Downfall of Fu Zhenghua, Sun Lijun affirms trend we identified in CCP elite politics; China’s debt crisis worsens

• Always keep a clear head;
• Increase their risk awareness;
• Establish “bottom line thinking”;
• Unleash their “struggle spirit”;
• Take strict precautions and severely crackdown on all kinds of disruptive, destructive, subversive and infiltrative activities of hostile forces inside and outside the country;
• Resolutely cut off the “black hand” of hostile forces inside and outside the country that endanger national security;
• Resolutely crush the Hong Kong version of the “color revolution” plot;
• Resolutely safeguard national sovereignty, security and development interests.

• Sun “never stayed true to the Party’s ideals and faith, betrayed the ‘Two Safeguards,’ completely lacked the ‘Four Consciousnesses,’ displayed extremely inflated political ambition, had very poor political integrity, held extremely distorted views on power and achievements, held improper discussions of Party Central’s major policies, created and spread political rumors, complied publicly but defied privately (陽奉陰違), deceived superiors and concealed from subordinates (欺上瞞下), and fished for political capital.”
• To achieve personal political goals, Sun resorted to “unscrupulous means, manipulated power, engaged with cliques and factions in the Party, formed gangs and factions, cultivated personal followers, formed interest groups, controlled vital departments with gangs, seriously undermined Party unity, and endangered political security.”
• Sun was “arrogant, acted unscrupulously, engaged in privileges, deserted his post on the frontline of fighting the COVID-19 epidemic, privately possessed confidential materials without authorization, and engaged in superstitious activities for a long time.”
• Sun used “methods and means in public security investigation” to resist a disciplinary and supervisory investigation into himself. He also “violated organizational principles, failed to truthfully explain the problem under inquiries from the organization, wantonly sold official posts, placed cronies in office during personnel reshuffles, and seriously destroyed the political ecology of the public security and political and legal affairs apparatus.”

1. The various public security developments above either directly or obliquely affirm our analysis of CCP elite politics: Xi Jinping’s targeting of Jiang Zemin faction’s political legacy (the persecution of Falun Gong) as the Xi-Jiang factional struggle moves towards the end game, and the Hong Kong situation since anti-extradition bill protests broke out in the city in 2019.

The recent public security developments also provide more clues as to how Xi plans to more fully consolidate his control over Hong Kong, how the “anti-Xi coalition” could counter Xi, and what Xi could do in response. They also track with the ongoing second segment of the national political and legal affairs education and rectification campaign, which targets political and legal affairs officials of all ranks in provincial-level administrations and the central government.

2. The Jiang faction has long held sway over Hong Kong since the handover from Great Britain, and Xi Jinping has been trying to wrestle control over the territory away from the Jiang faction since taking office in 2012. Hong Kong quickly became a factional struggle “battleground” where both sides traded blows and sought to undermine each other. We previously gave an overview of the Xi-Jiang struggle in Hong Kong and various factional struggle-related incidents from 2012 to the start of the anti-extradition bill demonstrations in 2019.

Just like during the pro-democracy protests in 2014, the Jiang faction exploited the anti-extradition bill protests to further fracture Hong Kong society and create even more headaches for the Xi leadership. The hand of the Jiang faction is perhaps the clearest in the Yuen Long Incident in July 2019, with the leveling of guilty charges against some of the assailants this June indicating that the Xi camp disapproved of the triad attacks against passersby. Regardless, the Hong Kong police’s heavy-handedness at the time and the CCP’s tough messaging meant that Beijing lost the hearts and minds of the bulk of the people in Hong Kong; this is evidenced by the pan-democrat camp’s landslide victory during the district council elections in November 2019 and pro-CCP Hong Kong establishment camp’s heavy defeat.

The CCP’s handling of the Hong Kong situation also damaged Sino-U.S. relations, affected bilateral trade talks at the time, and later led to U.S. sanctions; all this undermined Xi’s “quan wei” and cut into his political capital. Worse, the de facto bankruptcy of the “one country, two systems” arrangement with the pro-Beijing Hong Kong authorities crushing the pro-democracy camp in the city and the implementation of the Hong Kong National Security Law in June 2020 seriously set back the CCP’s strategy for “reunification” with Taiwan. The people of Taiwan became more anti-CCP, the Beijing-friendly Kuomintang presidential candidate lost the January 2020 ROC election, and support for the “one country, two systems” model on the island dropped sharply.

