1 Song Tao heads the Taiwan Affairs Office
CPPCC personnel adjustments
June 6
The Standing Committee of the 14th National Committee of the Chinese People’s Political Consultative Conference concluded its seventh meeting in Beijing.
The meeting announced some personnel adjustments:
- Ma Xiaowei (age 64), the former director of the PRC National Health Commission, was appointed as a member of the 14th CPPCC National Committee and a deputy director of the CPPCC’s education, science, health, and sports committee.
- Yi Huiman (59), the former chairman of the China Securities Regulatory Commission, was appointed as a member of the 14th CPPCC National Committee and a deputy director of the CPPCC’s economic committee.
- Cao Jun, the former director of the office of the CPPCC’s Hong Kong, Macau, and Taiwan compatriots and overseas Chinese committee, was appointed as a member of the 14th CPPCC National Committee and a deputy director of the education, science, health, and sports committee.
- Hu Henglu (52), director of the research office of the CPPCC General Office, was appointed as deputy secretary-general of the 14th CPPCC National Committee.
- Sui Qing, the current head of the Liaoning provincial United Front Work Department, no longer serves as deputy director of the CPPCC’s ethnic and religious affairs committee.
- Zhang Xiaoming (60), former director of the Hong Kong and Macau Affairs Office, resigned as member of the 14th CPPCC National Committee and its Standing Committee. Zhang was earlier removed from his position as deputy secretary-general of the CPPCC National Committee on March 2, 2024.
- Wang Tian (56), vice president of the All-China Federation of Industry and Commerce and chairman of Better Life Commercial Chain Share Co. Ltd., resigned as a member of the 14th CPPCC National Committee.
- Gou Zhongwen (66), former director of the General Administration of Sport of China, was removed as a member of the 14th CPPCC National Committee and its Standing Committee, as well as deputy director of the CPPCC’s ethnic and religious affairs committee. Gou was publicly investigated on May 30, 2024.
- Shi Lei (52), chairman of Inner Mongolia Domonde Industrial Group Co. Ltd., was retroactively disqualified on March 27, 2024 as a member of the 14th CPPCC National Committee.
- Tang Yijun (63), former justice minister and chairman of the Jiangxi provincial CPPCC, was retroactively disqualified on April 29, 2024 as a member of the 14th CPPCC National Committee.
Jiang Mianheng steps down as college president
June 5
ShanghaiTech University issued a notice on its official website stating that Jiang Mianheng, the elder son of Jiang Zemin, is no longer serving as president of ShanghaiTech University (February 2014 to June 2024). The notice also said that Jiang had been appointed director of the university’s administrative committee, and Feng Donglai, an academician from the Chinese Academy of Sciences, succeeded Jiang as president.
ShanghaiTech University also issued an open letter by Jiang Mianheng to the faculty, staff, and students of the college. Jiang wrote in the letter that he had completed two 10-year terms as president, and implied that he had stepped down due to old age as he had become a septuagenarian in recent years (Jiang is 73 in 2024).
Jiang Mianheng was the first president of ShanghaiTech University, which officially opened in September 2014.
Factional struggle rumors
May 31
Dajiyuan (Chinese language edition of The Epoch Times) reported that factional struggle between Xi Jinping and the CCP’s second generation reds is becoming increasingly intense, citing Party insider information obtained by a commentator with the media outlet.
The report said that notable second generation clans that oppose Xi include the Jiang Zemin clan represented by Jiang Mianheng, the Liu Shaoqi clan represented by former PLA general Liu Yuan, and the Deng Xiaoping clan represented by Deng’s eldest son Deng Pufang. According to sources, Xi had allegedly launched an investigation into Liu Yuan under the pretext of cracking down on corruption, and Liu had allegedly escaped greater scrutiny after handing over 2 billion yuan worth of assets to the authorities. While Liu Yuan currently has a degree of freedom, he has been placed under strict surveillance.
