SinoInsight 1
This week, the Xi Jinping leadership rolled out several measures to advance the CCP’s socialist agenda, rein in the private sector, strengthen Party rule over the regime, and consolidate power:
Aug. 29
Party and state media promoted a commentary by leftist WeChat blogger Li Guangman that praised Beijing’s recent “rectification actions” against celebrities and the tech sector, as well as Xi’s “common prosperity” socialist agenda.
Li celebrated the ongoing “profound revolution,” noting that it represented “a return from the capital group to the masses of the people, and a transformation from capital-centered to people-centered [policies].” Therefore, “this is a political change, and the people are becoming the main body of this change again, and all those who block this people-centered change will be discarded,” he wrote.
Aug. 30
1. The National Political and Legal Affairs Education and Rectification Leading Group announced that nearly 180,000 political and legal affairs officials had been reprimanded or punished for violating Party discipline and the law since the start of the political and legal affairs apparatus rectification campaign that piloted in late 2020.
The leading group noted that over 90 percent of those reprimanded were in the lower ranks of officials in leadership positions, but a greater proportion of higher ranking cadres in the cities and counties had committed serious violations of Party discipline and law. Central Political and Legal Affairs Commission secretary general Chen Yixin said that violations of senior officials “often involved a mix of judicial corruption, political corruption and economic corruption.”
2. The PRC’s National Press and Publication Administration issued new rules forbidding those under 18 from playing video games for more than three hours a week.
Aug. 31
1. The CCP Politburo announced in a meeting that the Sixth Plenum of the 19th Central Committee will be held this November. The plenum will focus on “the major achievements and historical experience of the Party’s struggle in the past century,” including why the CCP “succeeded in the past and how we can continue to succeed in the future.”
The Politburo meeting added that since the CCP was founded a century ago, it had always adhered to “communist ideals and socialist beliefs” and “sought happiness” for the Chinese people.” The meeting also touted Xi Jinping’s “education reform,” and called on Party members to deeply study “Xi Thought,” implement “the Party’s education guidelines,” and comply with new regulations regarding basic-level government work for ordinary colleges (中國共產黨普通高等學校基層組織工作條例).
2. Qin Gang, the new PRC ambassador to the U.S., said during a virtual meeting that “the extreme China policy of the previous US administration has caused serious damage to our relations, and such a situation has not changed. It is even continuing.”
Qin also said that Washington “misjudged” its need to deal with the PRC from a “position of strength” to win a “new cold war.” He added, “China is not the Soviet Union. The Soviet Union’s collapse was of its own making.”
Qin also cautioned, “Today, when the U.S. chooses to use state power to bring down Huawei, it can only expect—in the words of many Chinese—not the collapse of Huawei but the emergence of more companies like Huawei.”
Sept. 1
1. CCP ideological journal Qiushi published an article by Xi Jinping on why “the Party’s great spirit” is forever the “precious spiritual treasure of the Party and the state” (黨的偉大精神永遠是黨和國家的寶貴精神財富). The 36-paragraph article was composed of excerpts from Xi’s speeches, instructions, and letters from March 2013 to July 2021 where he touched on “the Party’s great spirit.”
Explainer: The “spirit” mentioned in the Qiushi piece is a reference to the Party’s many political campaigns and narratives (Yan’an, Long March, anti-American, anti-pandemic, anti-poverty, etc.) and struggle culture over the past century. This March, Wu Degang, the deputy dean of the CCP Central Committee’s Institute of Party History and Documentation, told mainland media that the Party had created 91 “spirits” in total.
The Qiushi article is an effort by Beijing to elevate and conflate the CCP’s so-called “spirit” with that of the Chinese race and nation.
2. The CCP government capped housing rental price rises in cities to not more than 5 percent a year.
Sept. 2
1. The PRC authorities issued guidelines to strengthen regulation of celebrity salaries, punish tax evasion, and root out “unhealthy” cultural content, including programs that portray “effeminate” behavior.
2. The PRC authorities held a meeting with 11 Chinese ride-hailing companies and instructed them to stop “using capital to engage in vicious competition and disorderly expansion.” Didi Chuxing , Meituan Dache, and T3 Chuxing were among the companies present at the meeting.
