1 Probes in the CCP’s top ranks see the regime’s political and geopolitical risks spike
Military meeting and speculation
Sept. 20
Official PRC media reported that a pilot work exchange meeting of the People’s Liberation Army’s “three major organizations” at the grassroots level was held in Beijing on Sept. 19. Miao Hua, a member of the Central Military Commission and director of the CMC Political Work Department, attended the meeting and delivered a speech.
Footage from state broadcaster CCTV’s military channel showed personnel from four service branches (ground force, navy, air force, rocket force) in attendance at the meeting. The PLA Daily also published a report on the meeting on the front page of the Sept. 20 edition of its newspaper.
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The “three major organizations” at the grassroots level of the military refer to the Party branch, the Communist Youth League branch, and the military personnel committee. According to the CCP’s official explanation, the Party branch is a grassroots organization established by the CCP in the PLA and is the “core of unified leadership and unity” in military companies. Meanwhile, the CYL branch and military personnel committee are two mass organizations inside companies and assist the Party branch in its work.
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Some overseas Chinese language media and Chinese observers have speculated that the attendance of just Miao Hua at the “three major organizations” out of the four CMC members (defense minister Li Shangfu, chief of joint staff Liu Zhenli, discipline inspection secretary Zhang Shengmin, and political work director Miao Hua), as well as the “absence” of CMC vice chairman Zhang Youxia, Li Shangfu, and Liu Zhenli at a Xi Thought “thematic education” meeting on Sept. 15, suggested that Xi Jinping was expanding his purge of the military apparatus.
Zeng and Chi met Xi at Beidaihe?
Sept. 21
Nikkei Asia cited “sources familiar with China’s internal affairs” as saying that Zeng Qinghong and former CMC vice chairman Chi Haotian had met with Xi Jinping at Beidaihe this year. While Chi sat next to Zeng, he allegedly “did not say a word,” according to the sources.
A source also claimed that the pre-Beidaihe gathering by Party elders that Nikkei had mentioned in an earlier report (see our analysis) “was not so much a secret meeting” but was “practically approved by Party leadership, which really had no other choice.” The source noted that Xi previously issued “official notices” cautioning the elders against meeting among themselves and made “full use of his close aides to keep a close watch.”
This time, however, “Xi may have thought that the retired officials were merely being given an opportunity to ‘let off steam.’” Instead, “the advice Zeng relayed from his peers apparently landed with a terrific thud, one that has been reverberating through party organizations across the nation for nearly a month,” according to Nikkei.
West losing confidence in China
Sept. 20
Bloomberg News reported that Xi Jinping’s removal of foreign minister Qin Gang and Li Shangfu “is making China appear unstable to the outside world,” and the “upheaval is leaving investors and governments spooked.”
Bloomberg also reported that “morale within the [PRC] foreign ministry in particular is very low, with anxiety running high among a group of bureaucrats that see themselves as professional diplomats who don’t want to get caught up in political power plays,” citing Chinese officials who requested not to be identified.
Bloomberg further noted that the PRC system is “showing signs of becoming paralyzed” by Xi’s micromanagement of domestic operations. A foreign executive in Beijing told Bloomberg that Chinese officials presently operate in “silos of fear,” with “everyone scared of Xi and also isolated from each other.”
2. George Magnus, an associate at the China Center at Oxford University, wrote in a piece for The Telegraph that “between domestic political and economic turbulence there is a sense that [China] is now at, or nearing, a geopolitical tipping point.”
Magnus attributed the problems with the Chinese economy to the CCP dictatorship rather than Xi. “Many of the causes of economic frailty blamed on Xi Jinping – repression, centralization of power and poor governance – in fact are a consequence of China’s failing model of economic development. This failure is now becoming institutionalized and self-replicating; changing the person at the top of the machine will have little effect on its performance,” he wrote.
Magnus further observed, “Volatile economic and political conditions are certainly assured inside China as systemic problems continue to come to the fore, and in international relations as Beijing’s growing pains continue to hamper it … The troubles which have been bubbling beneath the surface may soon bubble over, and we will need to be ready for when they do.”