Dajiyuan’s sources also said that Jiang Mianheng, his brother Jiang Miankang, and Jiang Mianheng’s son Alvin Jiang Zhicheng have been placed under strict control by the PRC authorities. The sources add that there are currently no instructions from Xi Jinping on how to proceed with the Jiang cases.
Dajiyuan’s sources further add that Xi is making significant changes to the CCP’s power structure. For instance, the Xi-led National Security Commission has established multiple secret subordinate departments. These departments have rapidly expanded their authority, effectively taking over many functions of the political and legal affairs apparatus, as well as the intelligence and spying apparatus. However, there is intense infighting among the different factions within Xi’s national security system, and more than one leader of those secret departments have died mysteriously or disappeared, shrouding the situation in deep secrecy and intrigue.
Backdrop
Since the start of the year, rumors have been circulating nonstop regarding Xi Jinping’s indecision about criticizing Jiang Zemin’s “incorrect political line” and that the Xi leadership has placed Jiang Zemin’s son and grandson under tight control.
Our take
1. The personnel adjustments involving Zhang Xiaoming and Jiang Mianheng, when read together with the factional struggle rumors that have been circulating this year, are indicative of potentially significant shifts in the dynamics of elite politics in the CCP.
First, Zhang Xiaoming’s resignation from the 14th CPPCC National Committee and its Standing Committee is very unusual given that he is only 60 this year and is still eligible to hold office for at least another five years. Typically, ministerial-level officials like Zhang serve until they are between 65 to 70 before formally retiring. Unless Zhang is appointed to another position in the near future or is reported to be suffering from serious illness, it is very likely that his being investigated is the reason for his premature resignation. We analyzed as early as September 2017 when Zhang was promoted to the highest office that he held that he was actually in danger of being purged despite appearances suggesting otherwise.
Zhang’s relatively rapid decline from power in recent years lends weight to our assessment that he is in some type of trouble. Zhang was appointed director of the Hong Kong and Macau Affairs Office in Beijing in September 2017, but was demoted to deputy director in charge of daily operations in February 2020 and replaced by Xia Baolong. In June 2022, Zhang was transferred to the CPPCC to serve as deputy secretary-general, an appointment that removed him from a position of real power to a sinecure post. And with the personnel adjustments at the recent meeting of the Standing Committee of the 14th CPPCC National Committee, Zhang no longer holds office.
Xi Jinping likely long had his eye on sidelining Zhang Xiaoming, but was unable to do so for many years given the strong influence of a rival faction over the Hong Kong and Macau apparatus and Xi needing to acquire sufficient power and “quan wei” (authority and prestige) before he could make the move. Zhang’s career trajectory in Hong Kong marks him as a member of the Jiang faction, and his tenure as Hong Kong Liaison Office director from 2012 to 2017 coincided with a sharp uptick in turmoil in the territory and increased problems for the Xi leadership. Xi only managed to move Zhang out from the Hong Kong and Macau apparatus and more thoroughly “rectify” it very late into his second term (see here and here), a development that hints at the strength and depth of the Jiang faction’s influence in Hong Kong and the PRC’s apparatus responsible for the territory. The link between factional struggle dynamics in the CCP elite and personnel appointments suggests that Zhang’s recent resignation from the CPPCC is a sign that the Jiang faction’s power and influence have waned substantially while Xi’s has grown considerably.
Another sign of the Jiang faction’s diminishing influence is Jiang Mianheng recently stepping down as president of ShanghaiTech University. A review of Jiang Mianheng’s career shows a correspondence between his positions and the fortunes of his late father:
- When Jiang Zemin was in office and when the Jiang faction dominated the CCP regime, Jiang Mianheng served as vice president of the Chinese Academy of Sciences (November 1999) and concurrently served as president of the CAS’s Shanghai branch (August 2005).
- When rumors of Jiang Zemin’s death circulated in July 2011, Jiang Mianheng stepped down as vice president of CAS a few months later in November 2011. It was also in the latter half of 2011 that then-CCP leader Hu Jintao launched an investigation into Chongqing public security chief Wang Lijun and exacerbated tensions between Wang and Bo Xilai that led to the “Wang Lijun incident” in February 2012 and triggered a fierce factional struggle in the CCP elite.
