SinoInsight 1
Economic data and observer forecasts
April 18
1. China’s first quarter GDP grew at 4.8 percent year-on-year and 1.3 percent quarter-on-quarter, according to National Bureau of Statistics data.
Observers noted that while China’s GDP growth beat expectations, the data suggested that the Chinese economy is faltering. They also expressed skepticism at the official data.
Analysts forecasted even worse economic performance in April and Beijing’s increasing difficulties in achieving its growth target of 5.5 percent. Nomura saw “significant downside risks” to their 4.3 percent annual GDP growth prediction, while the International Monetary Fund slashed its China 2022 growth forecast to 4.4 percent. UBS Group, Bank of America, Barclays, and Standard Chartered Bank cut their forecasts to 4.2 percent, 4.2 percent, 4.3 percent, and 5 percent respectively.
2. The NBS announced that national real estate investment from January to March increased by 0.7 percent year-on-year to 2.7765 trillion yuan. Investment in residential property also increased 0.7 percent from a year ago to 2.0761 trillion yuan.
Table 1 (Source: National Bureau of Statistics)
Commercial housing sales area in Q1 2022 decreased 13.8 percent year-on-year to 310.46 million square meters; sales area of residential apartments fell by 18.6 percent year-on-year. Commercial housing sales declined 22.7 percent to 2.9655 trillion yuan; sales of residential apartments fell by 25.6 percent from the previous year.
Table 2 (Source: National Bureau of Statistics)
Logistics and supply chain policies
April 18
The PRC held a national teleconference on keeping supply and industrial chains stable. State Councilor Xiao Jie presided over the meeting, and State Councilor Zhao Kezhi delivered a speech. Officials from relevant departments and localities also gave speeches.
In his remarks to the meeting, PRC vice premier Liu He said that “people’s lives must be supported, freight must be free-flowing, and industries must have circulation.”
Liu also issued 10 important measures:
- Care for the lives and physical and mental health of the public and epidemic prevention personnel;
- Improve the working and living conditions of logistics employees;
- Provide financial support such as loan repayment deferment;
- Issue sufficient travel permits (全國統一通行證) that can be recognized nationwide;
- Nucleic acid test results within 48 hours can be used nationwide;
- Implement closed-loop management with a “collect, leave, track” system (i.e. logistics employees are allowed to leave an area after their nucleic acid test swab has been collected instead of waiting until their test results come in; those tested positive will be tracked down through the epidemic monitoring system);
- Passage (of logistics employees) shall not be restricted on the grounds of waiting for nucleic acid test results;
- Outstanding problems (with regard to supply and logistics) in key areas should be tackled one at a time;
- Leverage 1 trillion yuan of funds to help stabilize supply and industrial chains;
- Create a “white list” of foreign trade firms and companies in key sectors (automobile, medical, electronics, equipment manufacturing, agriculture, food, etc.).
The first meeting of the State Council’s Leading Group for Smooth Logistics (國務院物流保通保暢工作領導小組) was held in Beijing. Representatives from 28 departments and ministries, including the Central Propaganda Department, Cyberspace Administration of China, Central Financial and Economic Affairs Commission General Office, Ministry of Science and Technology, Ministry of Public Security, Ministry of Commerce, State Administration for Market Regulation, and the China Securities Regulatory Commission, attended the meeting via teleconference.
Li Xiaopeng, head of the Leading Group for Smooth Logistics and transport minister, stressed during the meeting the necessity of uniting “more closely around Party Central with Comrade Xi Jinping at the core,” maintain stable supply and industrial chains, and take practical action to “welcome the victorious opening of the 20th Party Congress.”
The meeting reviewed three regulations and measures pertaining to the safeguarding of national logistics. The meeting also urged officials to:
- Do a good job of rectifying excessive epidemic prevention and control issues, and make every effort to ensure a smooth and orderly transportation network. Resolutely prevent negative repercussions from toll station and service area shutdown problems. Resolutely ban the setting up of epidemic prevention checkpoints on main highways and service areas.
- Do a good job in ensuring the transportation of key materials, and fully support the economic operation of key regions. The stable operation of supply and industrial chains must not be affected by insufficient transportation guarantees.
