SinoInsight 1
June 18
The PRC State Council held an executive meeting presided over by premier Li Keqiang. The meeting recognized that commodity prices have spiked in recent months, including the prices of agricultural production materials such as fertilizers and diesel. As such, the central government announced a one-off 20 billion yuan ($3.1 billion) subsidy for farmers.
June 22
The All-China Federation of Supply and Marketing Cooperatives, Central Leading Group Office for Rural Work, People’s Bank of China, and the China Banking and Regulatory Commission jointly issued guidance on piloting the development of the production, supply, and credit “trinity” (關於開展生產、供銷、信用“三位一體”綜合合作試點的指導意見). The guidance stated that work to establish pilot “trinity” work units “with demonstration and leading roles” will begin in July 2021 and be finished by the end of June 2023.
OUR TAKE
1. The CCP’s moves above suggest that global inflationary pressures are seriously impacting Chinese farmers and China’s agricultural sector, but the regime is running out of options and funding to properly address the problem.
Meanwhile, the joint effort by rural and financial authorities to develop production, supply, and credit lines indicates that the regime is strengthening its control over agricultural production and supply as it makes contingencies for Communist China to weather further isolation by the international community.
2. According to China Agricultural Means of Production Association data, fertilizer prices in China rose across the board on June 14:
- The China urea wholesale price index (CNPI) increased by 514.21 points over seven consecutive weeks to hit 2672.93 points, reaching a new historical peak since the index was published in 2011.
- The China diammonium phosphate wholesale price index (CPPI) grew to 3300.39 points, the third-highest level on record since the index was published on May 6, 2013. Previously, the index hit a record high on March 29, 2021 at 3307.24.
- The China potassium chloride wholesale price index (CKPI) grew to 2681.59 points, a record high since the index was published on May 6, 2013.
The CCP’s 20 billion yuan one-time subsidy is a drop in the bucket for farmers facing record-high production material prices. According to data from the CCP’s “National Land Use Master Plan (2006 – 2020)” (全國土地利用總體規劃綱要 [2006—2020年]), China had 1.865 billion mu (one mu is equivalent to about a sixth of an acre) of arable land, 1.546 billion mu of basic farmland, and 800 million mu of high-quality farmland as of 2020. Assuming the 20 billion yuan only goes towards subsidizing farmers working on high-quality farmland, the average subsidy per mu works out to be just 25 yuan. And if the subsidy is instead divided equally amongst the rural population (509.79 million people), that works out to a measly 39.23 yuan per person. Of course, the above calculations assume that all of the 20 billion yuan finds its way into the hands of the farmers; more often than not corrupt officials will have their slice of the subsidy and leave even less for those who are supposed to benefit from it.
3. Chinese farmers face not only increased production material costs stemming from inflation, but also the negative consequences of the CCP importing large amounts of grain from abroad to lower the consumer price index (CPI).
According to data released by the PRC General Administration of Customs in June, China’s grain imports surged year-on-year in the first five months of the year by 191 percent to 27.11 million tons. The grains imported include the three main staples (rice, wheat, corn), as well as barley and sorghum. Wheat imports in the first five months of 2021 increased 89 percent from a year ago to 4.61 million tons; rice imports increased 130 percent year-on-year to 2.25 million tons; and corn imports increased 323 percent year-on-year to 11.73 million tons, exceeding the annual import quota of 7.2 million tons.
4. Beijing has been expanding the scale of rural supply cooperatives since Xi Jinping took office. The total number of rural supply cooperatives grew from 19,082 in 2012 to 37,652 in 2020 (97.3 percent increase); rural supply cooperative workers grew to 694,000 in 2020 from 514,000 in 2012 (35 percent increase); and total sales by rural supply cooperatives went up from 2.6 trillion yuan in 2012 to 5.3 trillion yuan in 2020 (103.8 percent increase).
In analyzing the CCP’s development and expansion of its rural supply cooperatives back in 2018, we noted that Beijing appears to be preparing for the worst as international pressure against Communist China began to spike under the Trump administration. The CCP’s continued work in that area suggests that it is continuing with its self-sufficiency and control preparations as the regime faces “turbulence unprecedented in the past century,” “major changes unseen in a century,” and “major risks and challenges at home and abroad,” in the words of Xi Jinping.
The CCP’s revitalization of rural supply cooperatives is not entirely a return to the planned economy of the past, at least for the time being. Rather, Beijing appears to be encouraging local rural supply cooperatives to take the initiative and become semi-autonomous in resolving issues pertaining to people, supply, and finances. Meanwhile, Beijing still retains sway over the local rural supply cooperatives through shareholding mechanisms, the issuing of business licenses, or control over supply channels. Beijing is likely hoping that the updated arrangement will allow it to indirectly strengthen Party control over rural localities while curbing longtime problems like various supply or credit-related inefficiencies and localities excessively relying on the central government for financial support.
