SinoInsight 1
Work and anti-corruption arrangements
Dec. 7
Xi Jinping presided over a Politburo meeting to analyze and study economic work in 2023, according to state mouthpiece Xinhua. The meeting also reviewed a work report by the Central Commission for Discipline Inspection and the National Supervisory Committee, as well as researched and deployed the work for building a “clean and honest government” and anti-corruption work in 2023.
The meeting opened by extolling Xi’s political achievements over the past year before noting that 2022 was an “extremely important year in the history of the Party and the country.” Amid “strong winds and waves” in the international environment, as well as “difficult and heavy” domestic reform, development, and stability, “Party Central with Comrade Xi Jinping at the core” united and led the whole Party, the whole nation, and people of all ethnic groups to “rise to the occasion” and maintain “general economic and social stability.”
The meeting made the following points about economic work in 2023:
- Stability is the watchword in 2023, and the authorities should strive for progress while maintaining stability. Concurrently, the Party should strengthen its overall leadership over economic work.
- The authorities will continue to implement a proactive fiscal policy and a prudent monetary policy.
- The authorities will continue to “optimize epidemic prevention and control measures” (i.e. ease “zero-COVID”). The meeting did not mention anything about adhering to “dynamic zero-COVID.”
- Industrial policy should focus on development and security, while science and technology policy should focus on self-reliance and self-improvement. The construction of a modern industrial system should be accelerated, and the resilience and security of industrial and supply chains should be improved.
- The authorities must firmly “grasp the bottom line of people’s livelihood” (i.e. ensure employment and grassroot operations).
- Private enterprises should implement the “two unswervings” (i.e. “unswervingly consolidate and develop the public sector” and “unswervingly encourage, support, and guide the development of the non-public sector of the economy”).
- The authorities will promote high-level opening up to the outside world and make greater efforts to attract and utilize foreign investment.
- The authorities will seek to effectively prevent and defuse major economic and financial risks, and hold the bottom line of preventing systemic risks.
On anti-corruption work in 2023, the meeting said that the hard work of comprehensively and strictly governing the Party had been carried out for 10 years and the anti-corruption struggle achieved “overwhelming victory” and was fully consolidated, but things are “far from being successfully accomplished.” Therefore, it is necessary for the authorities to “carry out the great self-revolution of the Party in the new era to the end.” The authorities will “focus on investigating and dealing with corruption cases that intertwine with political and economic issues, as well as deepen the rectification of corruption in areas where power is concentrated, capital intensive, and resource rich.” The authorities will also “strengthen the effectiveness of supervising leading cadres (一把手) and leadership groups.”
Western pressure and PRC ‘peacemaking’
Nov. 30
Foreign ministers from NATO countries met in Bucharest to discuss potential action to contain the “challenge” posed by China, including economic measures like export controls and the protection of strategic infrastructure from Chinese investment.
“What we talked about today is … working to adapt in concrete ways to meet the challenge,” U.S. Secretary of State Antony Blinken told reporters after the meeting. “What we are seeing and what we are doing … is looking into the areas where China poses a challenge … and taking appropriate steps accordingly.”
“What I have seen … is a growing convergence in the approach to the challenges that China poses,” Blinken told reporters. “I heard that convergence loud and clear this morning … everything I heard today reinforces that.”
According to the Financial Times, the U.S. has in recent weeks “stepped up pressure on its NATO allies to align closer to Washington’s more robust approach to China, leveraging its outsized role in supporting Ukraine and increasing its military presence in Europe this year in the face of Russia’s war against the country.”
Dec. 2
1. Finland’s prime minister Sanna Marin said at a Lowy Institute event that “this is the time to stop being naive, also when it comes to China.” She added that this did not mean “closing all the doors and windows” to trading with China, but that it was crucial for democratic countries to have “strategic autonomy” in important sectors.
2. U.S. Deputy Secretary of State Wendy Sherman said at an American University event, “I think we have seen the protests die down now in China, and the reason they’ve died down is they actually had an effect … Protests do matter.”
When asked by students about the threat of Sino-U.S. conflict, she said, “I think war is potentially possible because Xi Jinping now has absolute control in China. So our effort is to deter that. To urge China not to go in that direction. But also to support Taiwan to have the means to defend itself.”
Dec. 3
Avril Haines, the U.S. Director of National Intelligence said at the annual Reagan National Defense Forum in California that Xi Jinping is “unwilling to take a better vaccine from the West, and is instead relying on a vaccine in China that’s just not nearly as effective against Omicron.”