Our take
1. Contrary to the speculation in Chinese-speaking spheres, the non-appearance of CMC members at military meetings is insufficient evidence in and of itself to signal that senior generals are definitely in trouble. It is normal for the CMC members to attend some meetings and skip others given their different portfolios and responsibilities. At best, the non-attendance of certain CMC members at meetings in the current political environment of increased scrutiny over the top military leadership suggests that those “missing” members in question could be under investigation, but it is hard to conclude anything more than that from the publicly available information.
The military meetings on Sept. 15 and Sept. 19 concern political and ideological work, and fall within the purview of CMC vice chairman He Weidong, political work director Miao Hua, and military discipline commission head Zhang Shengmin. Miao should be attending and heading those meetings given his current portfolio, but He and Zhang do not necessarily have to show up. Other members of the CMC who are technically not required to attend the Sept. 15 and Sept. 19 meetings include CMC vice chairman Zhang Youxia and chief of joint staff Liu Zhenli. Therefore, the attendance or non-attendance of He, Liu, Zhang Youixa, and Zhang Shengmin at the two meetings is not very revealing of their current political status.
It is difficult to say whether Zhang Youxia will eventually be implicated in the Li Shangfu probe. However, it would be highly damaging to Xi Jinping and the Xi camp politically if Xi moved against Zhang given their personal and factional ties.
A probe into Zhang Shengmin could pique Xi’s suspicion towards all other generals whom he elevated up the ranks via “rocket promotion” during his tenure. This could in turn result in more purges in the senior ranks of the military.
2. The information about CCP elite politics and factional struggle in the Sept. 21 Nikkei Asia article, similar to some of the information in the Sept. 5 Nikkei piece, does not seem plausible. In fact, the information provided by Nikkei’s sources reads like an evasive response to what we found most questionable in the Sept. 5 piece, that is, how is it that Zeng Qinghong and other Party elders could mobilize so openly against Xi when the latter has been increasingly tightening control over them while Zeng and the others have seen their power and influence increasingly diminished.
It is also suspicious that the Sept. 21 Nikkei piece explicitly named Zeng as the Party elder “representative” who met with Xi at Beidaihe while implying that it had disclosed this detail in the Sept. 5 article. However, a close reading of the Sept. 5 article reveals no such detail; Zeng is only described as a “central figure” of the Party elders among those who are disgruntled with Xi. That Nikkei’s “sources” or the columnist would reveal such crucial information (Zeng’s direct involvement in the Party elders’ meeting with Xi at Beidaihe) in dribs and drabs, as well as offer a roundabout and obfuscating explanation for why Xi allowed the Party elders to have their meeting (“really had no other choice,” “let off steam,” etc.), suggests that there is more “story-telling” elements and embellishment of events than actual information in both Nikkei articles on what allegedly went on in this year’s Beidaihe. This increases our skepticism regarding the information and Nikkei’s “sources.”
We still believe that it is possible that “some prominent Party elders like Zeng could have expressed their concerns about how the regime is fairing under Xi directly to him at Beidaihe,” as we wrote in the Sept. 7, 2023 newsletter. However, we are very doubtful that events at the retreat unfolded in the manner described by Nikkei Asia, or that Xi allowed Party elders to meet and plot against him. We also strongly suspect that the Zeng-led Jiang faction and the “anti-Xi coalition” looking to carry out political mobilization against Xi both inside and outside China are behind the information provided to Nikkei.
We believe that the information in the Nikkei articles likely overstates Zeng Qinghong and Chi Haotian’s influence, while downplaying Xi’s political strength and control. For one, if Zeng and the other Party elders continue to retain tremendous influence, then it would be implausible for them to not latch onto Xi’s many failures (China’s politics, economy and society were already in dire straits) before the 20th Party Congress to block him from taking a third term, but instead allowed him to stay in office and further marginalize the “collective leadership” system. Political developments in the near future will also quickly substantiate or invalidate the Nikkei information: if Zeng is indeed as influential as is claimed, Xi will replace his purged senior officials with those associated with the Jiang faction; otherwise, Xi will continue picking his own political allies or loyalists to fill up the vacancies.
