Two Sessions work reports, propaganda expose Xi and the CCP regime’s troubles

     SinoInsight  1     

• “Focusing on Beauty, and the Economics of Making the World a Better Place”
• “Focusing on ‘Real,’ and the Economics of Gaining ‘Global Benefits’ from the ‘China Reality’”
• “Focusing on ‘Effectiveness,’ and the Economics of Enlightening the Way for ‘Government and Markets’ to Get Along”
• “Focusing on ‘Synergy’ to Promote the Economics of Global Green, Coordinated, and Sustainable Development”
• “Focusing on ‘Common,’ and the Economics of Progress for Humanity and World Harmony”

• With the ongoing COVID-19 pandemic, world economic recovery “lacks drive,” commodity prices “remain high and are prone to fluctuation.” This makes the PRC’s external environment “increasingly volatile, grave and uncertain.”
• China’s economic development faces the “triple pressures of shrinking demand, disrupted supply and weakening expectations.”
• Local COVID-19 outbreaks are still occurring “sporadically.”
• Consumption and investment recovery is “sluggish,” maintaining steady growth in exports is “getting more difficult,” and there is “inadequate” supply of energy resources and raw materials. Meanwhile, many micro, small, and medium-sized enterprises and self-employed individuals are facing difficulties in production and business operations, with the task of stabilizing employment “more formidable.”
• The PRC’s ability to support innovation is weak.
• The contradiction between fiscal revenue and expenditure of some local governments have become more pronounced, with “many potential risks” in the economic and financial sectors.
• There are many shortcomings that need to be addressed in areas important to the people’s lives.
• There are deficiencies in government work, including formalism and bureaucratism, officials being out of touch with reality and acting against the public will, and some local governments using “one-size-fits-all” or “campaign-style” approaches in policy implementation.
• Some officials have “shirked their responsibilities, failed to do their jobs, or behaved irresponsibly.” Some have also been derelict in their duties by disregarding serious infringements on the rights and interests of the people. Also, “corruption remains a common problem in some sectors.”

• Focus on supply-side structural reform;
• Respond to the pandemic and the pursuit of economic and social development in a well-coordinated way;
• Continue to ensure the “six stables” (六穩) and the “six guarantees” (六保), and keep working to improve the people’s lives.
• Maintain stable macroeconomic performance, keep major economic indicators within a reasonable range, and maintain overall social stability.

• GDP growth of around 5.5 percent;
• Create over 11 million new urban jobs while having a surveyed urban unemployment rate of no more than 5.5 percent;
• Control CPI increase at around 3 percent;
• Keep personal income growth in step with economic growth;
• Stable increases in both the volume and quantity of imports and exports while keeping a basic equilibrium in the balance of payments;
• Produce grain output of over 650 million metric tons;
• Further improve the environment while continuing to reduce the discharge of major pollutants;
• Energy consumption per unit of GDP will be assessed with “appropriate flexibility” within the framework of the 14th Five-Year Plan. Newly added renewable energy and coal, petroleum, and natural gas consumed as raw materials will not be included in the total amount of energy consumption.

• Social policies must stick to the bottom line of safeguarding the people’s lives;
• The proactive fiscal policy must be more effective, with the deficit-to-GDP ratio for the year set at around 2.8 percent;
• Prudent monetary policy should be both flexible and appropriate, and “reasonably ample” liquidity should be maintained;
• The employment-first policy should be appropriately advanced, and policy tools in reserve should be deployed promptly to ensure stable economic performance;
• Economic growth should be “stable, steady, and progressive” (穩字當頭、穩中求進).

• Resolving the “Taiwan question” in the new era in accordance with the “one-China principle” and the 1992 Consensus to advance the “peaceful growth of relations across the Taiwan Strait and the reunification of China.”
• The PRC firmly opposes “any separatist activities seeking ‘Taiwan independence’ and firmly opposes foreign interference.”

• The entire military resolutely implemented the decisions and instructions of Party Central and the Central Military Commission over the past year. The military also achieved a good start to the 14th Five-Year Plan through “struggling, preparing, and building” (邊鬥爭、邊備戰、邊建設), and in doing so, provided strong support for the development of the Party and the regime.
• Significant progress was made in governing the military in accordance with the law.
• The PRC should strengthen foreign-related military rule-of-law work, integrate planning of military operations and rule-of-law struggle, and improve foreign-related laws and regulations in the military field to better protect national interests through the use of law.
• The whole military must ensure war preparedness, assist local governments in maintaining overall social stability, deal with various emergencies in a timely and effective manner, maintain national security and stability, and complete various tasks assigned to it by the Party and the people.