- Do a good job in precise management and control of vehicle traffic, and make every effort to improve the efficiency of freight logistics operations. Accelerate the recognition of nucleic acid test results nationally and implement “collect, leave, track” closed-loop management for truck drivers.
- Do a good job in urban and rural logistics and distribution services, and make every effort to ensure the basic living needs of the masses. Priority should be given to providing centralized nucleic acid testing for postal couriers, and terminal delivery services should be resumed in an orderly manner.
- Do a good job in connecting supply and demand of key enterprises, and make every effort to maintain stable supply and industrial chains. Priority should be given to ensuring the passage of vehicles carrying out transportation for key enterprises.
- Do a good job of helping employees alleviate difficulties, and make every effort to help logistics companies overcome difficulties. All localities are encouraged to provide free nucleic acid and antigen testing services for truck drivers.
April 18
The People’s Bank of China and the State Administration of Foreign Exchange issued a notice on “doing a good job in financial services for epidemic prevention and control, and economic and social development” (關於做好疫情防控和經濟社會發展金融服務的通知). The notice proposed supporting the relief of distressed subjects, smoothing the national economic cycle, and promoting foreign exports. The notice also introduced 23 policy initiatives to strengthen financial services and increase support for the real economy.
The PBoC also revealed that it had paid 600 billion yuan in profits to the central government by mid-April, or the equivalent of a 25-basis points cut in banks’ reserve requirement ratios (on April 15, the PBoC announced a 25-basis-point cut to banks’ RRR from April 25, which would release about 530 billion in long-term liquidity). The central bank added that it is on track to pay over 1.1 trillion yuan in profits in 2022.
Epidemic policy and propaganda
April 16
The Shanghai Pudong District government issued a notice to all local residents (告浦東新區全體居民書).
The notice opened by stating that the epidemic situation in the district is “still severe and complicated,” with positive cases “still rising at a high level,” exceeding 10,000 cases for four consecutive days.
The notice warned that the Omicron variant is “very stealthy, very cunning, and very contagious,” and if allowed to spread, “it will bring us catastrophic and irreversible consequences.” The notice also appealed to residents, “The more difficult it is, the more we have to persevere. Once we give up, all previous efforts and sacrifices will be in vain, and we will have to pay a greater price in the future.”
In concluding, the notice promised that the Pudong government will do its best to “ensure living supplies and medical treatment,” access to medical care, and “relieve everyone’s worries.”
Analysis: There are several ways to interpret the Pudong government’s notice:
1) The situation on the ground in Shanghai is far worse than what the official figures indicate, and “zero-COVID” has proven to be largely ineffective in curbing the spread of Omicron.
2) The epidemic situation is not as dire as the Pudong government suggests, but the latter is having a problem with resident morale and “stability maintenance” issues that could threaten adherence to “zero-COVID” protocols. Hence, the Pudong government is exaggerating the dangers of Omicron and case numbers to scare local residents into absolute compliance with “zero-COVID.”
3) Pudong officials really believe that Omicron is very dangerous and are truly looking out for the well-being of local residents. This scenario is less likely unless the officials truly lack basic understanding of the severity of the Omicron strain (high transmissibility and low deaths) and completely believe Party propaganda about the effectiveness of “zero-COVID.”
4) A mix of scenarios 1-3 could be valid. For example, cases could really be spreading fiercely in Pudong, Pudong officials believe that the virus is very dangerous, and officials are hoping to perpetuate “zero-COVID” conditions both to safeguard residents and ensure their compliance with the policy.
Regardless of the interpretation, prolonged lockdowns in Shanghai will only worsen the collateral damage caused by the “political epidemic.”
April 17 – April 19
Xinhua published several commentary pieces on persevering with the “dynamic zero-COVID” policy. The headlines of the commentaries are:
- “Fast, Accurate, Strict, Actualization——Viewing Dynamic Zero-COVID From the Perspective of Four Keywords” (快、準、嚴、實——從四個關鍵字看動態清零);
- “Scientifically and Precisely Implement ‘Dynamic Zero-COVID,’ Win Initiative for China’s Development” (科學精準落實”動態清零”, 為中國發展贏得主動);
- “The Pursuit of Values From the Perspective of Anti-epidemic Practice” (從抗疫實踐看價值追求);
- “Adhere Unswervingly to Dynamic Zero-COVID, Realize Social Clearance As Soon As Possible” (堅持動態清零不動搖 儘早實現社會面清零).