- After Xi Jinping took office, he took a series of actions that were unfavorable to the Jiang faction, including abolishing the reeducation through labor system (targeting Jiang Zemin’s political legacy of persecuting Falun Gong), investigating top Jiang faction members like former security czar Zhou Yongkang and former CMC vice chairs Guo Boxiong and Xu Caihou, and requiring the judicial authorities accept all criminal complaints (有案必立, 有訴必應) from May 2015 (which led to the filing of over 200,000 complaints against Jiang Zemin). In January 2015, Jiang Mianheng, then in his mid-60s, stepped down as president of the CAS Shanghai branch due to “age reasons” but stayed on as president of ShanghaiTech University (department-level position).
It may not be entirely coincidental that Jiang Mianheng stopped serving as ShanghaiTech University president around the same time that Zhang Xiaoming resigned from the CPPCC, as well as with rumors circulating of Jiang Mianheng being placed under some form of strict control and Xi Jinping considering criticizing Jiang Zemin at the Third Plenum in July. If the developments are indeed linked, then it does not bode well for the Jiang faction.
We believe that Xi very likely has reservations about openly criticizing Jiang Zemin and his “incorrect political line” given the existential implications of the move for the CCP regime. Without the right moment and excuses, Xi will have great difficulty in justifying a big move against Jiang’s political legacy and the Jiang faction. In the interim, however, Xi will almost certainly keep taking actions to weaken the Jiang faction and purge the remnant Jiang faction officials whom he feels comfortable enough to target.
2. Ma Xiaowei and Yi Huiman’s appointment to the 14th CPPCC National Committee suggests that both men had “retreated to the second line” (退居二線), or be placed in relatively sinecure positions until they reach retirement age, without incident.
Both Ma and Yi were previously subjects of speculation that they had been purged. In analyzing rumors that Ma was arrested that emerged in the second half of 2023, we pointed to reports on the National Health Commission website which could be read as an indirect refutation that he was in trouble, as well as gave a possible explanation for why Xi might want to go after Ma. And in analyzing why Yi was replaced as head of the securities regulator this February, we noted that he could “simply be headed for a planned retirement.”
2 Growth in China’s exports marred by slowing imports
June 7
The PRC General Administration of Customs issued the following trade data for May and the first five months of 2024:
May
- Total imports and exports increased by 5.1 percent year-on-year to $522.07 billion (the growth rate was 4.2 percent when compared with official PRC data from 2023).
- Exports increased by 7.6 percent year-on-year to $302.35 billion (the growth rate was 6.6 percent when compared with official PRC data from 2023).
- Imports increased by 1.8 percent year-on-year to $219.73 billion (the growth rate was 0.9 percent when compared with official PRC data from 2023).
- The trade surplus reached a four-month high of $82.62 billion (the growth rate was 25.6 percent when compared with official PRC data from 2023).
January to May
- Total imports and exports increased by 2.8 percent year-on-year to $2.46 trillion (the growth rate was 0.9 percent when compared with official PRC data from 2023).
- Exports increased by 2.7 percent year-on-year to $1.4 trillion (the growth rate was 0.03 percent when compared with official PRC data from 2023).
- Imports increased by 2.9 percent year-on-year to $1.06 trillion (the growth rate was 2.2 percent when compared with official PRC data from 2023).
- The trade surplus increased by 1.8 percent year-on-year to $337.21 billion (the growth rate was negative 6.2 percent when compared with official PRC data from 2023).
China’s exports to major trading partners
- European Union: Down 1.0 percent in May and down 5.0 percent during the January to May period.
- United States: Up 3.6 percent in May and down 2.4 percent during the January to May period.
- ASEAN: Up 22.5 percent in May and up 4.1 percent during the January to May period.
- Russia: Down 2.0 percent in May and down 2.7 percent during the January to May period.
- Latin America: Up 18.9 percent in May and up 8.6 percent during the January to May period.
