SinoInsight 1
On April 29, President Joe Biden laid out his domestic and foreign policy priorities in addressing a joint session of Congress.
Biden’s roadmap for America broadly aligns with our earlier analysis of the Biden-Harris administration’s interim national security strategy and foreign policy guidance. We wrote at the time:
- Under the guise of “defending/revitalizing our democracy,” the Biden-Harris administration will “consolidate power at home, punish political enemies, and ram through pet projects like climate change actions and ‘equity’ programs.”
- “America on its current trajectory under the Biden-Harris administration will move towards authoritarianism and communism.”
- The Biden-Harris administration’s approach to China is “anti-Xi, not anti-CCP.”
Highlights of Biden’s speech that prove our points (with brief commentary) include:
America
1. Biden said, “Tonight, I come to talk about crisis and opportunity. About rebuilding the nation, revitalizing our democracy, and winning the future for America … Now, after just 100 days, I can report to the nation, America is on the move again. Turning peril into possibility, crisis into opportunity, setbacks to strength.”
2. Biden continues to frame the Jan. 6 Capitol breach as an “insurrection” despite emerging evidence proving otherwise. For instance, Biden describes the incident as “the worst attack on our democracy since the Civil War” in opening his speech. Later he talks about “a violent mob assaulting this Capitol—desecrating our democracy … The insurrection was an existential crisis, a test of whether our democracy could survive.”
- Commentary: On April 29, Deputy Assistant Attorney General Brad Wiegmann said in a Congressional hearing that U.S. federal agents have arrested more than 430 people in connection with the Jan. 6 incident. “As the investigation continues, and as sufficient additional evidence is gathered and other criminal perpetrators are identified, we will continue to charge additional defendants with offenses relating to the events of January 6th,” he added. Wiegmann and President Biden’s remarks indicate that the Biden-Harris administration will keep expanding its persecution of political enemies as part of “defending/revitalizing our democracy” and power consolidation.
3. Biden announced several plans to “deliver real equity,” including a new $1.8 trillion economic stimulus that “aims to redistribute trillions of dollars of resources from the highest-earning households and businesses to everyone making less than $400,000 a year,” according to a Wall Street Journal article.
- Commentary: Redistribution and “equity” have Marxist roots and are gateways to socialism and communism. Americans weaned on stimulus cheques, free public education where students are indoctrinated in neo-Marxist critical race theory and other socialist ideas, and other government handouts and social programs will be more inclined to support real socialism and communism over time.
4. Biden said, “And we won’t ignore what our intelligence agents have determined to be the most lethal terrorist threat to our homeland today: White supremacy is terrorism.”
- Commentary: Many classical liberal, centrist, and conservative commentators have pointed out that the American left, mainstream media, Democrat politicians, and members of the establishment intelligentsia usually label people and things they disagree with as “White supremacists” as a form of demonization. Journalists on the political left have also warned of a “new domestic war on terror” aimed at combating “neo-Nazi, white supremacist ideology” and those who sympathize with people accused of being “White supremacists.”
5. Biden said, “gun violence is becoming an epidemic in America … I will do everything in my power to protect the American people from this epidemic of gun violence … We need a ban on assault weapons and high-capacity magazines.”
- Commentary: The Second Amendment allows the American people to protect themselves from tyrannical government. If the Biden-Harris administration is moving towards authoritarianism and communism, it will not stop at merely restricting Americans’ Second Amendment rights, but will work incrementally towards repealing them altogether.
6. Biden said, “Our Constitution opens to the words, as trite as it sounds, ‘We the people.’ It’s time we remembered that ‘We the people’ are the government.”
- Commentary: Students of the Constitution will note that the Framers, fearing tyranny and wary of human fallibility, designed the Constitution to protect the people from the government. As James Madison wrote in Federalist 51, “If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary.” Biden’s reframing of the Constitution to equate the people and the government should be a warning sign to those who fear authoritarianism in America.
- Communist and socialist regimes frequently invoke “the people” to justify authoritarian rule by a handful of elites over the rest of the population. For instance, the CCP regime is called the People’s Republic of China, its military is called the People’s Liberation Army, and its courts and prosecuting bodies are called “People’s Courts” and “People’s Procuratorates.” The PRC government, however, ultimately serves the Party, not the people.