Wu Zunyou, chief epidemiologist at the Chinese Center for Disease Control and Prevention, posted to his personal social media account an article expressing his views on “dynamic zero-COVID” and “misunderstandings” about the policy. The article was widely shared by mainland media outlets.
Wu led off his article by praising the “strong leadership of the central government” for the “phased achievements” (階段性成果) in epidemic prevention. He also credited the “general strategy of epidemic prevention,” the “general policy of ‘dynamic zero-COVID,’” and the united general public’s “active participation” for the current epidemic prevention results. Wu proceeded to explain the meaning of “dynamic zero-COVID,” as well as its “conditions,” “principle,” and “measures.”
Wu then observed that there are many misunderstandings about “dynamic zero-COVID” and explained the “basic principles” behind the policy while debunking four “myths” about it.
Myth 1: “Dynamic zero-COVID” does not mean zero infections. The whole country does not need to be completely free of COVID-19 by a specific time, but rather, local outbreaks need to be eliminated in a relatively short period. Also, “dynamic zero-COVID” means ensuring that there is no community spread, not requiring that communities have no cases.
Myth 2: Some people equate “dynamic zero-COVID” with lockdowns. Containment measures are only used when outbreaks are detected late, or when outbreaks are discovered early but decisive measures were not taken in time to control community transmission.
Myth 3: Some people equate “dynamic zero-COVID” measures with mass nucleic acid testing. Mass testings are only conducted when outbreaks are detected late, or when decisive measures were not taken in time to curb greater spreading of the virus following an outbreak and the transmission chain is unclear.
Myth 4: Some people think that “dynamic zero-COVID” will massively impact the economy. In fact, the policy helps to protect the economy and ensure its development. While “dynamic zero-COVID” measures like lockdowns and mass testing do have a certain impact on the economy, a preliminary mathematical model by experts shows that the economy of places that implement those measures are only affected half as badly as places without them.
Analysis: Wu Zunyou is essentially blaming local officials for not executing Party Central’s “zero-COVID” properly (“one-size-fits-all,” “campaign-style” approaches instead of with differentiation and nuance) as a way of defending Xi Jinping’s policy. His article also indirectly acknowledges that the CCP had botched the implementation of “zero-COVID.”
Wu’s article, however, cannot be considered an official admission of error by Xi and the CCP because it was written in the former’s personal capacity as an epidemiologist.
April 19
1. In an editorial, the PRC’s top respiratory diseases expert Zhong Nanshan said that China cannot endlessly pursue “dynamic zero-COVID.”
“China needs to reopen so as to normalize socio-economic development and adapt to global reopening. Prolonged dynamic zeroing cannot be pursued in the long run,” wrote Zhong with co-author Guan Weijie, an associate researcher with the State Key Laboratory of Respiratory Disease in Guangzhou, in the editorial, which was titled “Strategies for Reopening in the Forthcoming COVID-19 Era in China.”
The editorial, which was first published on April 6 in the English-language National Science Review journal, was translated into Chinese and published by mainland media on April 18. However, the Chinese version was subsequently deleted.
2. Wu Qing, the executive vice mayor of Shanghai and member of the Shanghai municipal Party Committee, apologized to residents for the inconvenience caused by epidemic prevention policy adjustments during a press conference. He also expressed sincere hope that the public will continue to understand and cooperate with the authorities in the mass nucleic acid screening from April 20. Wu said that the nucleic acid screen would be conducted in closed and controlled areas for three consecutive days.
April 20
1. Shanghai health commission senior official Wu Qianyu announced that Jinshan District and Chongming District have “reached the goal of social ‘zero-COVID,’” while “community spread has been effectively curbed.”
Wu added that the city is seeing a “downward trend” in cases over recent days. Official figures showed a 7.4 percent reduction in infections to 18,901 cases over 24 hours.
