SinoInsight 1
Prominent Australia-based Chinese dissident and jurist Yuan Hongbing told Dajiyuan (Chinese language edition of The Epoch Times) in an interview that the arrest of former Suncity Group CEO Alvin Chau is a sign of intensifying intra-Party factional struggle post-Sixth Plenum. In earlier interviews with overseas Chinese media, Yuan cited Party insiders as saying that Xi Jinping was obstructed by elite cadres led by former Politburo Standing Committee member Zhang Gaoli from criticizing Jiang Zemin in Xi’s “historical resolution.” (see here and here).
Yuan said that his Party insider friends in the Macau system disclosed that Alvin Chau is a “white glove” (bagman) and Macau asset of certain Party elite clans, including those belonging to Jiang faction number two Zeng Qinghong and former Central Political and Legal Affairs Commission secretary Meng Jianzhu. “The purpose of arresting this ‘Little King of Gamblers’ [Alvin Chau] is to destroy the economic foundation of Jiang Zemin, Zeng Qinghong, Meng Jianzhu, and others … and then attack them politically.” Yuan added.
Yuan Hongbing also said that Chau was taken down swiftly because the public security apparatus was now under the command of Xi close ally Wang Xiaohong, the new public security Party secretary and likely incoming public security minister.
Dec. 6
Pro-CCP Hong Kong newspaper Sing Tao Daily said it “learned” that “national security” was a major issue behind the takedown of Alvin Chau. The newspaper added that Xi Jinping personally issued instructions to crackdown on cross-border gambling, which “seriously affects the country’s economic safety, social stability, and national image,” on at least six occasions in recent years,
Sing Tao also said that the operation against Chau was led by the central government through Wang Xiaohong even though it was the Macau police who made the arrest.
OUR TAKE
The arrest of Alvin Chau was preceded by sweeping crackdowns on the mainland. In January 2020, the Ministry of Public Security announced that in 2019, public security organs had solved more than 7,200 online gambling cases, arrested 25,000 suspects, seized and froze over 18 billion yuan in gambling-related funds, and broken up more than 300 illegal underground money changers and online payment gangs. In May 2021, the MPS announced that since 2020, public security organs had handled 18,000 cases of cross-border gambling and related crimes involving over 110,000 suspects; and had taken down more than 3,400 online gambling platforms, over 2,800 illegal payment platforms and underground money changers, more than 1,400 illegal technical teams, and over 2,200 gambling promotion platforms.
If the operations of Xi Jinping’s anti-corruption campaign serve as a template, then the authorities appeared to have worked its way up the cross-border gambling food chain before homing in on bigger fish such as Chau. With rare exceptions in Xi’s first term, Beijing usually carries out high-level purges only after gathering sufficient evidence and “softening” the target of its “rectification” campaign. The Xi leadership has to move cautiously and be especially methodical in taking out prominent corruption targets because many of them have the political backing of the Jiang Zemin faction or other influential Party elites. That Alvin Chau remained at large until the third year of the Xi leadership’s anti-cross-border gambling campaign further underscores Chau’s ties to the Jiang faction, as well as shows that Xi Jinping likely lacked sufficient “quan wei” and a sense of political urgency until very recently to move against a bagman of the Jiang faction elite.
2. A review of Xi Jinping’s factional struggle-related actions from January 2020 to the arrest of Alvin Chau indicates a clear escalation in the Xi-Jiang conflict. This affirms the assessment in our 2020 special report that factional struggle in the CCP regime had reached an inflection point in early 2020 and was heading towards a showdown.
A brief timeline notable factional struggle-related developments from January 2020 to December 2021 is as follows:
2020
January
Jan. 20: Xi Jinping publicly acknowledged the COVID-19 outbreak and called for the “resolute curb” of its spread.
Jan. 28 – Jan. 29: Hong Kong media reported mass reshuffles in the Hong Kong Liaison Office.
Jan. 30: Kong Qingdong, a radical left Peking University professor and political ally of Jiang faction member Bo Xilai, attacked Xi in a cryptic Weibo post.
Jan. 30 – Feb. 4: Xi “disappears” from public view and in official media.