She added, “Seeing protests and the response to it is countering the narrative that he likes to put forward, which is that China is so much more effective at government.”
Haines said that recent protests in China are “not something we see as being a threat to stability at this moment, or regime change or anything like that,” but added that “how it develops will be important to Xi’s standing.”
Dec. 4
When asked on CNN whether the Biden administration supports “zero-COVID” protesters in China, Secretary Blinken replied, “Of course, we do. We support the right for people everywhere, whether it’s in China, whether it’s Iran, whether it’s any place else, to protest peacefully, to make known their views, to vent their frustrations.”
Dec. 6
1. Qin Gang, the PRC ambassador to the United States, delivered a keynote address titled “Climate Change: A Shared Challenge and Responsibility” (氣候變化: 共同的挑戰與責任) at the 2022 US-China Business Council (USBC) gala dinner in Washington D.C.
Qin made several remarks aimed at lowering Sino-U.S. tensions, including:
- “I believe none of us wants to see global warming, but all of us want to see a ‘warming’ of China-U.S. cooperation. Therefore, we must not allow the ballast to reduce weight or the propeller to lose power. Instead, we need to provide fuel to ensure the ship of China-U.S. relations will not lose direction or speed, and will brave the storm and ride the waves.”
- “The U.S. defines China as the ‘most serious competitor’ and the ‘most serious long-term geopolitical challenge” out of grave strategic misperception and misjudgement. Because of this, it has imposed export controls, import restrictions, investment reviews, as well as measures in tech cooperation, industry supervision, and industrial subsidies … (The measures) run counter to the principles of market economy and rules of international trade, and are disruptive to global industrial and supply chains.”
- “Healthy, stable, and cooperative trade relations with China will serve America’s own interests.”
- “Building a small yard with high fences, cutting off supplies, and seeking decoupling are detrimental to both oneself and others.”
- “On issues concerning the economy and trade, people need to face the reality that China and the U.S. are deeply integrated; people should take the interests and voice of the business community seriously, follow business roles, and conduct professional discussions.”
With regard to climate change, Qin said:
- “Harmony between man and nature is a main feature of Chinese modernization, and a pledge made by China to the world … China will not develop at the expense of the environment.”
- “We have announced the goal of achieving peak carbon before 2030 and carbon neutrality before 2060, and we have introduced a roadmap, an action plan, and specific measures to reach the goal.”
- “We are ready to work with the U.S. and the international community to address climate change … I hope that the U.S. business community will get more involved in our climate cooperation.”
Qin also made some remarks regarding “zero-COVID”:
- “There is no denying that the (zero-COVID) policies have had some impact on the economy and people’s lives. But in general, China has realized a good balance between protecting the people and restoring the economy.”
- “Since November, China has further improved its COVID policies … Governments at various levels are doing their best to serve the needs of enterprises and ensure the economy goes well. On the basis of science-based and targeted control measures, we will continue to make dynamic adjustments to facilitate business and personnel exchanges as much as we can.”
- Qin Gang did not mention “adhering to dynamic zero-COVID.”
2. In an interview with Nikkei Asia, former Australian prime minister Kevin Rudd said that the significance of the “blank paper revolution” and the crackdown on religion in China “occurs not tomorrow, not next week or next year, but in a much broader reaction over time.”
“But that doesn’t necessarily mean regime change,” he added. “It means moving, perhaps back to a more pragmatic middle course in the medium- to long-term future, probably in the post-Xi period.”
Dec. 8
1. The U.S. House of Representatives passed the National Defence Authorization Act (NDAA) for 2023, which provides up to $10 billion in security assistance and weapons to Taiwan.
The Taiwan-related parts of NDAA exclude some provisions that Beijing would have found to be provocative, such as:
- Renaming the Taipei Economic and Cultural Representative Office in Washington as the Taiwan Representative Office.
- Excluding language authorizing sanctions against the PRC’s top political leadership and large banks if Beijing engages in “significant escalation in aggression.”
- Not designating Taiwan as a “major non-NATO ally” for the purposes of weapon transfers.
- Excluding a provision requiring the Pentagon to establish a “comprehensive training program” with the Taiwanese military, but authorizes a military student exchange program.
- Excluding a requirement that U.S. arms manufacturers must “expedite and prioritize” the production of weapons Taiwan buys over other customers.