• 92,000 cases involved online pyramid schemes, online gambling, illegal use of information networks, and other crimes;
• 56,000 cases concerned drug crimes;
• 4,586 cases involved assaults on police officers;
• 9,653 cases were epidemic-related crimes;
• 3,409 cases (18,350 people) involved gangs and criminal elements (涉黑涉惡);
• 40.57 billion yuan worth of property was confiscated;
• 23,000 cases (27,000 people) of corruption, bribery, and malfeasance, including former central-managed cadres like Qin Guangrong and Wang Fuyu;
• Recovered 59.66 billion yuan of stolen funds and goods from official duty-related crimes;
• 511 defendants in public prosecution cases and 383 defendants in private prosecution cases were acquitted.

• 13,000 bankruptcy cases involving 2.3 trillion yuan in claims;
• 732 bankruptcy and reorganization cases, revitalizing 1.5 trillion yuan of assets;
• 13,000 cases of market manipulation, insider trading, illegal fundraising, money laundering, and other crimes;
• 1.831 million marriage and family cases;
• Online auction turnover of 432.3 billion yuan, an increase of 7.4 percent.

• Crimes endangering national security will be severely punished;
• The eradication of gangs and triad elements (掃黑除惡) will be normalized;
• Crimes pertaining to guns and explosives, pornography gambling and drugs, theft, robbery and fraud, and food and drug rings, will be severely punished;
• Financial securities, tax evasion, and other related crimes will be combatted;
• High pressure must be maintained in punishing corruption and bribery;
• Cyber crimes, transnational crimes, and cross-border crimes will be severely punished;
• Crimes such as sexual assault, as well as trafficking in women and children and buying trafficked women and children, will be severely punished. Judicial protection for trafficked women and children will also be strengthened.

• Procuratorates approved the arrest of 868,445 criminal suspects and prosecuted 1,748,962 people, up 12.7 percent and 11.2 percent year-on-year respectively;
• People prosecuted by procuratorial organs for abducting and trafficking women and children dropped from 14,458 to 1,135 from 2000 to 2021 (average annual decrease of 11.4 percent). Meanwhile, people prosecuted for buying and selling abducted women and children increased from 155 to 328 over the same period;
• 134,000 people were prosecuted for crimes involving the disruption of economic order, a figure unchanged from the previous year;
• 38 percent of crimes involving enterprises and other work units were not prosecuted, a year-on-year increase of 5.9 percentage points;
• 43,000 people were prosecuted for financial fraud and disrupting financial management order, a year-on-year increase of 3.3 percent;
• Procuratorates 36 cases involving major illegal fundraising in conjunction with the Ministry of Public Security;
• 1,262 people were prosecuted for money laundering crimes, a year-on-year increase of 78.5 percent;
• Supervisory committees at all levels handed over 20,754 people for official duty-related crimes, and 16,693 of them were prosecuted, a year-on-year increase of 5 percent and 8.8 percent respectively;
• 9,083 people were prosecuted for accepting bribes and 2,689 people were prosecuted for offering bribes, a year-on-year increase of 21.5 percent and 16.6 percent respectively;
• 23 former provincial and ministerial level cadres were prosecuted, including Wang Fuyu and Wang Like;
• 129,000 people were prosecuted for illegal trading of phone cards and bank cards, and crimes involving withdrawals and transfers, or 9.5 times as many people as in 2020;
• 39,000 prosecutors served as “rule-of-law” vice principals in 77,000 elementary and middle schools;
• Prosecution of malicious wage arrears and domestic violence crimes dropped significantly. Also, prosecution of crimes against doctors (harming and harassing) dropped from 3,208 in 2018 to 427 in 2021;
• Procuratorial organs did not arrest 385,000 people and prosecute 348,000 people despite referrals from the public security authorities, an increase of 28.3 percent and 150 percent from 2018;
• 2,800 prosecutors were investigated in 2021, double the number in 2020. Of the 2,800, 202 were subjected to criminal procedure;
• Four members of the SPP were subjected to Party discipline and administrative punishment, while one member was subjected to criminal procedure;
• The SPP “initiated accountability” in 246 criminal miscarriages of justice from 2018, including the “direct supervision” of 22 cases of wrongful imprisonment of 10 years and more (“Zhang Yuhuan case,” Zhang Zhichao case,” etc.). 511 procurators were held accountable, including 134 members of relevant procuratorate teams and 122 retirees.

OUR TAKE
1. The work reports by various government organs and Party propaganda around the Two Sessions period indicate that the CCP regime and the Xi leadership are becoming increasingly embattled by challenges from within and without.