February
Feb. 13: Xia Baolong replaced Zhang Xiaoming as Hong Kong and Macau Affairs Office (HKMAO) director. Zhang, a Jiang faction member, was demoted to HKMAO deputy director with responsibilities over daily operations.
Feb. 14: Xi Jinping chaired a meeting of the central committee for deepening overall reform where he spoke about speeding up the establishment of a biosecurity law and the importance of biosecurity to national security.
Feb. 15: Qiushi published a speech by Xi where he claimed to have made instructions to deal with the coronavirus pandemic during a Politburo Standing Committee meeting on Jan. 7.
Feb. 18: Ren Zhiqiang, a Party princeling and old friend of close Xi ally Wang Qishan, published a controversial article attacking Xi and the CCP. Ren was subsequently “disappeared” by the authorities. Observers speculate about a so-called “Xi-Wang split”; we do not believe such theories hold water.
Feb. 23: Xi Jinping addressed about 170,000 cadres and military personnel on epidemic prevention and control work in a national teleconference meeting. Xi spent more than a third of his 10,000 character-long speech giving an account of how he moved rapidly to deal with the coronavirus outbreak before listing seven “achievements” in major areas.
Feb. 28: Zhao Kezhi chaired a special meeting on the topic of cracking down on cross-border gambling.
March
March 10: Xi Jinping visited the epidemic center of Wuhan for the first time since the COVID outbreak. (In May 2020, rumors began circulating in Chinese-language circles that Sun Lijun was involved in an effort to assassinate Xi while the latter was in Wuhan.)
March 21: Chen Ping, chairman of Sun TV in Hong Kong, shared a proposal which essentially denounced Xi and called for an enlarged meeting of the Politburo to be held to “discuss the problem of Xi Jinping.”
March 27: Wang Xiaohong, executive deputy minister of public security, was jointly appointed MPS special service bureau head.
April
The Macau authorities opened an investigation into Alvin Chau following earlier notification about his case from the mainland authorities.
April 19: Sun Lijun, a former deputy public security minister and 610 Office deputy director, was officially investigated. Sun is associated with the Jiang faction.
April 20: Fu Zhenghua stepped down as justice minister and the justice ministry’s Party group deputy secretary. Fu is a former 610 Office director (and Sun’s superior) and is associated with the Jiang faction.
April 30: An open letter signed by “Deng Pufang” (Deng Xiaoping’s eldest son) and addressed to Two Sessions delegates was published online. The letter contained a list of 15 questions and criticisms of Xi’s policies. The letter was later widely circulated and discussed in Chinese-language circles.
May
May 19: Fu Zhenghua was appointed as a deputy director of the Chinese People’s Political Consultative Conference’s committee for social and legal affairs.
May 21 to May 28: The CCP holds the Two Sessions in Beijing.
June
Some Chinese observers revived the notion of a “Xi-Li split,” noting that Li Keqiang’s promotion of a “street stall economy” contrasted with the negative reaction to it by the Beijing municipality and some other localities. We do not believe that there is a “Xi-Li split.”
June 14: Deng Huilin, the deputy mayor and public security chief of Chongqing City, was investigated. Deng is associated with the Jiang faction. (Information that emerged in September 2021 indicated that Deng was part of a so-called Jiangsu “judicial mafia” and intra-Party “cliques and factions.” The Jiangsu “judicial mafia” reportedly plotted “sinister activity” against a “national leader” who visited Nanjing.)
June 24: Zeng Xin, the Hubei public security chief and former head of the MPS 12th Bureau (technical reconnaissance), was transferred to Guangxi Province to serve as Party secretary of the Guangxi Political and Legal Affairs Commission. In November 2021, overseas Chinese media reported that Zeng had missed several important events in Guangxi and had “self-surrendered” to the authorities. Overseas Chinese media also say that Zeng’s “self-surrender” is connected to investigations into Sun Lijun (Wuhan is in Hubei Province, and Sun is rumored to be involved in an attempt to assassinate Xi while he was there). Zeng is associated with the Jiang faction.
June 30: The Standing Committee of the National People’s Congress passed the Hong Kong National Security Law. We previously analyzed that Xi’s extension of the mainland’s national security regime into Hong Kong is partly motivated by factional struggle.