Beijing medical official investigated
April 16
Yu Luming (age 61, deputy-ministerial rank, retiring), a member of the National Committee of the Chinese People’s Political Consultative Conference’s education, science, technology, health, and sports committee, a vice chairman of the Beijing municipal CPPCC, and director of the Beijing municipal health commission, was investigated, according to the Central Commission for Discipline Inspection. Yu’s last public appearance was at a meeting of the Standing Committee of the Beijing CPPCC on April 8.
On April 13, or three days before the investigation into Yu was official, Beijing Yihe Spring Technology Co announced that “Jingyitong” (京醫通) medical treatment cards would be suspended from April 20. Beijing Yihe Spring Technology Co is the company responsible for the construction and operation of Jingyitong’s online system. Jingyitong is a real-name IC medical card jointly issued by the Beijing municipal health commission, the Beijing Hospitals Authority, and the Bank of Beijing. The card, first launched in April 2012, could be used for registration, payments, and medical test results queries. Yu Luming was a key promoter of Jingyitong.
A document circulating on April 18 announcing the “imminent closure of Jingyitong” noted that the Bank of Beijing refused to fulfill its obligations to Beijing Yihe Spring Technology Co, resulting in the latter bearing alone hundreds of millions of yuan of project expenses over the past seven years. The Bank of Beijing is a Jingyitong investor. The news was reported in official mainland media.
On April 19, the Beijing municipal health commission announced that it and the Beijing Hospitals Authority were paying attention to the matter and instructed the parties involved to actively resolve the issue.
Analysis: Yu Luming spent the bulk of his career in the Beijing medical system. He previously served as deputy director (November 2015 to January 2018) of the Beijing municipal health commission and family planning commission, as well as deputy director (January 2013 to November 2015) director (November 2015 to November 2018) of the Beijing Hospitals Authority. At the 2018 Two Sessions, he became a member of the CPPCC National Committee and a vice chairman of the Beijing CPPCC. Yu also formerly headed the Beijing municipal medical security bureau (November 2018 to November 2011).
The investigation into Yu and the closure of Jingyitong appear to be connected. The Jingyitong system is a medical financial product that facilitates the circulation of Beijing’s scarce medical resources and huge amounts of medical funds. Given that Yu is involved in promoting Jingyitong, he very likely has a slice of the immense interests generated by the system. This would be in line with what Xi camp scholar Huang Wansheng said in a leaked recording about “massive interest groups” in the pharmaceutical business and government.
It is very likely that Yu Luming’s downfall is linked to medical system corruption. The takedown of Yu at this time could also be the result of the Xi leadership lashing out at corrupt officials to distract from its “zero-COVID” failure.
OUR TAKE
1. As we analyzed in our April 18 newsletter, the CCP is being forced to relax “zero-COVID” restrictions in the face of strong social and economic pressures. Wu Zunyou’s article “explaining” the policy and debunking “myths” appear to be an early effort by the authorities to reframe policy flip-flops as “being ‘dynamic’ and ‘more scientific’ in adapting to the virus.” Meanwhile, propaganda outlets continue to promote the “zero-COVID” policy as the best solution to tackling outbreaks. Wu also credited Xi Jinping’s policy for producing “phased achievements.”
The central government is looking to deflect responsibility for the problems caused by “zero-COVID” and instead hold local governments accountable for their incorrect implementation of the policy. Local governments, however, are not without blame for the epidemic prevention fiasco in Shanghai and elsewhere given their prioritization of local interests, as well as “prefer left rather than right,” “one-size-fits-all,” and “campaign-style” approaches to executing policy—the latter two being habits that Beijing has specifically warned against.
Yet local governments are at least partially incentivized by the central government to take extreme epidemic prevention and control measures because regime propaganda has been rather unscientific (“imported virus” on packages, etc.) and paranoid about the dangers of COVID-19. Naturally, local governments would put whole cities in lockdown when a handful of cases are found in communities, carry out round after round of mass testing (including, in the most absurd cases, of cats, fish, and soil), and wreck the economy by their own hands while endangering the lives of residents.