Xi Jinping’s strategy for Hong Kong since the anti-extradition bill protests has been to clamp down even more tightly and tighten his personal control over the city. To that end, Xi extended the PRC’s national security apparatus, a supra-authority organization, to Hong Kong via the Hong Kong National Security Law and the Committee for Safeguarding National Security of the Hong Kong Special Administrative Region. The shuttering of Apple Daily, the arrest of prominent pro-democracy advocates, and crackdown on “seditious” children’s books and their publishers have sent a chill throughout Hong Kong while eliminating most public dissent.

Party Central’s tightening control also swayed Hongkongers to leave the city in droves, and saw businesses relocate or transfer their money to places with less political risk, such as Singapore (a prominent example is Jiang Zemin’s grandson Alvin Jiang, co-founder of Boyu Capital). For Xi, however, Hong Kong’s loss of vitality and wealth, as well as the damage to his personal prestige and global popularity, are a necessary price to pay for markedly increased political stability in the territory and far fewer opportunities for the Jiang faction and the “anti-Xi coalition” (including external enemies) to transform Hong Kong into an “anti-Xi base” in the lead up to the 20th Party Congress in 2022. A Hong Kong transitioned from “chaos to governance” would count as a political victory of sorts for Xi, and boost his prospects of securing a norm-breaking third term.

Part of Xi’s strategy for tightening control in Hong Kong involves eliminating room for his factional rivals to maneuver in the agencies responsible for Hong Kong affairs. When the anti-extradition bill protests were unfolding, Xi ally Zhao Kezhi was added to the Central Hong Kong and Macau Coordination Leading Group to serve as a deputy leader. In February 2020, the Central Hong Kong and Macau Coordination Leading Group was upgraded to the Central Hong Kong and Macau Work Leading Group.

Under the previous arrangement, Politburo Standing Committee (and Jiang faction member) Han Zheng was the Central Hong Kong and Macau Coordination Leading Group’s head, while Zhao Kezhi, Central Foreign Affairs Commission Yang Jiechi, United Front Work Department head You Quan, PRC foreign minister Wang Yi, and Hong Kong and Macao Affairs Office (HKMAO) director (also Jiang faction member) Zhang Xiaoming served as deputy heads of the leading group.

After the Hong Kong and Macau leading group was upgraded, it retained Han Zheng as head but only kept two deputy heads in Zhao Kezhi and new HKMAO director Xia Baolong. Yang Jiechi, Zhang Xiaoming, You Quan, and Wang Yi were “demoted” to regular members of the leading group alongside other members Li Xi (Guangdong Party secretary), Ma Xingrui (Guangdong governor), Luo Huining (Hong Kong Liaison Office director), and Fu Ziying (Macau Liaison Office director).

The organizational structure of the Central Hong Kong and Macau Work Leading Group essentially blunts the Jiang faction’s ability to cause mischief. While Jiang faction member Han Zheng still heads the leading group, the leading group’s deputy leaders Zhao Kezhi and Xia Baolong, who  belong to the Xi camp,  would be able to keep Han honest, at least in theory. Also, Jiang faction member Zhang Xiaoming was demoted last year as HKMAO director and is now only a regular member of the new leading group, while half of the regular members of the leading group belong to the Xi camp, including You Quan, Li Xi, Ma Xingrui, and Luo Huining. With Xi tightening the noose around the Jiang faction, the odds of Zhang Xiaoming being investigated are steadily rising.

Another of Xi’s “major strategic deployments” in Hong Kong is the purging of Sun Lijun. Per our earlier analysis, Sun, a Jiang faction member, formerly oversaw political security (including Hong Kong and Macau affairs) as director of the MPS’s First Bureau and anti-Falun Gong activity as director of the MPS’s Twenty-sixth Bureau. The removal of Sun in April 2020, or two months prior to the implementation of the Hong Kong National Security Law and establishment of the national security apparatus in the city, guards against a hijacking of Xi’s supra-authority organization and further cleans out the Jiang faction’s “poisonous influence.”