July
July 9: The CCP launched a three-month pilot campaign to “rectify and educate” the political and legal affairs apparatus in five cities, four counties, and two prisons.
July 31: Luo Wenjin, the former captain of the criminal police corps of the Jiangsu Provincial Public Security Bureau, was investigated. Luo was later alleged to be part of a “judicial mafia” and had interactions with Deng Huilin and Lai Xiaomin. Luo is associated with the Jiang faction.
August
Aug. 18: Gong Daoan, the Shanghai municipal public security chief and former director of the MPS 12th Bureau, was investigated. He was later accused of engaging in “cliques and factions” in the Party. Gong is associated with the Jiang faction.
October
Oct. 2: Dong Hong, the former deputy head of the second Party Central inspection Group and former aide to Wang Qishan, was investigated. Some Chinese observers believe that the purge of Dong Hong indicates a “Xi-Wang split”; we do not believe that to be the case.
Oct. 24: Wang Like, Party Secretary of the Jiangsu provincial Political and Legal Affairs Commission and a member of the Jiangsu provincial Party Standing Committee, “self-surrendered” to the authorities. Wang was later alleged to have engaged in “cliques and factions” within the Party.
November
Nov. 2: The PRC authorities summoned Jack Ma, Ant Group executive chairman Eric Jing, and Ant chief executive Simon Hu for a meeting.
Nov. 3: Ant Group’s IPOs in Shanghai and Hong Kong were suspended. The Wall Street Journal later reported that Xi Jinping blocked Ant’s IPO because it would have enriched his political rivals, including the Jiang Zemin clan and members of the Jiang faction.
2021
January
Jan. 29: Lai Xiaomin, the former China Huarong Asset Management chairman, was executed. Lai is linked with the Jiangsu “judicial mafia.”
March
March 13: Peng Bo, a former deputy director of the 610 Office, was investigated. Peng is associated with the Jiang faction.
April
April 9: Liu Xinyun, vice governor of Shanxi Province and director of the Shanxi Public Security Bureau, was investigated. A Jiang faction associate, Liu was later accused of engaging in intra-Party “cliques and factions.”
April 17: Liu Changle, the founder and a major shareholder of Phoenix Media, sold nearly 1.9 billion shares to Shun Tak Group and Bauhinia Culture Holdings. This development appears to be part of Xi Jinping’s effort to tighten his grip on Hong Kong while eliminating the influence of his factional rivals.
May
May 1: Qiushi published a piece criticizing “another Party Central” sectarianism and emphasizing the need to safeguard “Party unity and centralized leadership.”
May 12: The Wall Street Journal reported that Liu He could be replaced by Hu Chunhua as the PRC’s top economic envoy to Washington. The news led to speculation about “Xi’s successor” and Liu’s standing.
May 28: Beijing-headquartered overseas Chinese language media outlet Duowei News published an article attacking Xi Jinping over his “Four Histories.” For Duowei to carry the article indicates that it has the backing of powerful factions in the Chinese regime, principally those that oppose Xi.
July
Beijing targeted Didi Chuxing shortly after it listed on the New York Stock Exchange. We analyzed at the time that the Didi crackdown is likely linked with the Xi-Jiang factional struggle.
August
Xi Jinping cracks down on private tuition, video games, and entertainment.
September
Sept. 16: Qiushi published an article stating that the Party’s absolute leadership over the military is a “political bottom line that cannot be challenged.” The article also listed four “negative examples” from history where the “political bottom line” was breached, including Lin Biao’s “planned armed coup.”
Sept. 25: The Central Commission for Discipline Inspection published a lead article on its website warning about the capture of leading cadres by interest groups.
Sept. 30: Sun Lijun was expelled from the Party and all government posts. Sun is accused of “having improper discussions of Party Central’s major policies,” “complying publicly but defying privately,” and “engaging in cliques and factions in the Party.”
October
Oct. 2: Fu Zhenghua is officially investigated on corruption charges.
Oct. 11: The PLA Daily published an article warning officials against joining an “emperor emeritus” coup.