Should the worst-case scenario happen, the CCP could partially close up China and leverage its updated rural supply cooperatives system to implement a semi-planned economy. The cooperatives system could be used to facilitate material redistribution, restrict the movement of personnel across China, and lower the risk of popular uprising.
SinoInsight 2
June 22
The Sichuan Provincial Political and Legal Affairs Commission held a press conference in Chengdu to announce the results of first segment “education and rectification” work. According to the press conference, the provincial authorities accepted more than 40,000 reported cases while over 2,300 Sichuan political and legal affairs officials had “voluntarily surrendered” themselves to the authorities as of June 16. Further, disciplinary and supervisory organs have filed cases and investigated more than 1,600 officials, detained over 140 officials, and punished more than 3,800 officials.
Per mainland media reports, the CCP’s “education and rectification” campaign will be carried out in two segments. The first segment, which commenced in February 2021 and will span four months, targets political and legal affairs commissions, work units, prisons, and drug rehabilitation centers in cities and counties. The second segment, which commences in August 2021 and is scheduled for three months, targets the Central Political and Legal Affairs Commission and its work unit, as well as provincial political and legal affairs commissions and their work units
June 24
The Central Political and Legal Affairs Commission’s “Chang An Wang” website reported that the National Political and Legal Affairs Education and Rectification Leading Group held its third meeting. The meeting revealed that provincial education and rectification leading groups took “another look” (回頭看) at the first segment “education and rectification” work, with the central authorities carrying out “pressure point style” oversight of “another look” work.
- Analysis: The so-called “another look” inspection appears to be a selectively spot checking of first segment “education and rectification” work, likely in response to fresh reports or last minute cases. “Pressure point style” oversight means that Party Central carried out selective spot checks of the provincial spot checks.
“Chang An Jian” noted that the “closing” of investigations does not mean the “end” of “education and rectification” work. “Chang An Jian” added that by taking “another look” at first segment “education and rectification” work, the central authorities were sending three important signals: First, inspectors will not withdraw if their objectives are not met; there is no tolerance for improper rectification; and the second segment of “education and rectification” work is about to begin.
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From June 16 to June 25, mainland media and government websites reported the investigation of another nine bureau-level political and legal officials. Five of the nine were about to retire or had retired.
1. June 16: He Jianmin (age 58), deputy secretary of the Heilongjiang Provincial Political and Legal Affairs Commission and a first-level inspection team member, was investigated.
2. June 18: Zhou Chengde (59, approaching retirement), a member of the Liaoning High People’s Court judicial committee, was investigated.
3. June 19: Xie Hongxing (53), former deputy inspector of the Henan High People’s Court, was investigated.
4. June 21: Li Junxin (57), deputy mayor of Luohe City in Henan Province and director of the city’s Public Security Bureau, voluntarily surrendered himself for investigation.
5. June 23: Sun Bo (58), member of the Shuangyashan City Party Committee and secretary of the Shuangyashan Political and Legal Affairs Commission, was investigated.
6. June 24: Dong Ge (68, retired in 2014), a former member of the Inner Mongolia Xilingol League Party Committee and Xilingol League Political and Legal Affairs Commission, was investigated.
7. June 24: Guan Lianping (62, retired in April 2019), former director of the Changchun City Stability Maintenance Work Leading Group Office, was investigated.
8. June 25: Wang Fuhai (49), head of the Qinghai Provincial Party Security Bureau Traffic Police Corps, was investigated. Wang previously served as deputy captain of the Qinghai domestic security (國保) team and captain of the domestic security reconnaissance team (March 2014 to April 2017).
9. June 25: Chu Luning, (62, female, retired in April 2019), former vice president of the Qingdao Intermediate People’s Court in Liaoning Province, was investigated.
OUR TAKE
The PRC’s publicly available information and our previous research (see here, here, here) indicate that the scope of the first segment of “education and rectification” work in the political and legal affairs apparatus is very broad and intense.
The official announcement that “education and rectification” of political and legal affairs officials at the provincial level and above will commence in August is even quicker than we anticipated, especially seeing how the rectification campaign is scheduled for completion in March 2022. The accelerated timetable could be related to the upcoming Beidaihe meeting in the July-August period and the 6th Plenary Session of the 19th Central Committee in the fourth quarter of the year; as domestic and international pressures mount for Xi Jinping and the CCP regime, Xi needs to get a firm grip on the Party’s “knife handle” as quickly as possible to ensure smooth “stability maintenance” operations and to keep his factional rivals in check.
Depending on how serious the challenges to Xi and the CCP become, the ongoing rectification of the political and legal affairs apparatus could see the downfall of “big tigers” in the provinces or in the central government ahead of the key meetings we mentioned above. Tighter internal crackdowns could in turn inspire Xi’s domestic political rivals to ramp up efforts to marginalize him before or during the 20th Party Congress in 2022.