Our take
1. China’s exports appeared to have rebounded somewhat in May, but the growth in imports fell sharply from 7.3 percent in April to 0.9 percent during the same period (compared with official PRC data from 2023). This suggests that China’s economic recovery remains unsteady and hints at the increasing relocation of supply chains from mainland China.
Possible reasons for the increase in China’s exports include:
i) Global manufacturing demand rebounded in May and the manufacturing PMI of ASEAN countries remained in the expansion zone. This likely helped to drive China’s exports.
Some details:
- The global manufacturing PMI rose by 0.6 percent to 50.9 percent in May, staying in the expansion threshold for five consecutive months.
- The U.S. manufacturing PMI increased by 0.9 percent to 50.9 percent in May. China’s exports to the U.S. shifted from a decline of 2.8 percent from a year ago in April to an increase of 3.6 percent in May, a month-on-month increase of 5.25 percent.
- The Eurozone manufacturing PMI rose from 45.7 percent in April to 47.3 percent in May to reach a 14-month high and reverse declines at the start of the year. China’s exports to the EU shifted from a decline of 3.5 percent in April from a year ago to a drop of 1 percent in May, a month-on-month increase of 2.4 percent.
- The manufacturing PMIs of Japan and South Korea were 50.4 percent and 51.6 percent respectively in May. China’s exports to Japan and South Korea shifted from year-on-year declines of 10.9 percent and 6.1 percent respectively in April to declines of 1.6 percent and 3.6 percent respectively in May, with the month-on-month change staying mostly flat.
- The manufacturing PMI of ASEAN countries like Vietnam, Indonesia, and the Philippines remained in the expansion zone. China’s exports to ASEAN increased by 8.1 percent from a year ago in April and increased significantly to 22.5 percent in May, with a month-on-month increase of 1.7 percent.
ii) The rerouting of shipping vessels due to the Red Sea crisis has led to congestion at major Asian ports and resulted in higher shipping prices in May. Higher shipping prices in turn drove up commodity prices and contributed to the growth in China’s overall trade.
- The Baltic Dry Index rose by 33.8 percent year-on-year and 9.4 percent month-on-month in May.
- China’s Container Freight Index rose by 42.7 percent year-on-year and 14.3 percent month-on-month in May.
- China’s Bulk Commodity Price Index rose to 118.9 points in May, up 3 percent month-on-month and 5.9 percent year-on-year. This marked the third consecutive month of increases and was a 15-month high.
iii) The low base of China’s exports in May 2023 when there was a contraction is part of the reason for the stronger growth rate during the same period this year. China’s exports could seem “healthier” over the next couple of months considering that exports saw 12 consecutive months of negative growth (when compared to the official data from 2022) from May 2023, with the year-on-year growth rate reversing from a 7.97 percent increase in April to an 8 percent decline over time.
2. China’s sharply contracted imports in May appears to be due to the reduction in imports from the EU and the U.S., or a decrease of 6.8 percent and 7.8 percent year-on-year respectively compared with an increase of 2.5 percent and 9.3 percent in April.
At the same time, China’s exports to ASEAN countries grew significantly in the double digits. This reflects a shift of supply chains out from mainland China to neighboring ASEAN countries, as well as an increase in the demand for Chinese intermediate goods in ASEAN countries and a reduction in China’s demand for imported goods for reprocessing (with the demand being absorbed by ASEAN countries). We believe that global demand for Chinese products will shrink as supply chains mature in ASEAN countries.
3. Exports are part of the PRC’s “troika” of growth drivers and are likely to show “solid” numbers in the coming months due to the low base in 2023. However, growth in exports is likely to have a more limited impact on China’s economic recovery now as compared to the past due to the U.S. and the EU’s trade war against China and the shifting of supply chains out from the mainland. In particular, the continuous relocation of supply chains serves to reduce global demand for Chinese products, increase unemployment in China, and weaken consumer spending.
China also does not have good recovery prospects given that the PRC authorities have yet to find an alternative industry to absorb the impact of the real estate crisis and create new growth points.