All in all, the inept, inefficient, and chaotic handling of COVID-19 outbreaks by both central and local governments are thoroughly discrediting CCP propaganda that its political system is superior. While Beijing is attempting to shift blame, fingers will ultimately point towards Xi Jinping as the cause of the crisis.
2. The State Council’s strong emphasis on ensuring stable supply and industrial chains indicate that the Chinese economy is under immense pressure due to Beijing’s epidemic prevention strategy and that changes have to be made. Ironically, the proposals put forth by Liu He and others sound like “precise epidemic prevention” and not “zero-COVID.” That Beijing is willing to take the risk of facilitating outbreaks with looser restrictions also hints that economic deterioration must be dire.
As usual, local governments are threatening to upend the central government’s stable supply and industrial chain initiative. Taiwanese newspaper United Daily News reported on April 18 that foreign companies like 3M, DuPont, and BASF were reluctant to resume production under the Shanghai local government’s work-resumption guidelines, which essentially places all the responsibility of potential outbreaks on the companies. The foreign companies also felt that the local government’s plan for returning to work was poor and requested that the latter revise its commitment letter. Official media outlets quickly came out to “deny rumors” that those companies rejected the Shanghai government’s plan or were unwilling to resume production.
3. The PBoC’s recent small RRR cut and paying of profits to the central government indicate that the CCP authorities are caught in a dilemma over how to rescue the economy.
On the one hand, the authorities need to release stimulus to support companies and industries hit by lockdowns and the pandemic in general. However, stimulus will likely play a limited role in boosting the economy given that the business environment in China is being severely impacted by the “zero-COVID” policy and geopolitical risks (Russian sanctions, U.S. pressure, investors afraid of crackdowns, etc.).
On the other hand, the authorities are hesitant to release more stimulus or cut rates because they are concerned about inflation and the “spillover effects” of U.S. monetary tightening. The U.S. Federal Reserve is widely expected to raise interest rates by 50 basis points in May and accelerate the shrinking of its balance sheet. On April 18, St. Louis Federal Reserve Bank President James Bullard again raised the idea of increasing interest rates to 3.5 percent by the end of 2022 during a Council on Foreign Relations virtual meeting. A 3.5 percent increase would see the Fed hike rates by half a point at all six of its remaining meetings this year. The inversion of the Sino-U.S. interest rate spread will drive capital outflows and worsen the problem of “spillover risks.”
4. The Xi leadership is making efforts to save the economy and fix the problems of “zero-COVID” while still clinging on to it. Party culture and other deficiencies of the CCP system, however, mean that Beijing is likely to fail in both endeavors. Propaganda work to spin defeats into triumphs (喪事當喜事辦) and reframe the narrative can only go so far in helping the CCP; observers are becoming increasingly skeptical of official economic data and the extremely low rate of COVID deaths presented by the government. Political Black Swans are on the horizon when people no longer believe the propaganda and increasingly resort to “self-rescue” (自救) instead of trusting the CCP government to curb the epidemic and other matters.
China’s worsening economy and mounting problems put Xi Jinping under immense pressure and leave him vulnerable to attacks from enemies at home and abroad. George Soros, the prominent financier who has stepped up criticism of Xi in recent years, noted in January that Xi faces serious domestic troubles, including elite politics, demographics, the epidemic (“Omicron threatens to be Xi Jinping’s undoing”), and a real estate debt crisis. “In my opinion, the second quarter of 2022 will show whether [Xi Jinping] has succeeded” in resolving the property sector crisis, Soros said. “The current situation doesn’t look promising for Xi.”
The broad “anti-Xi coalition” could seize the crucial window of opportunity before the Beidaihe meeting in the fall (around July to August) to advance their “anti-Xi, not anti-CCP” strategy or other measures. Xi’s enemies would be looking to undermine the Xi leadership with the goal of at least blocking Xi Jinping’s bid for a third term at the 20th Party Congress and rejecting his key personnel reshuffles.