2. Speaking at the Aspen Security Forum event in Washington, National Security Council Coordinator for the Indo-Pacific Kurt Campbell said that China has “taken on and challenged many countries simultaneously,” including territorial disputes with Japan and India. “I think they recognize that that has, in many respects, backfired,” he added.
“All of that suggests to me that the last thing the Chinese need right now is an openly hostile relationship with the United States. They want a degree of predictability and stability, and we seek that as well,” Campbell said.
Campbell added that the world would see “a resumption of some of the more practical, predictable elements of great-power diplomacy” between Washington and Beijing in the next several months. “I think we’re going to see some developments that I believe will be reassuring to the region as a whole,” he said without elaborating.
3. The Japanese government proposed designating China an unprecedented “strategic challenge” in its new National Security Strategy at a meeting with members of the junior ruling coalition partner Komeito, according to a Nikkei Asia report.
OUR TAKE
1. The Dec. 7 Politburo meeting and Qin Gang’s speech to the USBC affirm our analysis before the 20th Party Congress and after (see here and here) about how Xi Jinping “could move to swiftly ‘rehabilitate’ his negative image after securing his political agenda items.” We noted that Xi could ease “zero-COVID” and dial down on the CCP’s “wolf warrior” diplomacy after the 20th Party Congress, and that he will step up “self-rectification” efforts to purge the regime of his remaining factional enemies.
The anti-lockdown and anti-regime protests in China, as well as signs of steep economic deterioration, will further convince Xi that he must move away from “zero-COVID,” open up China’s markets further, step up diplomacy to court business and lower tensions with the U.S. and its allies, and clean up the remnant Jiang faction and other political foes in 2023.
Xi’s task will be complicated by escalating intra-Party struggle, the disadvantages of the CCP’s authoritarian system, the Chinese people’s growing animosity towards Xi and the regime, and mounting external pressure on the PRC as the West and the international “anti-Xi coalition” look to exploit increasing instability in China to undermine the Xi leadership. As we noted in the Dec. 8, 2022 newsletter, Xi now stands at history’s crossroads and will eventually be compelled by worsening internal and external crises to make the choice between preserving himself or the CCP.
2. The U.S. and its allies appear to be laying the groundwork to turn up the heat on the PRC if Beijing does not cooperate with the West’s climate agenda, adopt the West’s stance on Ukraine, and adhere to the international rules-based order. At the same time, the U.S. and its allies are leaving room to lower tensions with China. We believe that the U.S. and its allies could quickly ramp up pressure on China if they determine that Beijing is not sufficiently cooperative or they sense an opportunity to provoke or support leadership change (but not necessarily regime change, as noted by Kevin Rudd) in the PRC.
Qin Gang’s speech to the USBC and the Politburo’s observation about “strong winds and waves” in the international environment suggest that the Xi leadership is well aware and very wary of external risks. The toning down of “wolf warrior” diplomacy, however, is likely only intended to buy time for the CCP to resolve its crises and “delay and wait for change” (serious U.S. recession, global governmental crises, etc.) before again advancing its domination agenda.
3. Businesses, investors, and governments should not be deceived by Beijing’s sudden “change” for the better. They should instead remain hyper-vigilant to the CCP threat because a wounded animal can be very dangerous when cornered. Also, they should not buy into Party propaganda intended to gin up optimism about China’s reopening; we have analyzed in several newsletters how the CCP’s dysfunctional system will stymie its efforts to walk back from “zero-COVID” and rescue the economy.
Instead of preparing for China’s recovery and stabilization of economic and social order, businesses, investors, and governments should instead make contingencies for the escalation of “internal contradictions” in the CCP regime, further destabilization, and sharply increasing political risks as intra-Party factional struggle heads to a showdown.
SinoInsight 2
Several members of the 20th Politburo have been appointed to new posts since November. Over the same period, several political and legal affairs officials were, including the former head of the Guangdong public security bureau (PSB).
Provincial reshuffles
Nov. 27
Zhao Yide (age 57), governor of Shaanxi Province, was promoted to Shaanxi Party secretary. Zhao succeeded Liu Guozhong, a new Politburo member.
Analysis: Zhao Yide was deputy Party secretary of Wenzhou municipality and secretary of the Wenzhou Political and Legal Affairs Commission when Xi Jinping was Party boss of Zhejiang Province. After Xi took office in 2012, Zhao was steadily elevated up the ranks.