Li Keqiang’s government work report best encapsulates the problems facing Beijing. The low 5.5 percent GDP growth target and repeated calls for economic and social stability in 2022 suggest that the Xi leadership has a bleak outlook on the economy. Emphasis on food security and domestic self-reliance by Li and Tang Renjian reflect concerns about shortages and poor harvest at home as external food supply becomes threatened by the Russia-Ukraine war and other geopolitical issues. Li’s mention of “sporadic” coronavirus outbreaks is an acknowledgement of the failures of “zero-COVID” strategy in containing the pandemic. Finally, Li’s criticism of officials affirms our analysis that Beijing’s orders are still not leaving the gates of Zhonganhai (政令不出中南海) or being properly implemented, to the detriment of regime security and Xi Jinping’s political “achievements.”

To make up for Xi’s lack of “achievements” and their unraveling amid recent developments (coronavirus outbreaks, rapidly worsening economy, financial contagion from real estate sector debt crisis, growing geopolitical pressures and the alienation of the PRC, etc.), the Xi camp has doubled down on propaganda and attempted to spin tragedy into victory (喪事當喜事辦). Unfortunately for Xi, the bloviating and barely believable propaganda (like crediting “Xi Jinping Thought” for guiding domestic and global economic development and giving China “high scores” when the Chinese economy is noticeably weakening) rings empty and plays right into the hands of his factional rivals. The pro-Jiang faction, anti-Xi “Fang Zhou and China” article from late January accused Xi’s advisers of “blindly ignoring reality” in producing “baseless propaganda” and not considering whether or not their handiwork would be challenged. The continued rollout of tone-deaf propaganda during the Two Sessions period further “validates” the accusations of Xi’s enemies while undermining Xi Jinping’s “quan wei” (authority and prestige).

The Xi leadership also saw subtle challenges to its policy direction during the Two Sessions. Supreme People’s Court president and Jiang faction member Zhou Qiang called for “severe punishment” to be handed out to those who carry out “incitement to subvert state power, espionage, evil cults (邪教), and other crimes” in a sentence that appeared as part of the full text of his work report. However, the entire sentence and the word “evil cults” was missing from Xinhua’s abstract of the document.

Xinhua’s omission of “evil cults” and Zhou’s inclusion of the word in his work report is not trivial, given its connection to the political legacy of Jiang Zemin and its role in the Xi-Jiang factional struggle. During the Jiang era (including the Hu Jintao years), “evil cults” usually referred specifically to Falun Gong and was mainly used in the context of the Falun Gong persecution campaign started by Jiang in 1999. After Xi took office, he began targeting Jiang’s anti-Falun Gong political legacy to gain leverage over the powerful Jiang faction in intra-Party struggle. Notably, the Xi leadership criticized the supra-authority, anti-Falun Gong “610 Office” in 2016 and dissolved it in 2018; arrested many former “610 Office” leading cadres, including Sun Lijun and Fu Zhenghua; and has visibly kept the “Falun Gong card” in play against the Jiang faction in Hong Kong. The recent “evil cults” discrepancy between Zhou Qiang’s work report and the Xinhua abstract of the work report is almost certainly a manifestation of the Xi-Jiang factional struggle, with Zhou looking to preserve his political patron’s legacy and the Xi camp sticking to Xi Jinping’s stance on the Falun Gong issue.

2. The work reports of the Supreme People’s Court and the Supreme People’s Procuratorate contain signs of growing societal instability and dysfunction, as well as government malfeasance and corruption.

The reports cite many instances of financial and economic crimes, an unhealthy societal trend. More worrisome for the CCP, the 40.57 billion yuan worth of property recovered from criminal elements is less than the 59.66 billion yuan of funds and goods recovered from official duty-related crimes; a country is in trouble when its officials are more “successful” than the crooks. Meanwhile, the over ten thousand bankruptcies and trillions of yuan involved in civil and commercial cases reflect China’s economic deterioration and debt crisis.

Zhou Qiang’s mention of women and children trafficking in his work report is a nod to the “Xuzhou chained woman” incident. On the one hand, the CCP is forced to acknowledge national outrage and make efforts to appease the populace. On the other hand, the authorities are managing public relations and covering up official-criminal collusion. SPP data showed that those prosecuted for abducting and trafficking women and children fell drastically between 2000 and 2021, a phenomenon that is unlikely to be the result of reduced crime but rather a sign of inaction or cover ups on the part of the authorities; Chinese netizens have continued to unearth more cases like the “Xuzhou chained woman” incident in recent weeks, such as the case of 91 missing people in Anhui’s Fuyang City (including an 18-year-old school girl) in the first two months of 2022 alone and the “Yulin Iron Cage Girl” incident in Shaanxi’s Jiaxian County.