China
1. Biden said, “We’re in competition with China and other countries to win the 21st century. We’re at a great inflection point in history. We have to do more than just build back better …
“… I would like to meet with those who have ideas that are different, that they think are better. I welcome those ideas. But the rest of the world is not waiting for us. I just want to be clear, from my perspective, doing nothing is not an option. Look, we can’t be so busy competing with one another that we forget the competition that we have with the rest of the world to win the 21st century.
“Secretary Blinken can tell you, I spent a lot of time with President Xi—traveled over 17,000 miles with him, spent over 24 hours in private discussions with him. When he called to congratulate, we had a two-hour discussion. He’s deadly earnest on becoming the most significant, consequential nation in the world. He and others, autocrats, think that democracy can’t compete in the 21st century with autocracies, because it takes too long to get consensus.”
- Commentary: The Biden-Harris Interim National Security Strategic Guidance notes that “traditional distinctions between foreign and domestic policy … are less meaningful than ever before.” One of the ways in which we understand this blurring of foreign and domestic is that the Biden-Harris administration plans to use foreign issues and crises like China to advance its domestic agenda where applicable. From his remarks above, President Biden is calling on Republicans and those who disagree with him to “unite” and arrive at “consensus” to help him pass policies that supposedly aid the U.S. in “competition with China,” but will likely do more to allow the Biden-Harris administration to forge ahead with its radical socialist agenda than seriously address the CCP threat. Republicans who do not go along with the administration could be cast as “unpatriotic” and “uncooperative” in aiding America’s effort to “compete with China,” while dissidents could encounter political persecution.
- The “united front” approach of “working” with enemies in the name of combating an external enemy is a favorite tactic of Marxist radicals and was deployed to great effect by the CCP. During the Sino-Japanese War, the CCP exploited the Second United Front with the Kuomintang to infiltrate, subvert, and undermine the latter. Eventually, the “united front,” or “consensus,” laid the foundations for the KMT’s ouster from the mainland following the defeat of Imperial Japan.
- In an interview with Fox Business on April 30, former Secretary of State Mike Pompeo said of Biden’s speech, “Well if you listen to his rhetoric we’d be fine, but you and I both know this is likely to be an empty promise. There’s no evidence in the record that this administration is prepared to truly confront China.”
2. Biden said, “The investments I propose tonight also advance a foreign policy, in my view, that benefits the middle class. That means making sure that every nation plays by the same rules in the global economy, including China. In my discussions with President Xi, I told him we welcome the competition. We’re not looking for conflict.
“But I made absolutely clear that we’ll defend America’s interests across the board. America will stand up to unfair trade practices that undercut workers and American industries like subsidies from state to state-owned operations and enterprises and the theft of American technology and intellectual property. I also told President Xi that we’ll maintain a strong relationship in the Indo-Pacific, just as we do for NATO and Europe. Not to start a conflict, but to prevent one.
“I told him what I said to many world leaders, that America will not back away from our commitments, our commitments to human rights and our fundamental freedom and our alliances. I pointed out to him, no responsible American president could remain silent when basic human rights are being so blatantly violated. An American president has to represent the essence of what our country stands for.”
- Commentary: Biden’s held Xi Jinping personally responsible for the CCP’s crimes and malign behavior spanning four decades using a rhetorical tactic. In other words, the Biden-Harris administration is essentially adhering to the “anti-Xi, not anti-CCP” China strategy that an establishment think-tank published shortly after his inauguration.
- Because the average person does not differentiate between China, the CCP, and Xi Jinping, most will presume that Biden is just being tough on China from his remarks. Indeed, most people will view Biden’s anecdote of “talking tough” to Xi as him being personally invested in taking on a dictator, unlike President Trump, whom mainstream media has depicted as being friendly with strongmen.
