (April 17), the CCDI announced an investigation into Lai, a probe which ended in his execution on Jan. 29, 2021.
We believe that top financial officials like Lai Xiaomin (probed April 2018), Tomorrow Group’s Xiao Jianhua (vanished January 2017), and CEFC’s Ye Jianming (investigated March 2018) were taken out due to factional struggle concerns on Xi Jinping’s part. Huarong, Tomorrow Group, and CEFC have had prior business dealings, and their bosses are believed to be involved in the 2015 “financial coup” against the Xi leadership. The 2015 coup prompted Xi to step up anti-corruption investigations in the financial sector starting in 2017 (as we anticipated) as he sought to deny his factional rivals further opportunities to pull off another “financial unrestricted warfare” against him. Because Lai Xiaomin, Xiao Jianhua, and Ye Jianming served as bagmen, or “white gloves” (白手套) for powerful factions and families in the CCP elite, targeting them is Xi’s way of sending a message (殺雞儆猴) to the Jiang faction, the “anti-Xi coalition,” and other CCP interest groups.
4. Based on publicly available information, Lia Xiaomin is also tied with the Zeng Qinghong Clique/Jiangxi Gang in the Jiang Zemin faction. Zeng Qinghong, a power Party princeling with influence over the CCP’s intelligence apparatus, was Jiang Zemin’s political enabler and the nominal number two of the Jiang faction. Both Zeng Qinghong and Lai Xiaomin are natives of Jiangxi Province.
According to reports in overseas Chinese language media, when Lai was in charge of Huarong, the asset management firm offered tens of billions of yuan in financing to an unnamed company. Said company later sold property firms it owned in Hong Kong and Shenzhen to the Zeng Qinghong clan at a low price, and those property companies would come under the management of Zeng’s niece Zeng Baobao.
In January 2019, the CCDI’s magazine carried an article accusing Lai Xiaomin of having a preference for hiring his fellow Jiangxi natives. “If Huarong threw a dinner party just for Jiangxi villagers, the cafeteria would be half empty” that day, wrote the article, citing Huarong staff.
Xi Jinping’s anti-corruption campaign has claimed the scalps of several “Jiangxi Gang” officials who owed their promotions to Zeng Qinghong. Notable officials include former Jiangxi Party Secretary Su Rong and former state security vice minister Ma Jian.
SinoInsight 2
In late January, many “self-media” commentators in China and verified WeChat users reported receiving a notice from WeChat “reminding” them about the “qualifications required for official accounts to publish news and information on the internet” (關於公眾賬號從事互聯網新聞信息發布需要資質的提醒).
Per the WeChat notice, verified users need to apply for a “internet news information service license” (互聯網新聞信息服務許可證) or other “relevant media qualifications,” citing a string of new PRC laws and regulations governing the matter. The notice “recommends” that verified users without “qualifications” should not “[conduct] interview(s), edit, distribute, comment, or analyze” news and information concerning “politics, economics, military matters, foreign affairs, and major incidents or other related content.” Otherwise, verified users “may violate relevant laws and regulations.”
OUR TAKE
1. In reviewing the “relevant laws and regulations,” the WeChat notice virtually bars all independent commentators (individuals or groups) from compiling, discussing, and disseminating news and information on “politics, economics, military matters, foreign affairs, and major incidents or other related content” on social media.
Per the 2017 Internet News Information Service Management Regulations:
- “News information as mentioned in these Regulations includes reporting and comments on politics, economic, military matters, foreign affairs, and other such social public affairs, as well as reporting and comments on sudden social incidents.” (Article 2)
- “An internet news information services licence shall be obtained to provide internet news information services to the public through internet websites, application software, forums, blogs, microblogs, public account, instant messaging tools, online live streaming and other such methods. Launching internet news information service activities without a licence or in excess of the licence’s scope is not permitted. Internet news information services as mentioned in the previous paragraph include internet news information gathering and distribution services, reprinting services, and dissemination platform services.” (Article 5)
- “Those applying for an internet news information service gathering and distribution services licence shall be news work units (including the work units they control) or a work unit controlled by a news or propaganda department.” (Article 6)
The above articles in the “internet news information” regulation entails that only official or semi-official media in the PRC can secure a license to report on “politics, economics, military matters, diplomacy, and major incidents or other related content,” but not self-media commentators.
2. If WeChat and the CCP choose to strictly enforce the “relevant laws and regulations” governing “internet news information,” then soon the only content allowed on WeChat and possibly other Chinese social media are those concerned with entertainment, food, travel, romance, and other “positive” (i.e. non-controversial) news. This is because PRC social media regulators can easily interpret almost anything that needs to be censored as “other related content,” and prevent self-media content creators from commenting on incidents of societal injustice or wrongs, rights defense cases, and a host of other “negative” social matters. Even those in the “50-cent Army” and pro-CCP Maoist commentators are at risk of being censored under the PRC’s vague regulations.
Meanwhile, “politics, economics, military matters, foreign affairs, and major incidents” will become the sole purview of official and semi-official mainland media outlets.
3. The CCP’s strengthening of speech censorship and public opinion control is a manifestation of crisis in the CCP elite. Communist China is currently plagued by an unprecedented “perfect storm” of problems (coronavirus on the rise, economic and financial woes, food shortages, soaring consumer prices, factional struggle, etc.), and the Party cannot allow the Chinese people to become disseminators of news, especially when the news is mostly bad and piling up fast. The CCP fears that the airing of public grievances, many of which are longstanding, could trigger uprisings and compound the regime’s problems during a trying period for the Communist Party.