OUR TAKE
Xi Jinping is pushing for a norm-breaking third term in office at the 20th Party Congress in 2022. However, he faces an uphill battle in justifying this break from the post-Tiananmen convention, with the CCP regime facing a “perfect storm” of internal and external problems (rapidly deteriorating economy, demographic crisis, debt bomb, property bubble, coronavirus outbreaks, raising global anti-CCP sentiments, “great power competition,” etc.), as well as intense factional struggle in the Party elite.
From Beijing’s recent actions, Xi’s solution to his troubles appears to be twofold. First, tighten control by doubling down on power consolidation, regime “rectification” (anti-corruption campaign, heightened regulation, etc.), and factional struggle (warning about “another Party Central,” targeting the financial sector and rival elites, etc.). Second, win over the masses through cracking down on “capitalists” (including celebrities and tech companies), implementing “people-centric” socialist policies (“common prosperity,” poverty alleviation, education reform, etc.), and tapping into nationalism (conflating the CCP and China to “borrow” the legitimacy of Chinese culture and civilization, maintaining a confrontational stance against America, etc.).
The logic behind Xi’s solution is as follows. To secure another term in office, Xi must find a way to make himself indispensable to the regime and its success (realizing the “China dream,” “national rejuvenation,” “East is Rising, West is in Decline,” etc.). And to make himself indispensable, Xi must think and act big, including taking unpopular measures like punishing hundreds of thousands of officials and tightening regulation. In doing so, Xi is demonstrating that unlike previous CCP leaders, only he is willing and able to “turn the knife inward” (刀刃向內) and take reform into “deep-water territory” (深水區) to ensure that the CCP seizes “opportunities equally unprecedented in a century” to triumph both domestically and externally. Meanwhile, the rollout of socialist policies is designed to narrow the rich-poor divide, restore equity in society, weaken private ownership, and ultimately secure the support of the Chinese people for Xi and the CCP. Xi will then claim credit for bringing the PRC into the “new era” of “high-quality development” and having “sought happiness for the people” with his “Xi Jinping Thought.”
Xi Jinping’s solution, however, has and will inevitably incur pushback at home and abroad. Chinese officials displeased with iron discipline under Xi could dial their “passive resistance” (不作爲) and “prefer left rather than right” (寧左勿右) attitude in executing Beijing’s orders, stymying the effectiveness of Xi’s policies and success of his strategy. Xi’s factional rivals, backed into a corner, will find ways to undermine his leadership; one area in which they can cause serious trouble for Xi is the financial sector.
Xi will be anticipating resistance of some sort from his rivals, and could possibly strike first; members of the Jiang Zemin faction are at particular risk, including Jiang faction number two Zeng Qinghong and his clan.
How well the Chinese people respond to Xi’s ambitious socialist policies will also be a concern for Beijing. Xi’s policies need time to bear fruit, and the Chinese people may not be patient or tolerant enough to buy into yet another “pie-in-the-sky” scheme, especially with increasing hardships due to the coronavirus pandemic and worsening economic conditions. Worse, Xi’s leftward lurch will leave a large segment of the population skeptical and suspicious of his true intentions, especially those who lived through or heard about the Cultural Revolution, or who spent time abroad and learned about the nature of the CCP regime. Further, Black Swan events in China before the 20th Party Congress could leave the Chinese people utterly disillusioned with Xi and the Party, resulting in rising social instability and possibly rebellion.
Meanwhile, as Xi Jinping was busy pushing out one measure after the other this week to shore up his rule, influential investor George Soros published another op-ed attacking Xi, this time in the Financial Times. Soros advised foreign investors to stop buying into the China rally lest they meet a “rude awakening” from risks in the PRC, and called on Congress to enact measures to make it difficult for Chinese companies to list in U.S. markets. Other commentators have also begun encouraging foreign investors to “steer clear of China” while Xi is “on a crusade to assert Communist Party control over every sphere of economic and social life in China.” Going forward, global elites could step up “anti-Xi, not anti-CCP” efforts, and could also work in tandem with CCP elites who oppose Xi to take him down.
SinoInsight 2
Aug. 31
The Central Commission for Discipline Inspection published on its website an interview with Jiang Yujie, a researcher from the State Council Development Research Center’s Department of Macroeconomics.