Nov. 28
Hao Peng (62), director of the State Council’s State-owned Assets Supervision and Administration Commission, was transferred to Liaoning Province to serve as provincial Party secretary. Hao replaced new Politburo member Zhang Guoqing (58).
Dec. 1
Zhao Gang (54), Shaanxi deputy Party secretary and Party secretary of Yan’an municipality, was appointed vice governor and acting governor of Shaanxi Province.
Analysis: Zhao Gang spent the bulk of his career in state-owned defense and heavy machinery enterprises, including serving leadership positions at China North Industries Corporation (April 1993 to Sept. 2010), China Ordnance Industries Group (Sept. 2010 to Sept. 2017), and China First Heavy (Sept. 2017 to Oct. 2018).
Zhao and Zhang Guoqing were colleagues at China North Industries Corporation and China Ordnance Industries Group, and it is possible that Zhao was promoted at the recommendation of Zhang.
Dec. 7
1. Yi Lianhong (53), Party secretary of Jiangxi Province, was transferred to Zhejiang Province to replace outgoing Party secretary Yuan Jiajun.
2. Yin Hong (59), Party secretary of Gansu Province, was transferred to Jiangxi to succeed Yi Lianhong.
3. Hu Changsheng (59), governor of Heilongjiang Province, was transferred to Gansu to succeed Yin Hong.
Dec. 8
1. Chen Min’er (62), Party secretary of Chongqing and a member of the 20th Politburo, was transferred to Tianjin to succeed Li Hongzhong as municipal Party secretary.
2. Yuan Jiajun (60), Party secretary of Zhejiang Province, succeeded Chen Min’er as Chongqing Party secretary.
Analysis: Chen Min’er and Yuan Jiajun’s new appointments are in line with political rumors that emerged in mid-November.
As we previously analyzed, Chen’s new office suggests that his official career has plateaued and he will unlikely be elevated further. Meanwhile, Chen’s predecessor Li Hongzhong looks on track to be appointed as the second-rank vice premier at the 2023 Two Sessions.
Dec. 9
1. Xu Lin (59), deputy director of the Central Propaganda Department and director of the National Radio and Television Administration, was transferred to Guizhou Province to replace outgoing provincial Party secretary Chen Yiqin (63).
2. Liang Huiling (female, 59), deputy secretary of the Party group and council director of the All-China Federation of Supply and Marketing Cooperatives, was appointed acting governor of Heilongjiang Province and replaced Hu Changsheng.
Analysis: Many commentators believed that Xu Lin had been marginalized when he was reshuffled from being the director of the State Council Information Office to head the National Radio and Television Administration in June 2022. However, we noted at the time that Xi Jinping had likely intended to shift Xu to the propaganda apparatus to better consolidate his control over it.
Xu’s transfer to Guizhou appears to follow Xi’s playbook of placing trusted allies in key positions even if it appears that they are “sidelined” for the moment. An example is Shi Taifeng, whose career seemed to have stagnated when he was shunted to a less prestigious position in June 2022, but later joined the Politburo at the 20th Party Congress and was appointed head of the Central United Front Work Department.
State media said that Chen Yiqin is moving on to “another appointment” (另有任用). Chen could move to another province to serve as Party secretary, or be transferred to the All-China Federation of Supply and Marketing Cooperatives to replace Liang Huiling as director. Xi will want an official with a good work record (Chen produced poverty alleviation results in Guizhou) in charge of the supply and marketing cooperatives system as it is becoming increasingly important to the crisis-hit CCP regime.
‘Rectifying’ the political and legal affairs apparatus
Dec. 2
Gao Bin (60), former deputy secretary and deputy director of the People’s Congress of Lu’an City in Anhui Province, was investigated. Gao previously served as Party secretary of the Lu’an municipal Political and Legal Affairs Commission (Sept. 2016 to Feb. 2021).
Dec. 8
1. Li Chunsheng (61), deputy director of the Standing Committee of the Guangdong Provincial People’s Congress and Party group deputy secretary, voluntarily surrendered himself for investigation.
Li is a Jiang faction official who joined the political and legal affairs apparatus at the peak of Jiang Zemin’s campaign to persecute Falun Gong. Li previously served as Party secretary of the Xinyang municipal Political and Legal Affairs Commission (2003 to 2004), Henan Provincial PSB Party Committee member and director of provincial PSB’s political department (2004 to 2006), director of the personnel training bureau of the Ministry of Public Security’s (MPS) political department (2006 to 2013), and deputy director of the MPS political department (2008 to 2013).