3. The ongoing Russia-Ukraine war has the international community showing heightened concern over whether the CCP will invade Taiwan. From the work reports presented at the Two Sessions, it appears that the CCP wanted to avoid the topic where possible and downplayed its “reunification” ambitions.

Li Keqiang’s government work report devoted only one paragraph to Taiwan, which called for the “peaceful growth of relations across the Taiwan Strait and the reunification of China.” This is mild in comparison to previous statements by Li and others on the topic of “reunification,” where aggressive phrases such as “do not commit to renouncing the use of force” were used.

Wang Yang, the head of the CPPCC and deputy head of the Central Leading Group for Taiwan Affairs, barely touched on Taiwan at all in his work report despite Taiwan affairs being a key part of his portfolio. Instead, Wang merely reviewed the CPPCC’s cross-strait forums from the past year and spoke about “strengthening the great unity of Chinese sons and daughters in their struggle.”

Li Zhanshu’s NPC work report also hardly mentioned Taiwan. The report only noted that the NPC “clarified China’s solemn position” and “engaged in struggle” on a range of issues, including Taiwan, in discussions with foreign legislative organizations.

While Xi Jinping again called on the PLA and the PAP to “struggle, prepare, and build” and have “war preparedness,” the general direction of his remarks to the delegations suggest an internal focus. For instance, Xi’s instructions for the military and armed police to “assist local governments in maintaining overall social stability, deal with various emergencies in a timely and effective manner, maintain national security and stability, and complete various tasks assigned to it by the Party and the people” indicate that Beijing is concerned about various “stability maintenance” problems this year and is also working on political mobilization to deal with factional struggle issues. Xi’s focus on “foreign-related military rule-of-law work” and reduced “wolf warrior” aggressiveness further signal reduced overseas ambitions.

Another sign that the Xi leadership is not preparing for a Taiwan invasion can be found in the 2022 defense budget released on March 5. The 1.45 trillion yuan (about $230.16 billion) set aside for defense represents an increase of 7.1 percent. While the growth rate is higher than the 6.8 percent increase in 2021 and 6.6 percent climb in 2020, it is not as impressive as the 7.5 percent in 2019. In the face of rising inflation and the huge sums to be spent on improved military welfare, Beijing is likely looking to maintain defense spending at the level of the pandemic years and rather than setting aside more funds for war.

4. Remarks by senior officials at the Two Sessions hinted that the PRC is having trouble with food supply and shortages.

Beijing is likely expecting poor yields in 2022 given the serious natural disasters in the previous year. In particular, the breadbasket province of Henan suffered massive floods from mid-to-late July 2021, which affected the harvest and saw some farmland in low-lying areas still not drained until October. Wheat production in Henan accounts for about a quarter of the national output. Wu Guoding, the vice governor of Henan, said in an interview with CCTV on Sept. 27, 2021 that the province saw “very heavy” agricultural losses due to the floods. Wu estimated that up to 15.15 million mu (about 1.01 million hectares) of crop area was affected, with 9.78 million mu of land sustaining some losses and 5.21 million mu seeing no harvest at all.

The PRC’s massive grain imports also debunks the CCP’s propaganda about “bumper harvests.” According to PRC General Administration of Customs data, China imported 9.77 million tons of wheat in 2021, an increase of 1.395 million tons or 16.6 percent over the previous year. More than 80 percent of the imported wheat came from the U.S., Canada, and Australia. Meanwhile, a Dec. 23 Nikkei Asia report noted that China had hoarded more than half of the world’s grain in 2021, and is expected to have “69 percent of the globe’s maize reserves in the first half of crop year 2022, 60 percent of its rice and 51 percent of its wheat.”

Beijing’s drive to address food security issues exposes the regime to potential food and geopolitical risks. On Feb. 24, the General Administration of Customs announced that China would allow wheat imports from all regions of Russia. While the deal was made during Russian President Vladimir Putin’s visit to Beijing, the announcement of the details coincided with the Russian invasion of Ukraine, and barring bureaucratic happenstance, could have been intended to show PRC solidarity with Russia.

The PRC previously blocked Russian wheat from some parts of the country over concerns of dwarf bunt fungus, a destructive and difficult to control disease that can cause severe yield losses (up to 75 percent to 90 percent) for wheat and other crops. Allowing all Russian wheat into China leaves the regime vulnerable to a repeat of the 2018 swine flu incident where the PRC turned to Russian pigs following the outbreak of the Sino-U.S. trade war and saw African swine flu spread throughout its pig livestock. Meanwhile, the early display of “support” for Russia through allowing wheat imports could return to haunt Beijing in light of heavy sanctions imposed on Russia and Russian elites by Western allies and the international community in the days after the invasion began.