Jiang made the following notable points in the interview, which was titled, “In-depth Attention | Cut Off the Capital Chain Behind the Chaos in the Entertainment Industry” (深度關注 | 斬斷娛樂圈亂象背後的資本鏈條):
- Profit-chasing is the reason for the entertainment industry’s “dysfunctional industry ecology.”
- Under the “leadership of capital,” internet platform capital, “web traffic” celebrities, and fan community (飯圈) culture have formed an “interest chain.” This “interest chain” serves capital to seize excess profits.
- The “chaos” brought about by fan community culture does not conform to the core values of socialism or China’s excellent traditional culture, and is not conducive to the healthy growth of young people.
- The arts and culture are an important front for cultural and ideological work, and is an extremely important area of work for the Party. If capital is allowed to expand in a disorderly manner in the arts and culture, then the “spiritual home of the Chinese nation” will disintegrate.
- Once the excessive expansion of capital profoundly affects overall economic and social development, the path of economic and social development will increasingly deviate from its “people-centered” track.
- The PRC system has a unique advantage in giving full play to the positive role of capital while resolutely preventing its disorderly expansion.
Sept. 1
Duowei News, the Beijing-based overseas Chinese language media outlet, cited sources close to Beijing and who are familiar with CCP elite politics as saying that the upcoming Sixth Plenum of the 19th Central Committee will send a “major political signal.” The sources say that the “third major ‘historical resolution’ [歷史決議] since Mao Zedong and Deng Xiaoping is about to emerge, with the concept of Mao Zedong, Deng Xiaoping, and Xi Jinping being officially written into Chinese Communist Party history.”
Background: Mao Zedong and Deng Xiaoping each issued a “historical resolution” as a public declaration that they had triumphed over their rivals and were hence suppressing the latter in the name of correcting their “wrong road” (“left-leaning,” “right-leaning,” “capitalist-roaders,” etc.).
Mao’s “Resolution on Certain Historical Issues” was passed at the Seventh Plenum of the 6th Central Committee, and summarized the “lessons” of political movements from the CCP’s near-defeats by the Kuomintang between 1931 and 1945. During the aforementioned period, Mao wrestled military command from the Comintern faction at the Zunyi Conference in 1935, carried out rectification campaigns in Yan’an in 1942, and finally became the Party’s supreme authority by taking the titles of Politburo Chairman and Chairman of the Central Committee Secretariat in 1943.
Deng’s “Resolution on Certain Historical Issues Since the Founding of the People’s Republic of China” was passed at the Sixth Plenum of the 11th Central Committee. The Resolution was an official summary of major events since the CCP seized power in 1949, including negating the Cultural Revolution in theory and practice. At the Sixth Plenum, Hua Guofeng stepped down from the posts of Party Chairman and chairman of the Central Military Commission, and the “Two Whatevers” faction who opposed Deng’s reforms were eased out from the Party’s elite echelons.
Sept. 2
1. “China Discipline Inspection and Supervision News,” the official newspaper of the CCDI, published an article by CCP Central Committee Institute of Party History and Literature researcher Guo Rucai titled, “Learning and Appreciating the Important Discourses of General Secretary Xi Jinping on the Comprehensive and Strict Governances of the Party Party Three | Political Construction of the Party is the Fundamental Construction of the Party” (學習領會習近平總書記關於全面從嚴治黨重要論述之三 | 黨的政治建設是黨的根本性建設).
The article discusses the importance of Party building and notes that emphasizing politics is a “fundamental requirement.” Emphasizing politics is key to maintaining “the ‘quan wei’ (權威) of Party Central, as well as centralized and unified leadership,” “strictly governing the Party” (從嚴治黨), and ensuring political discipline and regulations. Further, observing the “Two Safeguards” (“safeguarding the ‘quan wei’ of Party Central with Comrade Xi Jinping at the core, and its centralized, unified leadership”) is the “highest political principle and fundamental political rule of the Party.”
The article stressed that the seven areas of corruption (七個有之) as pointed out by Xi Jinping are fundamentally political issues, and can be summarized in two aspects. The first aspect sees interest groups forming from the intertwining of political and economic issues, and these interest groups “attempt to seize power from the Party and the state.” The second aspect sees cadres engaging in so-called “mountain-topism” (山頭主義 ) and sectarianism (both terms refer to factionalism), as well as immersing themselves in “non-organizational activities,” which results in the undermining of Party centralization and unity.
