Xi more likely to prioritize domestic affairs, factional struggle in the wake of targeted external pressures

     SinoInsight  1     

• “Now, there are some surface-level similarities between the threat posed by the Chinese government and the historical threat of the Soviet Union.”
• Wray described the PRC government’s economic espionage as being “more brazen, more damaging than ever before.”
• “I do want to be clear that the Chinese government and the Chinese Communist Party pose the threat we’re focused on countering—not the Chinese people, and certainly not Chinese Americans, who are themselves frequently victims of the Chinese government’s lawless aggression.”
• “The Chinese government steals staggering volumes of information and causes deep, job-destroying damage across a wide range of industries.”
• “Chinese government hackers have stolen more of our personal and corporate data than every other nation combined.”
• “For decades, the Chinese Communist Party has targeted, threatened, and harassed U.S.-based Tibetans and Uyghurs, Falun Gong members, pro-democracy advocates, and really any others who question their legitimacy or authority.”
• “The Party doesn’t just go after individuals, though. They aim higher and more broadly—to try to corrupt our leaders, to buy or intimidate acquiescence to their will. That includes trying to undermine our democratic process by influencing our elected officials. And here, too, they play the long game.”

• Trade expansionists who “want to tie Asian nations closer to the U.S. with trade deals,” including White House Asia coordinator Kurt Campbell, Commerce Secretary Gina Raimondo, Treasury Secretary Janet Yellen and Secretary of State Antony Blinken.
• Labor-friendly faction “whose overriding goal is to make sure trade deals don’t hurt workers already battered by China trade and are more willing to use tariffs and quotas to protect them,” including U.S. Trade Representative Katherine Tai and some at the White House Council of Economic Advisers.
• A camp that views “trade through a political lens” and worries that “scrapping with China economically … could screw up other administration priorities like easing inflation or supply chain bottlenecks,” including White House chief of staff Ron Klain and National Economic Council Director Brian Deese.

• “2022 will be a critical year in the history of the world … We are at, or close to, important decisions that will determine the direction in which the world is going.”
• “Biden has made it clear to Xi Jinping that if he uses force against Taiwan, China will have to confront not only the U.S. but a larger alliance composed of the AUKUS, that is Australia, United Kingdom and the U.S. and the QUAD that is U.S., Japan, Australia and India, together with a number of other potential allies who have not yet fully committed themselves to joint action, such as South Korea and the Philippines … On the other hand, Xi Jinping has declared that he is determined to assert China’s sovereignty over Taiwan by force if necessary.”
• “… one might think that Xi Jinping, who collects personal data for the surveillance of his citizens more aggressively than any other ruler in history, is bound to be successful … I should like to explain why that is not the case.”
• “Xi Jinping has many enemies. Although nobody can oppose him publicly because he controls all the levers of power, there is a fight brewing within the CCP that is so sharp that it has found expression in various Party publications. Xi is under attack from those who are inspired by Deng Xiaoping’s ideas and want to see a greater role for private enterprise.”
• “It remains to be seen how the authorities will handle the [real estate] crisis … In my opinion, the second quarter of 2022 will show whether [Xi Jinping] has succeeded. The current situation doesn’t look promising for Xi.”
• “Xi Jinping has also encountered serious problems with vaccines … Xi Jinping couldn’t possibly admit this while he is waiting to be appointed for a third term.”
• “Omicron threatens to be Xi Jinping’s undoing.”
• “Given the strong opposition within the CCP, Xi Jinping’s carefully choreographed elevation to the level of Mao Zedong and Deng Xiaoping may never occur … It is to be hoped that Xi Jinping may be replaced by someone less repressive at home and more peaceful abroad.”

OUR TAKE
1. Director Wray’s recent China speech is similar in theme, rhetoric, and ideological angle as an earlier one from July 2020 under the Trump administration, and sharply contrasts with the Biden-Harris administration’s milder approach to China. Sending a severe warning about the CCP threat and doing valuable public service aside, we see three probable concurrent explanations for this:

• Wray maintained the style and substance of his Trump-era speech in his recent one for consistency’s sake. Doing so would signal to Beijing that the FBI at least has not changed its stance from the Trump administration towards countering the CCP threat regardless of what the Biden-Harris administration on the whole believes and is projecting about how it views China.
• The Biden-Harris administration is preparing to roll out a China framework that is akin to that of the previous administration, and Wray’s remarks are a signal of coming change. However, Politico’s report about factional fighting inside the administration leading to paralysis on the China issue makes this explanation unlikely.
• The FBI is concerned about recent public attention to ties between the CCP and the Biden family, as well as other active and former senior U.S. lawmakers and officials. Wray’s caution about the CCP looking to “corrupt our leaders” and influence “our elected officials” puts on notice those susceptible to the Party’s sway in a bid to counter said influence.

How Washington follows up on Director Wray’s speech is worth watching to gauge the trajectory of the Sino-U.S. relationship.

2. George Soros previously expressed strong public opposition to Xi Jinping in the third quarter of 2021 (see here, here, and here). We noted at the time that Soros’s stance is in line with the “anti-Xi, not anti-CCP” strategy floated by establishment elites in January 2021.

Whatever his insider connections, Soros’ observation that there is “strong opposition within the CCP” against Xi aligns with what we and an increasing number of China-watchers and analysts are saying. It is clear that Soros is at least verbally supportive of Xi’s enemies and is confident that Xi will be replaced this year.

3. The CCP would have noticed that George Soros and Director Christopher Wray issued their remarks on the same day (inauspiciously, on the first day of the Lunar New Year) and would view the two remarks as being part of the same “imperialist” or “counter-revolutionary” plot, regardless of whether or not they are in any way connected. In particular, the Party would take Director Wray’s remarks as evidence that the Biden-Harris administration never truly abandoned the Trump administration’s ideological, hardline “struggle” against Communist China despite Washington’s changing rhetoric. As PRC foreign minister Wang Yi told Secretary of State Antony Blinken in a phone call on Jan. 27, “the U.S.continues to make wrong words and deeds about China, causing new shocks to the relationship between the two countries.” The CCP’s sense of growing U.S. and Western antagonism puts greater pressure on Beijing.

Xi’s factional rivals would view the remarks of Wray and Soros as a sign that they have the West’s “blessing” to move against Xi Jinping and take the regime in a “different” direction. They would find themselves in a better position to argue that Xi has only brought increased troubles and hardships upon the PRC since taking office and cannot be allowed to serve another term lest he leads the regime to collapse.

The Xi camp would likely speculate that “hostile foreign forces” have essentially shown their hand and “acknowledged” that they are collaborating with rival factions in the CCP elite to deny Xi Jinping’s third term bid and seek his ouster. Yet Xi knows that his enemies are justified in citing his many disasters and lack of genuine accomplishments in blocking him from taking another term at the 20th Party Congress. To keep the Party elite cowed, guard against challenges to his rule from within and without, and secure another term, the Xi leadership could look to further intensify anti-corruption efforts to target factional foes, including taking down some “big tigers” and “untouchable” cadres ahead of schedule. Xi’s urgent need to deal with internal affairs would also likely see him delay pursuit of external adventures (such as invading Taiwan) even if opportunities present themselves (such as the Russia-Ukraine crisis turning into a kinetic conflict) until his domestic enemies are subdued.