OUR TAKE
1. Biden’s speech to the joint session of Congress is terrible news for Xi Jinping but good news for the CCP.
By now, the CCP would have deduced that the Biden-Harris administration does not plan to seriously address the threat of Communist China. The administration has made it abundantly clear that domestic issues (power consolidation) and climate change are its overriding priorities, and the “China challenge” is primarily used to help Washington advance its domestic agenda. Meanwhile, PRC scholar Di Dongsheng strongly alluded to successful CCP elite capture of the Biden-Harris administration (Joe Biden through his son Hunter) after the U.S. presidential elections in 2020. Thus, the CCP feels comfortable in stepping up its “wolf warrior” approach against the U.S. (see the Alaska meeting) and the world because it does not fear further and sudden escalation in the Sino-U.S. relationship, unlike during the Trump era. While the CCP appears to be consistent in its anti-American propaganda under Biden as compared to under Trump, glaring omissions (no Biden official has been villainized like how Secretary Pompeo was) and curious commentary (China Daily recently gave a backhanded compliment to Biden’s “young China officials”) show that it is now much less concerned with offending the U.S. than it is with intimidating America into kowtowing to the PRC. Beijing is also taking advantage of Washington’s lackluster China approach and focus on internal matters to promote its “East is declining, West is rising” propaganda and make inroads to become the global hegemon.
The CCP is also much less concerned with the current iteration of ideological battle with America. The Biden-Harris administration’s “democracy versus autocracy” framing fails to pose any existential danger whatsoever to the regime; the CCP already sells itself as a “democracy” in its propaganda, while “autocracy” is not a criticism of communism. By contrast, the CCP fears the Trump administration’s ideological attack, namely, exposing it as a Marxist-Leninist organization, distinguishing between the Chinese people and the CCP, and publicly condemning Communist China on all human rights matters, including once-taboo topics like Falun Gong and forced organ harvesting. The CCP is aware that open criticisms of its human rights crimes is only a step away from sanctions and the world treating the PRC like the Nazi regime. Also, differentiating between the CCP and the Chinese people raises the possibility of a China without the Party in charge. Further, identifying the CCP as a Marxist-Leninist organization instead of, say, an “authoritarian capitalist” one, blows the “benign” cover that it has been using to interact and blend in with normal countries in the past 40 years; communist regimes are still viewed very negatively today given the atrocities they perpetrate and the horrors associated with their pernicious ideology.
The CCP being less concerned about ideological struggle with the U.S., however, does not mean that it has ceased guarding against it. In an April 29 commentary published in Party mouthpiece People’s Daily, top PRC diplomat and Politburo member Yang Jiechi warned America, “if anyone challenges the Chinese Communist Party or China’s political system and leadership, the Chinese people will definitely not accept this.”
On the flipside, President Biden’s address to Congress is bad for Xi Jinping. On paper, Washington is putting up the appearance of being tough on China, and Biden appears to be signaling that his displeasure with China is connected with Xi personally. What Xi wants is for the U.S. to revert U.S.-China relations to the pre-Trump “engagement” era. Xi’s rivals will undoubtedly seize upon Biden’s speech as yet another example of deteriorating Sino-U.S. relations to attack him at opportune moments. As we wrote previously, the Biden-Harris administration being “anti-Xi, not anti-CCP” keeps the pressure on Xi Jinping, “denying him the opportunity to claim credit for bringing about markedly improved Sino-U.S. relations by ‘delaying and waiting for change’ (以拖待變) in America, i.e. outlasting the Trump administration. Xi’s rivals can also wield America’s continued ‘tough on China’ approach as a cudgel against him.” It is also presently unclear whether Xi personally benefits from the CCP’s capture of U.S. ruling and business elite, and if so, to what degree; Wall Street and Washington elites would have more likely forged connections with Jiang faction elites in the past two decades than with the Xi camp given the factional dynamics during that period.
2. Xi’s recent political messaging during his Guangxi tour indicates that he knows external circumstances are grim for himself and Communist China. The CCP’s increased militarism and “wolf warrior” diplomacy has met with global pushback. Members of the informal global “anti-CCP coalition” (Australia, Taiwan, etc.) have realized that Beijing’s “weaponization” of China’s markets through blocking imports and brand boycotts is much less effective than imagined, especially with allied nations willing to take over PRC demand and the Chinese people putting personal interests first over jingoistic nationalism in the case of Xinjiang cotton boycotts. Moreover, the Biden-Harris administration’s “sustaining” of Trump-era China policies (most are currently “under review”) instead of dropping them immediately signal to Beijing that the corner has not yet been turned in the Sino-U.S. “new cold war.”