The article also emphasizes Xi’s “five musts” (五個必須) and the need for the entire Party to maintain a high degree of consistency with Party Central. All Party organizations, members, and cadres must obey the centralized and unified leadership of Party Central, adhere to Party Central’s rules, orders, and prohibitions, and never do another thing behind Party Central’s back.
2. Global Times editor-in-chief Hu Xijin published a post (宣揚中國正在發生“深刻的革命”，這是誤判和誤導) on his official Sohu account criticizing a widely disseminated article by leftist blogger Li Guangman (see SinoInsight 1). Hu argued that Li’s claim of a “profound revolution” sweeping China was inaccurate, noting that the view “deviates from the country’s major policies and has caused misunderstandings.”
Hu added that while the PRC often talks about “self-revolution,” such revolution is more akin to “self-flagellation” aimed at generating new brilliances rather than destructive campaign-style revolution. He noted that Li’s article “describes in a particular diatribe the changes taking place in China as though the country is saying goodbye to reform and opening up and the basic line and policies since the 18th Party Congress, and is about to reverse the order and enact real ‘revolution’; this is a serious misjudgement and misleading.”
Hu also noted that he had reached out to many people in government, but has never heard of the political trends as described by Li being espoused in public meetings or in private conversation.
Finally, Hu dismissed a phrase with particularly spicy revolutionary fervor (不僅要摧枯拉朽，而且要刮骨療傷) in Li Guangman’s article as being the fantasy of only a few people. “Old Hu is a man of experience. I’m very concerned that such language will evoke certain historical memories in people and trigger a range of mental confusion and panic,” he wrote.
Earlier on Aug. 26, Hu Xijin wrote in a Weibo post: “Thinking about how many undisciplined words I’ve said over the years, thinking about how many people hold up their cell phones to record and shoot when speaking on stage … will the next ‘social death’ (社會性死亡; Chinese buzzword for a reputation-destroying scandal) be I, Old Hu? I shiver thinking about this … Master, where is the toilet? I can’t help but pee in my pants…”
OUR TAKE
1. The CCDI articles that we highlighted above affirms the presence of “another Party Central” in the Party elite. Those articles even go a step further in acknowledging that those who control capital are engaging in “anti-Party power seizures,” a nod at the Jiang Zemin faction and Party princelings who dominated the financial sector during the Jiang faction’s era of dominance and after.
Beijing’s entertainment industry crackdown and attacks against the capital behind the industry also concern factional struggle. The clan of Jiang faction number two Zeng Qinghong is involved in the entertainment industry, and the Zeng clan will eventually be touched by the Xi camp’s “rectification” efforts if the campaign is thorough and proceeds without too much mishap.
2. We previously analyzed Duowei’s alignment with the “anti-Xi coalition” in the CCP elite and how the media outlet has remained relatively unscathed despite mocking and attacking Xi Jinping. So it is rather unusual for Duowei to be “leaking” information about Xi issuing a “historical resolution” at the Sixth Plenum, news that—at least at first glance—appears to be positive for the latter.
There are two likely implications of the Duowei “leak.” First, Xi Jinping has currently amassed sufficient “quan wei” to issue a “historical resolution,” “turn the knife inward” and “scrape poison from bone,” and “rectify” the wrongs of past leaders by targeting his factional rivals. Second, there remains tremendous resistance to Xi in the Party elite, and the Duowei “leak” is really Xi’s enemies laying the groundwork to eventually oust him in the name of “bringing order out of chaos” (撥亂反正).
Both implications are equally likely based on currently available information. Either implication also indicates that Xi and his rivals are mobilizing supporters in preparation for a factional struggle showdown.
3. In considering the Jiang faction’s sway over the financial sector and prominent international financiers’ declaring their opposition to the Xi leadership, Xi Jinping’s enemies could be preparing to oust him by leveraging their influence in the financial arena.
Political risks in China are rising steeply. Businesses, investors, and governments must make contingencies for things to worsen this year, including the CCP meeting a “Berlin Wall moment.”