3. The turbulence and opacity of CCP elite politics as highlighted by Xi Jinping’s removal of two ministers who happen to be his political allies is alerting international businesses, investors, and governments to the dangers of political risk in China and raising more questions about whether Beijing can save the Chinese economy given the ongoing political turmoil. The longer Xi takes to decisively resolve his political problems, the longer the rumor mill will churn and magnify those problems. Over time, foreign businesses, investors, and governments will become increasingly concerned about China’s rising political risks and how it could impact their interests, and will become more inclined to pull capital and operations out from China (businesses and investors) or be less hesitant about condemning the CCP regime in increasingly harsh terms (governments).
Domestically, Xi will find himself becoming increasingly alienated from the officialdom, including from his own political allies and loyalists, over the probes into senior officials. The CCP authoritarian dictatorship will become more paralyzed and less effective as Xi and the CCP officialdom become increasingly plagued by suspicion, fear, and paranoia, which would in turn amplify the negative effects of the many internal and external crises already affecting the regime.
Political Black Swans will emerge sooner rather than later if current political trends in China hold or worsen. Businesses, investors, and governments are advised to prepare contingencies for “worst-case scenarios,” including rapid regime collapse.
2 Xi rolls out anti-corruption five-year work plan to deal with ‘severe and complex’ situation
Sept. 20
The website of the Central Commission for Discipline Inspection and the National Supervisory Commission published the person in charge of the Central Anti-Corruption Coordination Group Office’s response to questions from reporters about a new anti-corruption five-year (2023 to 2027) work plan (中央反貪腐協調小組工作規劃 [2023—2027年]; henceforth referred to as the “work plan”).
The person in charge said that despite Xi Jinping having achieved an “overwhelming victory and comprehensive consolidation” with the anti-corruption campaign over the past decade, “the situation in the anti-corruption struggle is still severe and complex.” The person added that the “soil and conditions for corruption have not been fully eradicated, new types of corruption and hidden corruption are emerging, and the task of curbing growth and eliminating stockpiles [of corruption] remain arduous.” Therefore, the 20th Party Congress put forward new requirements for the fight against corruption, including adopting a “zero-tolerance” attitude in combating corruption and punishing evils, as well as introducing new rules and deployment of key anti-corruption work for the next five years.
The person in charge said that “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” is the guiding ideology behind the new five-year plan for the anti-corruption campaign. The person added that Xi will “offend thousands of people so as not to let down 1.4 billion people” in “eliminating malaise and controlling chaos.”
The person in charge said that the work plan offers “ideas and measures” to “curb growth and eliminate stockpiles [of corruption],” including:
1. Continue to focus on the “seven things” (七個有之)
- Resolutely eliminate “two-faced people” who have degenerated politically and are disloyal and dishonest to the Party.
- Resolutely rectify “low-level red” (低級紅) and “advanced blackening” (高級黑), as well as resolutely eradicate political groups that form cliques and gangs for private gain.
“Seven things” explainer:
The “seven things” refer to behaviors and actions that Xi Jinping identified with corrupt officials in a speech at the Fourth Plenum of the 18th Central Committee on Oct. 23, 2014, including:
- Ignoring the Party’s political discipline and political rules, and doing things instead to advance their official career and influence such as engaging in nepotism and excluding dissenters.
- Forming cliques and gangs (團團夥夥), as well as groups and factions (拉幫結派).
- Engaging in anonymous false accusations and creating rumors.
- Engaging in buying people’s hearts and votes.
- Engaging in trading in favors (封官許願) and opportunism (彈冠相慶).
- Acting on their own volition and “publicly complying but privately defying” (陽奉陰違).
- Making governance ineffective through recalcitrance (尾大不掉) and engaging in “improper discussions” of Party Central’s policy (妄議中央).
2. Carefully investigate key issues
- Resolutely investigate and deal with corruption where political and economic issues are intertwined.