U.S. and international pressures aside, the CCP also faces a deteriorating economy, immense financial risks (implicit debt problems, bond refinancing issues, “platform economy” monopolistic practices, defusing the Ant/Alibaba situation, etc.), shrinking demographics, and the coronavirus pandemic (PRC vaccine efficacy, recent outbreaks in India and elsewhere threatening the mainland situation, etc.). Worse, Xi has to deal with the prospect of serious challenges against his rule from a coalition of domestic and foreign opponents, particularly between now and the 20th Party Congress in 2022.
Black Swans are on the horizon in China this year as Xi struggles with a lethal cocktail of political, geopolitical, financial, and pandemic dangers.
SinoInsight 2
April 30
Qiushi, the ideological publication of the CCP Central Committee, issued the full text of Xi Jinping’s Jan. 11 speech to leading provincial and ministerial-level officials (we analyzed earlier reports of the speech here). Titled “Xi Jinping: Seize the New State of Development, Implement the New Development Concept, Construct a New Development Pattern,” the speech ran over 10,000 characters long and focused on four issues.
Highlights of the speech include:
1. In expounding on the first issue (“accurately seize the new state of development”), Xi reiterated goals laid out during the Fifth Plenum in 2020.
After “comprehensively building a moderately prosperous society and achieving the first centennial goals,” the CCP should move towards “comprehensively building a modern socialist country,” actualizing “second centennial struggle goals,” and bring “socialism with Chinese characteristics into a new era,” Xi said. He added that those objectives represent a “new phase” in the primary stage of socialism.
Xi also noted that “the world today is undergoing major changes unseen in a century,” with “chaos” (亂) being a main characteristic. He added that the aforementioned trend will continue, but while “most of the opportunities and challenges are unprecedented, opportunities outweigh challenges on the whole.”
2. On the second issue (“deepening the implementation of the new development concept”), Xi Jinping reviewed 12 “historical achievements” and “historical changes” that took place under his rule. He then attributed those “successes” to the so-called “new development concept,” a systematic theoretical system devised by Party Central under his leadership.
Xi called on the Party to:
- “Completely, accurately, and comprehensively implement the new development concept” to resolve the people’s livelihood problem and the rich-poor gap. Xi reminded officials to heed the experience of the Soviet Union, noting that the Russian communist regime disintegrated because it distanced itself from the people and “became a privileged bureaucracy that only defended its own interests.”
- Resolve the problems of technological self-reliance; regional development imbalances; expanding and opening up to the outside world while safeguarding regime security; and regime security problems (“economic ups-and-downs,” huge fluctuations in capital flows, food supply, energy supply, supply of important resources, supply chain stability, “disorderly expansion of capital,” large-scale unemployment, various social problems, etc.).
- “It is necessary to enhance danger awareness and adhere to bottom line thinking.”
3. In elaborating on the third issue (“accelerating the construction of a new development pattern”), Xi Jinping proposed establishing a “dual circulation” model with “domestic circulation as the mainstay” to facilitate the “new development pattern” in the current period where “economic globalization is encountering a countercurrent and the international economic cycle pattern is undergoing in-depth adjustments.” He added that the “new development pattern” is the CCP’s “strategic blueprint and first-mover advantage in seizing the initiative for future development.”
Xi admitted that local officials have greatly misunderstood the concept of “domestic circulation”:
- Some areas shrunk their scale of economic opening up to foreigners;
- Some areas do things their own way and end up creating “small circulations” (local-level internal circulation) instead;
- Some officials implemented so-called “low-level logistics circulation”;
- To resolve “bottleneck technology problems” (i.e. U.S. chip sanctions), some officials blindly rushed out “incomplete ‘high-end’ projects” (i.e. places with no conditions to pursue semiconductor manufacturing end up doing so regardless);
- Some officials borrow blindly and expand investments to expand “domestic demand.”
Xi believes that China’s “market resources” are a tremendous advantage, but “external circulation” is still a must to increase the PRC’s industrial competitiveness and influence in the global industrial chain and supply innovation chain.
4. As for the fourth issue (“strengthening the Party’s overall leadership of socialist modernization”), Xi Jinping emphasized that “socialism with Chinese characteristics is the most essential feature of the Chinese Communist Party’s leadership.” He also called on officials to increase government efficiency by unifying and advancing “the political advantage of the Party’s comprehensive leadership,” “institutional advantages of socialism with Chinese characteristics,” and “theoretical advantages of the new development concept.”