SinoInsight 2
April 2 and April 15
Yuan Hongbing, an Australian-based Chinese dissident and jurist familiar with developments in the CCP elite, said on his “self-media” channel that he recently learned that the Swiss Federal Tax Administration (FTA) had provided the Xi leadership with a list containing the bank account information of offshore clients from mainland China, Hong Kong, and Macau at the end of 2021. He added that the list is causing a “major earthquake” in the CCP officialdom.
Yuan said that “people of conscience” within the Central Commission for Discipline Inspection informed him that a working group in the organ that reports directly to Xi Jinping’s office made a “preliminary assessment” of the list and found over 5,200 Swiss bank accounts connected to CCP officials. These accounts are either held by family members of officials or their “white gloves” (bagmen). The top 100 accounts contain $8 trillion in deposits.
The list includes officials who rose to the Party elite before and during Xi’s tenure. Seventy percent of national leaders (sub-national rank and above) during Jiang Zemin’s reign (Yuan Hongbing does not clarify if he is referring solely to Jiang’s official tenure [1989 to 2002] or during the entire Jiang-Hu era [1989 to 2012], where the Jiang faction dominated) are on the list. The family members of more than 50 retired Party leaders are also involved, including Jiang Zemin’s grandson Alvin Jiang, Zeng Qinghong’s niece Zeng Baobao, Zhu Rongji’s son Zhu Yunlai, Wen Jiabao’s wife and son, Liu Yunshan’s son Liu Lefei, an agent of Meng Jianzhu, and Chi Haotian’s relatives. About 30 family members of current leaders are in the list, including Xi Jinping’s brother-in-law, Li Zhanshu’s son-in-law, and the “white gloves” of Han Zheng, Wang Yang, and Wang Qishan.
Yuan Hongbing said that Xi Jinping originally wanted to refute Deng Xiaoping’s “reform and opening up” with a “Party elite market economy at the core” in his “historical resolution” at the Sixth Plenum of the 19th Central Committee. Xi also wanted to publicly criticize Jiang Zemin’s “incorrect political line.” However, Xi was unable to do both as he faced strong opposition from officials who rose to the Party elite before and during Xi’s tenure. His plans for the “historical resolution” thwarted, Xi instructed the Office of the Central Foreign Affairs Commission to “press Switzerland at all costs” to hand over Swiss bank account information of offshore clients from mainland China, Hong Kong, and Macau.
Yuan said that “the relevant Swiss officials” have long been won over by the CCP’s United Front. He speculated that Switzerland had handed over the list to Xi Jinping as a sort of “(gang) initiation ritual” (投名狀) in exchange for economic benefits from the Chinese market, and not simply as part of mundane data sharing between governments.
Yuan said that Xi had first handed the task of requesting the list from Switzerland to Yang Jiechi, the Central Foreign Affairs Commission Office director, two years ago, according to people familiar with the matter. Liu Jianchao, Yang’s deputy, was put in charge of the specifics of the task. After Liu succeeded in obtaining the list following Xi’s instruction to secure it “at all costs,” he won the latter’s trust and is now one of the candidates for foreign minister.
Yuan also learned that the Party elite are panicking now that Xi Jinping has the list. He also heard from a person familiar with the matter that former vice foreign minister Fu Ying expressed her concerns about the list in a private setting, noting that Xi would recklessly make the list public if he does not secure a third term, and very likely trigger a Soviet-style collapse of the CCP regime.
April 13
Bloomberg News reported that the CCDI is among the agencies involved in a recent inquiry into the links between Jack Ma’s Ant Group and PRC state-owned companies.
The CCDI is seeking to “understand the influence of Ma’s fintech empire and the extent of its transactions with state banks and enterprises,” according to the report, citing people familiar with the matter.
April 14
People’s Daily published a signed commentary on its front page titled, “An Overwhelming Victory in the Fight Against Corruption and a Comprehensive Consolidation (Forge Ahead in a New Journey, Make Contributions to a New Era, and Make Great Changes)” (反腐敗鬥爭取得壓倒性勝利並全面鞏固 [奮進新征程 建功新時代·偉大變革]).