Other “major strategic deployments” include the appointment of Luo Huining as Hong Kong Liaison Office head, as well as sweeping personnel reshuffles at the Liaison Office (200 new cadres transferred in 2019, with a net increase of 100 cadres; see here and here) and its leadership ranks. For instance, five of the six Liaison Office deputy directors were reshuffled after Xi took office, and those cadres either have minimal or no working experience in the Hong Kong and Macau apparatus prior to their current posting. And of the ones who were not replaced, only He Jing (age 57) has been with the Liaison Office since 1999.

3. The downfall of Sun Lijun and Fu Zhenghua is long in the making given the highly probable involvement of both Jiang faction officials in events concerning the negative political legacies of both Xi Jinping (Xinjiang, human rights lawyer crackdown, etc.) and Jiang Zemin (Falun Gong, corruption, etc.) in 2015 and beyond.

2015 was a particularly volatile year in the Xi-Jiang factional struggle. On the one hand, the Xi camp sentenced former security czar Zhou Yongkang to life imprisonment, investigated former CMC vice chair Guo Boxiong (the other Jiang era CMC vice chair Xu Caihou died of cancer in March 2015), required that the judiciary accept all cases (“有案必立，有訴必理,” which led to an avalanche of criminal complaints against Jiang Zemin by Falun Gong practitioners and human rights lawyers), leaked damaging information about the military hospitals’ involvement in live organ harvesting to the Hong Kong press (via retired major general Jiang Yanyong), saw pro-CCP Hong Kong media publish a story about the PRC’s top transplant doctor Huang Jiefu implicating Zhou Yongkang in the use of death row prisoner organs, and saw Xi Jinping hold a grand military parade and begin implementing military reform.

On the other hand, several negative incidents cropped up that have been linked to the Jiang faction, including a “financial coup” in June (two days after Zhou Yongkang’s sentencing), the mass arrest of human rights lawyers on July 9, a massive explosion in Tianjin in August, and the vanishing of five members (including staff and shareholders) of the Causeway Bay Bookstore in Hong Kong over the bookstore’s planned publication of a book containing scandalous details about Xi’s alleged love life. The last two human rights incidents attracted global attention and later led the U.S., Canada, the European Union, Japan, and other countries to publicly voice their concerns about rights abuses under the Xi leadership.

The Xi leadership may or may not have directly ordered the 709 crackdown and the arrest of booksellers, but the chances that Xi Jinping was behind both incidents are slim to none. The 709 crackdown runs against the grain of Xi’s campaign at the time to reform the judicial system and accept all complaints (“有案必立，有訴必理”). Arguments that Xi was looking to “draw the snake out of its hole” (引蛇出洞) with the judicial reform before swooping in to make arrests run counter to Xi’s broader overhaul of the justice system and gradual weakening of the Jiang faction’s anti-Falun Gong campaign before and after 2015, including the abolishing of the labor camp system in 2013, a high-profile effort to correct miscarriages of justice by the CCP judicial system in 2016, and the formal disintegration of the 610 Office in 2018.

Meanwhile, it is highly unlikely that Xi would have heard about the scandalous book about him given the preference of CCP officials to report only good news to their superiors and the extremely trivial nature of the “incident.” If Xi did not hear anything, he would not have the opportunity to personally order the kidnapping of the five book sellers. And even if Xi did hear about the book, the odds of him ordering petty retribution are very slim because taking action boosts the credibility of the book and its publisher, helping to promote both and drawing unwanted attention to Xi.

From the perspective of Party operations, it is more likely that orders to go after the “709 incident” lawyers and the Causeway Bookstore staff came from leading cadres in the political and legal affairs apparatus who oversaw the Hong Kong public security and anti-Falun Gong (many “709 incident” lawyers were defending or defended Falun Gong practitioners at the time) portfolios in 2015. And in 2015, Fu Zhenghua was a vice minister of public security, a member of the Central Political and Legal Affairs Commission Party, as well as the deputy director of the Central Leading Group on Dealing with Heretical Religions and director of its office, which is better known as the 610 Office. Meanwhile, Sun Lijun was the 610 Office’s deputy director and director of the MPS’s First Bureau and Twenty-sixth Bureau in 2015.