- Resolutely prevent leading cadres from becoming spokespersons and agents of interest groups and powerful groups.
- Resolutely prevent the collusion of politics and business, as well as prevent the infiltration of capital into the political arena from damaging the political ecology and economic development environment.
3. Keep an eye on key subjects
- Seriously investigate and deal with the relatives (spouses, children, and spouses of the children) and staff of leading cadres who use their influence for personal gain and corruption.
- Increase penalties for “political crooks” and political brokers.
4. Target key areas
- Resolutely clean up industry-specific, systemic, and regional corruption with high risks and hidden dangers.
- Deepen the rectification of corruption in the areas of finance; state-owned enterprises; politics and the law; where power is concentrated, funds are intensive, resources are abundant, and in food purchase and sales; institutions of higher education; sports; and healthcare.
- Effectively prevent and resolve corruption risks, as well as related economic and social risks.
5. Promote the extension of the anti-corruption campaign to the grassroots level
- Focus on [curbing corruption in] employment and entrepreneurship; education and healthcare; pension and social security; ecological and environmental protection; production safety; food and drug safety; law enforcement and justice; etc.
- Seriously investigate and deal with corruption and embezzlement; interception and misappropriation (of funds); fraudulent reports or impersonation; and taking advantage of one’s position [to engage in corruption].
- Increase efforts to punish “village tyrants,” “street tyrants,” “mine tyrants,” etc. who have been identified in corruption cases.
The person in charge said that the five-year work plan will guide the officialdom to “not dare to be corrupt, cannot be corrupt, and not want to be corrupt.” He added, “going by the investigation and handling of corruption cases, the stockpile has not yet bottomed out, growth [in corruption] is still occurring, and various problems have been exposed.” The person further called for “strengthening the management of new types of corruption and hidden corruption” and “effectively managing” issues involving “‘shadow companies,’ ‘shadow shareholders,’ false transactions, option corruption, ‘revolving doors’ in politics and business, and ‘escape resignation.’”
Sept. 21
The website of the CCDI and NSC published a piece by Qu Qingshan, dean of the Institute of Party History and Literature of the Central Committee, titled, “The Party’s Self-revolution — A Whole New Category and Major Proposition” (黨的自我革命 — 一個全新範疇與重大命題).
Qu noted that the “strategic situation of the great rejuvenation of the Chinese nation and the unprecedented changes in the world over the past century” are the “historical conditions and background of the era” for the proposal of the Party’s “self-revolution.”
In concluding, Qu wrote, “To persist in self-revolution, we must resolutely win the protracted and tough battle against corruption. The tough battle emphasizes the difficulty of the anti-corruption struggle, while the protracted battle emphasizes its long-term nature. Corruption is the most significant malignant tumor that harms the vitality and combat effectiveness of the Party. The masses of the people most detest corruption, and anti-corruption is the most thorough self-revolution. If the Party is to retain its characteristics and gain the support and endorsement of the masses, it must carry out the anti-corruption struggle to the end.”
Big picture
The rollout of the anti-corruption five-year work plan and Qu Qingshan’s article on “self-revolution” come amid news and rumors regarding the removal and/or alleged investigation of Xi Jinping’s political allies like foreign minister Qin Gang, defense minister Li Shangfu, and the leadership of the People’s Liberation Army Rocket Force.
Our take
1. The release of the new anti-corruption five-year plan affirms our earlier assessment that there is “no end date” to the anti-corruption campaign as Xi Jinping looks to keep the CCP “always on the road” of “self-revolution.” During the period after the 20th Party Congress, many China watchers—working on the basis of Xi having “eliminated” all of his political rivals, promoted his political allies to top office, and sealed his paramount position (定於一尊) within the Party—had been speculating that Xi would tone down or do away with the anti-corruption campaign.