After Xi came to power, Li Chunsheng was transferred to the Guangdong Provincial PSB to serve as director (2013 to 2021), a position he held until his transfer to the Guangdong Provincial People’s Congress after reaching retirement age in 2021.
2. Xu Hengcai (64), secretary of the Party group and chief prosecutor of the agricultural reclamation branch of the Heilongjiang Provincial People’s Procuratorate, was investigated.
Like Li Chunsheng, Xu entered the political and legal affairs apparatus at the height of Jiang’s anti-Falun Gong campaign. In September 2002, he was transferred from the Shuangyashan Municipal Party Committee where he served as office deputy director to the Shuangyashan’s procuratorate where he served as Party group member and deputy chief prosecutor. In May 2021, Xu was promoted to the post (bureau-level) he held before being purged.
3. Xiao Fajun (51), deputy Party secretary of Qiannan Prefecture and secretary of the prefecture’s Political and Legal Affairs Commission, was investigated. Xiao was promoted to the offices he held, including joining the political and legal affairs apparatus, before being purged in September 2021.
OUR TAKE
1. The latest round of personnel reshuffles reveals several points about Xi Jinping’s current political control.
First, Xi stuck to his reshuffle formula of installing former subordinates in key positions, elevating technocrats, promoting the colleagues of trusted officials, and stagnating the careers of less trusted officials. This underscores our longtime observation that Xi did not have a faction before entering office and had to call upon mainly those whom he had worked with to take up important posts. However, the formation of a “Xi faction” and new factional networks associated with Xi is definitely underway.
Second, Xi appears to trust only a small pool of officials and is not adverse to reshuffling them to wherever they are most needed even if it means that they are temporarily “sidelined.” If Xi was “totally dominant” as many China watchers are saying, then he would have no qualms with picking officials outside his tight circle of trusted allies and loyalists to head key positions. Put another way, Xi is far more constrained in governance ability than appearances suggest, and is limited in what he can do to overcome the “orders not leaving Zhongnanhai” problem.
Third, Xi is clearly willing and able to bend personnel reshuffle norms to maintain or improve his control over areas and offices that he believes are the most crucial. Thus, we do not rule out Xi making more unusual appointments at the 2023 Two Sessions.
2. The table below shows the current division of labor in the Politburo and its Standing Committee based on official announcements and the latest political rumors. Posts highlighted in green have already been confirmed, red highlights are posts that we believe have a higher probability of being confirmed, and posts without highlights are ones where we believe the probable outcome is yet unclear.
Of the posts that are unclear, we believe that Li Ganjie (currently a secretary of the Central Secretariat) stands a good chance of being appointed head of the Central Organization Department. Xi confidant Ding Xuexiang could stay on as CCP General Office director as we earlier analyzed, and the first-ranked vice premier of the State Council may not be a member of the 20th Politburo Standing Committee. Meanwhile, the four vice premiers in order of rank could be Liu Guozhong, Li Hongzhong, He Lifeng, and Zhang Guoqing.
The posts that have been confirmed or have a higher probability of being confirmed show that Xi Jinping’s men control key operational apparatuses like the military, propaganda, political and legal affairs, and anti-corruption. While the CCP’s lead diplomat Wang Yi is a former Jiang official, he has been mostly aligned with Xi in advancing the former’s “great power diplomacy” agenda. This means that the diplomatic apparatus is technically more or less in Xi’s hands.
The National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) will very likely be headed by Zhao Leji and Wang Huning respectively. While Zhao and Wang lean to the Jiang faction and the NPC and CPPCC are important regime organs, the Jiang faction will find it harder to directly interfere in operational measures through influencing those two institutions. Xi can also arrange for his loyalists and trusted officials to serve as vice chairman of the NPC and CPPCC, or secretary-general in the two institutions, to control operational matters and keep the Jiang faction in check.
3. Xi has continued to purge Jiang faction officials after the 20th Party Congress and following the former leader’s death, just as we earlier analyzed. Going forward, Xi would likely step up his effort to “rectify” the political and legal affairs apparatus and other Jiang faction strongholds. Or, to quote the Dec. 7 Politburo meeting, “focus on investigating and dealing with corruption cases that intertwine with political and economic issues, as well as deepen the rectification of corruption in areas where power is concentrated, capital intensive, and resource rich.”