Further, Xi called on officials to be “politically savvy” (政治上的明白人), improve “political judgement, political understanding, and political execution,” and “implement well” the “decisions and deployments of Party Central.”
April 30
Xi Jinping presided over a Politburo meeting on the present economic situation and economic work. The meeting held that the coronavirus epidemic was controlled and the economy recovered significantly under the leadership of the Central Committee with “Comrade Xi Jinping at the core.”
However, the meeting also noted that the PRC’s first-quarter economic results should be “viewed dialectically,” and that “the current economic recovery is uneven and the foundation is not solid.”
OUR TAKE
1. Several themes in Xi Jinping’s Jan. 11 speech to leading provincial and ministerial-level officials echo those of his recent Guangxi inspection tour: China is passing through dangerous, uncertain times, and officials must be loyal to Xi and implement policies to his specifications so that the CCP can emerge from the chaos victorious. The publication of Xi’s full speech in Qiushi after his Guangxi tour is likely part of a coordinated push to drive home the aforementioned message.
In analyzing PRC propaganda outlet reports on Xi Jinping’s Jan. 11 speech at the time it was delivered, we noted that what Xi had to say “embodies the CCP’s ‘survival-dominance’ dynamic.” Also, “[b]y extolling his achievements since assuming office, Xi is attempting to legitimize his move to highly centralize power in his person, particularly after the 19th Party Congress in 2017.” The full text of his speech in Qiushi affirms our analysis.
Xi is not exaggerating in his claim that the PRC faces “unprecedented challenges.” We already went over some of those critical challenges already in the first entry of this newsletter. The totality of “unprecedented challenges” mean that Xi and the CCP currently see sky-high levels of political risk.
To convince the Party to keep following his leadership amid the crises and avoid a sense of doom and gloom, Xi sought to “spin tragedy into cause for celebration” (喪事當喜事辦), and push “pie in the sky” (畫大餅) goals in his Jan. 11 speech. However, too much “positive energy” (“正能量”) propaganda can backfire. For instance, the CCP’s talk of having “controlled” the COVID-19 epidemic in China very likely inspired many people to participate in mass gatherings without their face masks during the weekend Labor Day holiday. Talk of “significant” economic recovery could also encourage risky financial activity that could aggravate economic imbalances and trigger debt crises.
2. The April 30 Politburo meeting called for China’s first quarter economic results to be “viewed dialectically.” This rare phrasing disguises a suggestion for people to not be too optimistic about the regime’s economic prospects, and for officials to curb unnecessary borrowing to expand investments.
Diminished economic and financial prospects in China, as well as stricter regulation and deleveraging, are impacting capital flows to the mainland:
- April 19: Fang Xinghai, vice chairman of the China Securities Regulatory Commission, said at the 2021 Boao Forum for Asia that the PRC authorities will suspend trading of foreign accounts that cause volatility in Chinese stock markets. He added that the CSRC is “paying close attention” to large foreign fund inflows and outflows in the stock markets, and noted that foreign hedge funds are responsible for a portion of the capital flows. Fang gave an example of how preventive measures can be applied to the Shanghai-Hong Kong and Shenzhen-Hong Kong stock connects: “First, we can now maintain a daily entry and exit quota; inflows are 50 billion yuan, and total outflows cannot exceed 42 billion yuan.”
- April 25: According to a Caixin report, a high-speed railway project from Shandong Jinan to Zaozhuang (Jizao High-speed Railway) was recently halted. The 58.5 billion yuan project had already accepted bids in March. Caixin cited a Shandong railway system source as saying that the project was suspended to avoid railway debt risks. At the same time, Shaanxi Province also suspended the Guanzhong Intercity Railway project after considering the “risk prevention perspective.”
- April 28: Bloomberg News reported on Vanguard Group’s exit from the Chinese market in March, noting that the firm’s difficulties in securing a mutual fund license due to increased regulations as one factor in its withdrawal. However, Vanguard still has a presence in China via a joint advisory venture with Ant Group.
Last October, former Chongqing mayor Huang Qifan observed that the CCP has “three magic weapons” for handling financial problems. Beijing could use those “three magic weapons” or other measures in accordance with “socialism with Chinese characteristics” to cope with financial risks associated with large capital flows into and out of China.