November
Nov. 2: The Peng Shuai-Zhang Gaoli affair begins just days before the Sixth Plenum of the 19th Party Congress. Zhang is later alleged to have led an effort by Party elites to oppose the inclusion of criticism against Jiang Zemin and his era in Xi’s “historical resolution.”
Nov. 8 to Nov. 11: The Sixth Plenum is held, and the CCP passes Xi’s “historical resolution.”
Nov. 19: Wang Xiaohong replaced Zhao Kezhi as MPS Party secretary.
Nov. 27: Alvin Chau is arrested.
SinoInsight 2
Beijing Winter Olympics
The U.S., the United Kingdom, Australia, Canada, and Lithuania announced a diplomatic boycott of the Beijing Winter Olympics in 2022, citing the PRC’s human rights abuses and issues in Xinjiang. Japan is also considering a similar boycott, while New Zealand said that it had already told China in October that it would not be sending diplomats to the Olympics due to COVID-19. France, however, said it would not do a diplomatic boycott.
The PRC threatened to take “resolute countermeasures” in response to the U.S. diplomatic boycott. When asked about Australia’s boycott during a press conference, PRC foreign ministry spokesman Wang Wenbin accused Australian politicians of “political posturing” and added, “whether they come or not, nobody cares.”
U.S. democracy summit
President Joe Biden hosted the Summit for Democracy from Dec. 9 to Dec. 10. Taiwan was among the 111 countries and territories invited, but not China. Hong Kong pro-democracy activist Nathan Law was also invited to speak at the event.
The PRC sharply criticized the Summit through its propaganda outlets, scholars, and diplomats while promoting its so-called “socialist democracy with Chinese characteristics” and “whole-process democracy.”
On Dec. 4, the PRC issued a white paper titled, “China: Democracy That Works.”
On Dec. 6, professor Wu Fei from Jinan University’s school of journalism and communication published an article on the internet portal Netease with the bombastic title, “Declaration of War! America Invites Over 100 Countries to Block China, the MFA Directly Issues a ‘War Challenge,’ 1 Versus 110” (宣戰! 美邀請100多國圍堵中國, 我外交部直接下「戰書」, 1挑110). The article was roundly ridiculed by Chinese netizens and scrubbed by Netease.
On Dec. 7, Central Foreign Affairs Commission director Yang Jiechi said that the U.S. democracy summit “incites ideological confrontation and camp confrontation.” He added, “This is doing undemocratic things under the guise of democracy, and a betrayal of the democratic spirit.”
Taiwan
The U.S. and other countries continue to deepen ties with Taiwan, including:
- Nov. 29: Taiwan leader Tsai Ing-wen met with visiting lawmakers from Lithuania, Latvia, and Estonia.
- Dec. 7: U.S. Secretary of Commerce Gina Raimondo held a videoconference with Taiwanese Economics Minister Wang Mei-hua to discuss bilateral commercial and investment collaboration, including on critical supply chains and semiconductors.
- Nov. 28: Republican Congresswoman Nancy Mace said in an interview with CNN that her use of the phrase “Republic of Taiwan” in a Nov. 25 tweet she sent while visiting Taiwan with four other U.S. representatives was “100 percent” international.
- Nov. 30: Former Japanese prime minister Shinzo Abe said in a speech on video to an audience in Taiwan that PRC “military adventure would be the path to economic suicide.” He added that “any armed invasion of Taiwan would present a serious threat to Japan” and “a Taiwan crisis would be a Japan crisis and therefore a crisis for the Japan-U.S. alliance.”
- Dec. 3: U.S. Secretary of State Antony Blinken told the Reuters Next conference that a PRC invasion of Taiwan would be a “potentially disastrous decision.” He added, “I hope that China’s leaders think very carefully about [an invasion of Taiwan] and about not precipitating a crisis that would have I think terrible consequences for lots of people and one that’s in no one’s interest, starting with China.”
- Dec. 4: U.S. Defense Secretary Lloyd Austin told a conference in California that PRC military flights near Taiwan “looks a lot like rehearsals.”
- Dec. 7: Blinken told The Wall Street Journal’s CEO Council Summit that if “Beijing were to decide to try to change the [Taiwan] status quo unilaterally by force, it would be a very serious mistake.”