The commentary opened by praising Xi Jinping’s anti-corruption achievements with the phrase, “10 years of sharpening a sword!” It then quoted Xi from his speech at the first collective study session of the Politburo of the 18th Central Committee: “A lot of facts tell us that the more intense the problem of corruption becomes, the Party and country will inevitably be destroyed in the end! We must be vigilant!” The commentary also stressed that the fight against corruption is a major political struggle that “cannot be lost and must not be lost.”
Near the conclusion, the commentary cites Xi’s speech at the Sixth Plenary Session of the 19th CCDI on Jan. 18: “We must keep a clear head, always blow the charge bugle call, and bear in mind that anti-corruption is always on the road. As long as corruption problems are given soil and conditions (to grow), corruption will not be eradicated, and our fight against corruption will not be able to stop.”
People’s Daily also published on its page six a commentary titled, “Continue to Fight Well the Tough Battle Against Corruption (Forge Ahead in a New Journey, Make Contributions to a New Era, and Make Great Changes)” (繼續打好反腐敗鬥爭攻堅戰持久戰 [奮進新征程 建功新時代·偉大變革]).
April 18
MYBank, a private online bank backed by Ant Group, announced that it would gradually suspend Alipay fund transfers from April 21. Alipay users would not be able to transfer funds to class two MYBank accounts with no transaction fees. Merchants and users can still transfer funds to other banks through Alipay, but will have to pay 0.1 percent transaction fees.
Founded in 2015, MYBank is one of the first online banks to build its core system on the financial cloud. More than 40 million small and micro businesses use MYBank’s digital credit services. Until recently, one of MYBank’s major advantages was allowing its users to transfer funds for free via Alipay.
OUR TAKE
1. Yuan Hongbing’s information about Xi Jinping obtaining bank account information of the Party elite from the Swiss authorities is plausible. Switzerland began sharing client financial account data with the tax authorities of various countries from 2018. Switzerland and China also have an agreement signed in 2015 that would allow “Chinese experts,” or rather, PRC security agents, to pursue their targets on Swiss soil. The Swiss tax authorities have also shared the details of at least 3.1 million bank accounts to 75 partner countries (China is a partner) in 2019. Meanwhile, PRC officials are notoriously corrupt and many have stashed their wealth abroad.
With the Beidaihe meeting and the 20th Party Congress coming up in a couple of months, Xi would understandably want as much dirt as possible on his factional rivals to use as leverage in political bargaining. Xi is pushing for a norm-breaking third term at the upcoming Party Congress and wants to ensure that the major leadership reshuffle at the Party Congress to largely favor the Xi camp. As Xi’s political “achievements” over the past decade rapidly evaporate one after the other in recent months, he also needs to find “trump cards” to play against his opponents and negate their efforts at blocking him for achieving his political objectives.
The timing of prominent pushbacks against Xi after the Sixth Plenum of the 19th Central Committee (see here, here, and here) suggest that Xi’s rivals had likely caught wind that he was securing the list and were growing anxious about how Xi was going to use the information against them. It is possible that Xi obtaining the list either triggered or contributed to the triggering of escalated factional struggle efforts against Xi in recent months.
If Yuan Hongbing’s Party insider information is reliable, then Xi Jinping is clearly preparing to engage in “you die, I live,” “perish together” factional struggle with the Jiang faction and the broader “anti-Xi coalition.” With the list, Xi would have hard evidence to lob corruption charges against senior Party cadres and elders that continue to challenge his leadership. But the list also contains dirt on the Xi camp, which makes it difficult for Xi to play this “trump card” without offsetting its negative impact on his political survival. As Xi steps up the anti-corruption campaign and his rivals grow more desperate, the probability of political Black Swans emerging in China this year will rise accordingly.
2. The CCDI’s recent investigation of Ant Group could be connected to the downfall of former Hangzhou Party secretary Zhou Jiangyong in August 2021 and the Xi-Jiang factional struggle in general. For instance, the CCDI investigation into Zhou could have unearthed new damaging information about Ant Group and the Jiang faction’s business dealings, giving the Xi camp more reason to probe the company.
MYBank’s Alipay fund transfer suspension also suggests that Jack Ma and businesses associated with Alibaba are no longer allowed to enjoy market advantages. They could be further stifled as the Xi-Jiang struggle intensifies.