Both Fu and Sun could have “creatively” interpreted (“prefer left rather than right”) the Xi leadership’s general call to do “stability maintenance” work well to simultaneously advance the Jiang faction’s anti-Falun Gong agenda and undermine the Xi leadership through ruining Xi’s global reputation during a very intense year in the Xi-Jiang factional struggle. The Xi camp would likely be aware of what Fu and Sun had done, but did not act at the time because Xi Jinping was still far behind in power consolidation and could not easily remove two prominent Jiang faction members without incurring even greater pushback. Fu’s case is also somewhat special because he had helped the Xi camp take out his former boss Zhou Yongkang. However, with Xi Jinping having now consolidated power to a high degree and needing to eliminate political risks before the 20th Party Congress, he can no longer delay action against Fu and Sun.

The CCDI’s charges against Sun Lijun leave no question that he is being purged for his part in the factional struggle. The downfall of Fu Zhenghua within days after Sun was “double expelled,” as well as his transfer to the CPPCC soon after anti-corruption authorities announced an investigation into Sun in May 2020, also hint at a connection between the two cases. It is likely that the Sun case was recently brought to a conclusion (at least from the anti-corruption agency side) only after he finally cooperated with investigators (one of his charges was resisting investigation), and Sun could have implicated his former superior Fu in his confessions, leading to a formal investigation into the latter.

We first anticipated Fu Zhenghua’s downfall in March 2018, and noted that he “still faces significant levels of political risk” even though he appeared to receive a “soft landing” after stepping down as PRC justice minister in April 2020.

4. The purge of Sun Lijun, Fu Zhenghua, and Xing Lin continues a trend since the start of the year of political and legal affairs officials previously holding 610 Office appointments being targeted under Xi Jinping’s anti-corruption campaign. In most cases, the anti-corruption authorities note that the official served in the 610 Office during their career in the investigation announcement; this was not always made explicit in prior takedowns of 610 Office personnel.

The current list of 610 Office officials purged this year includes:

There are two likely reasons why the anti-corruption authorities are going after 610 Office personnel and signaling to the rest of the Party that they are doing so. First, Xi Jinping is targeting Jiang Zemin and his faction’s negative political legacy to gain leverage in the factional struggle ahead of the 20th Party Congress in 2022.Second, Xi is looking to displace Jiang’s supra-authority organization (610 Office) with his own supra-authority organization (national security apparatus) to further consolidate his control over the CCP regime. The bulk of 610 Office cadres are in the Jiang faction (hence the “engaging in cliques and factions” and “forming interest groups” charges against Sun Lijun), and those cadres often abused their position and factional clout to “seriously undermine Party unity and endanger political security” both during the Jiang faction’s era of dominance and the Xi era.

We would not be surprised to see the rounding up of 610 Office cadres lead to the arrest of bigger Jiang “tigers” in the political and legal affairs apparatus, including Supreme People’s Court president Zhou Qiang, CPLAC chief Guo Shengkun, and former CPLAC secretary Meng Jianzhu. Zhou Qiang is the most at-risk of the three, given his participation in the “Shaanxi 100 Billion Mining Case” in 2019. Depending on the trajectory of the Xi-Jiang struggle, the Jiang faction and its senior members could eventually be outed as “another Party Central” that attempted a “Lin Biao armed coup” against the Xi leadership, and be dealt with accordingly.

5. There is a possibility that Sun Lijun could have possessed and sought to disseminate confidential material pertaining to the coronavirus or the CCP’s epidemic work. For one, the CCDI’s announcement of Sun’s expulsion noted that he “privately possessed confidential materials without authorization” directly after stating that he “deserted his post on the frontline of fighting the COVID-19 epidemic,” which suggests that the two incidents are connected. Also, Xi Jinping spoke about biosecurity risk control and management to the Politburo a day before Sun was officially expelled. There were also rumors circulating last year that Sun’s wife fled to Australia with confidential material about the coronavirus.

Regardless of whether Sun did indeed possess confidential material about the coronavirus and leaked it, it is clear that the Xi leadership wants to create the impression that that was the case. We believe that the Xi camp could be paving the way to eventually blame the coronavirus outbreak on “cliques and factions” and “another Party Central,” i.e. the Jiang faction and the “anti-Xi coalition,” and justify the takedown of  “untouchable” very senior CCP officials in the name of “protecting the Party and protecting the regime” (保黨保政權). Such a development would be in line with the scenario which we laid out in our 2019 special report on factional struggle and the coronavirus outbreak.

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