On Dec. 7, Speaker Nancy Pelosi announced that the House of Representatives will take up and pass three pieces of legislation to address the PRC’s human rights abuses in Xinjiang. The legislation includes H.R. 1155 (Uyghur Forced Labor Prevention Act), H. Res. 837 (House of Representatives express the sense that the International Olympic Committee failed to adhere to its own human rights commitments), and H. Res. 317 (condemning the PRC’s ongoing genocide and crimes against humanity being committed against Uyghurs and members of other religious and ethnic minorities).
Pelosi’s statement said, “The People’s Republic of China’s crimes against the Uyghur people constitute genocide and must end now.”
On Dec. 8, the House of Representatives passed the legislation by 428 votes to 1.
OUR TAKE
1. Heightened international antagonism towards the PRC will likely raise Xi Jinping’s domestic political pressures to a degree. In particular, actions by the U.S. and its allies that tread on the PRC’s “red lines” directly challenge Beijing’s narrative about how Xi’s foreign diplomacy has been a “success”; Xi’s “historical resolution,” introduced during the Sixth Plenum in early November, brags about how the PRC had brought the “humiliating diplomacy” of “old China” to an end while claiming that Xi’s “great power diplomacy” (大國外交) “serves national rejuvenation, promotes human progress, and facilitates efforts to foster a new type of international relations and build a human community with a shared future.”
Xi’s factional rivals and other enemies in the Party elite could point to what seems to be the continuation of “new cold war” in the post-Trump era and a failure of Xi’s “great power diplomacy” in opposing his bid for a third term and other moves to consolidate power. However, Xi’s foes do not have a strong case against him now because the U.S. and its allies have only made moves that cause Xi to lose some face without posing an existential threat to regime security. Meanwhile, Xi can point to his virtual meeting and phone calls with President Biden, as well as various concrete concessions won from the Biden-Harris administration, to dismiss the recent heightened international pressure as nothing more than regular fluctuations in the course of his “great power diplomacy” during a period of “major changes unseen in the world in a hundred years.”
2. The trajectory of U.S.-China relations appears to have largely progressed as we forecasted in our China 2021 Outlook. We wrote at the time: “Sino-U.S. relations will appear to partially ‘recover’ and ‘stabilize’ as the Biden-Harris administration moves away from ‘anti-CCP’ ideological confrontation with the PRC. However, the administration could be ‘anti-China’ in ways that would affect Xi Jinping personally, particularly with regard to Xinjiang, Taiwan, and Hong Kong. The Biden-Harris administration will likely retain the Trump administration’s tariffs and some ‘hardline’ policies to use as leverage in various negotiations with the PRC.”
The Biden-Harris administration has been weakening its stance towards the PRC (see here, here, here, and here) and has radically departed from the “China challenge” as identified by the Trump administration. However, Washington and its allies still have incentive to pressure the PRC and Xi Jinping into conforming with the current world order instead of replacing it with one that is dominated by the CCP. That means a China that goes along with the global climate agenda and economy, the “Build Back Better World” initiative instead of the Belt and Road, and the U.S.-led international rules-based order instead of the CCP-led “community with a shared future for mankind.”
We believe that the U.S. and its allies will keep pressing the PRC using tactics and measures that it finds acceptable (including those of the “anti-Xi, not anti-CCP” variant) to get China in lockstep with their agenda and world order. That could mean more treading on the CCP’s “red lines” of Taiwan, Xinjiang, Hong Kong, and other human rights issues. Concurrently, the Biden-Harris administration will dangle carrots (removing Trump’s tariffs, scaling back “new cold war” tensions, etc.) to entice and reward Xi and the PRC to change behavior.
Xi and the CCP could appear to “cave” to international pressure on certain issues when it is in their interest to do so. For instance, the CCP has its own “green” agenda to adhere to, while Xi Jinping could feel that it is politically expedient to use international attention on the Peng Shuai-Zhang Gaoli affair to move against his factional rivals and simultaneously win the goodwill of the international community for addressing women’s rights. However, the international community should not draw the conclusion that the CCP is “changing” its behavior; the CCP will do whatever it takes to survive and dominate.