2. The response to reporter questions by the person in charge of the Central Anti-Corruption Coordination Group Office suggests that the Xi leadership believes it has not fundamentally resolved the corruption issue in the Party and the regime despite the assertion that Xi had secured an “overwhelming victory and comprehensive consolidation” with the anti-corruption campaign during his first two terms in charge. Rather, Xi Jinping feels that “the situation in the anti-corruption struggle is still severe and complex,” especially with the emergence of “new types of corruption and hidden corruption.”
The person in charge’s mention that Xi is willing to “offend thousands of people so as not to let down 1.4 billion people” hints that the Xi leadership is considering—if not actively preparing—to take the anti-corruption campaign into so-called “deep water territory” and “scrape poison from bone,” or expand the campaign, move against disloyal elements (including Xi’s lingering factional rivals), and preserve Xi’s sole genuine political achievement.
We wrote in the Sept. 21, 2023 newsletter: “If Xi suspects or believes that his being forced to order probes into his own allies and loyalists is the work of the remnant Jiang Zemin faction or other ‘anti-Xi’ forces in the Party elite, then Xi could decide to play hardball and ‘perish together’ (同歸於盡) with his enemies by expanding the anti-corruption campaign to target previously ‘untouchable’ groups like the princelings, CCP elders like Zeng Qinghong, and lingering ‘anti-Xi’ elements in the military (including princeling-controlled military industrial enterprises like China Poly Group).”
3. The broadening of Xi’s anti-corruption campaign, including the “education and rectification” effort targeting the anti-corruption authorities that CCDI head and Xi ally Li Xi is overseeing, could bring trouble to former anti-corruption boss and current National People’s Congress Standing Committee chairman Zhao Leji. We previously went over Zhao’s ties to the Jiang faction and his “publicly complying but privately defying” with Beijing during Xi’s second term.
Since the 20th Party Congress, several former subordinates of Zhao’s and several anti-corruption officials have been investigated. According to a Sept. 11 report by semi-official mainland media The Paper, at least 19 discipline inspection and supervision “moles” have been probed over the course of 20 days starting from Aug. 23, 2023. On Sept. 19, the official website of the CCDI and NSC reported the investigation of another four “moles” in the anti-corruption apparatus.
Meanwhile, Wang Ruiqin, a former entrepreneur from Qinghai Province and an ex-member of the Qinghai Chinese People’s Political Consultative Conference, discussed the investigation of notable Zhao subordinate Luo Yulin and what it might mean for Zhao in a Sept. 20 article on the Washington-based overseas Chinese language media outlet IPK Media.
A former deputy ministerial-level official of the State-owned Assets Supervision and Administration Commission and multiple-time team leader of the discipline inspection group in SASAC, Luo Yulin was officially investigated on May 17, 2023. Wang said that Luo was one of few people that Zhao Leji trusted while they were both in the Qinghai provincial government, and their “close relationship” was “public knowledge.” For instance, when Zhao was Qinghai governor and Party secretary, Luo was known to have “rushed back and forth to handle many things for Zhao.”
Wang wrote that the anti-corruption investigation into Luo Yulin has “continued to expand” and is now a “major systemic case.” With the CCDI making “unprecedented efforts” to pursue the Luo case, Wang assessed that it is very likely that the “mastermind” behind Luo would be uncovered.
Wang claimed that “large-scale investigations” have been going on in Qinghai Province and Xining City, or two areas where Zhao and Luo have “operated for many years.” A number of “important figures closely associated” with Zhao and Luo have been arrested. The CCDI task force probing Luo has allegedly interviewed about a hundred or so people in Beijing, and about one to two hundred interviews have been conducted in Qinghai.
Wang added that the officialdom is in a “state of shock and panic” over the Luo Yulin investigations, and it is “widely believed that this is directed against Zhao Leji.” Wang said that Zhao is involved in corruption cases like the “Shaanxi 100 Billion Mining Case,” the construction of illegal villas in the Qinling Mountains, and an illegal mining case in Qinghai.
In concluding, Wang Ruiqin assessed that Zhao Leji is “cautious and timid” and would likely be “resigned to his fate” (坐以待斃) if he is purged; in other words, Wang believes that Zhao will not push back against Xi if he is officially probed.
