SinoInsight 1
On March 5, PRC premier Li Keqiang delivered his annual work report during the Fourth Session of the 13th National People’s Congress at the Great Hall of the People in Beijing. Li summed up the CCP regime’s 2020 accomplishments, then laid out the government work arrangements for 2021.
2020 accomplishments
- Per Li Keqiang’s work report, the CCP:
- Carried out epidemic prevention and control successfully;
- Oversaw economic recovery, with China being the only global economy that sawy “positive growth” in 2020;
- Won “victory” in poverty alleviation, including lifting 55.75 million rural people out of extreme poverty;
- Ran a financial system that “gave up” (讓利) 1.5 trillion yuan in profits for the real economy;
- Controlled consumer price increase to only 2.5 percent;
- Defused local government debt risks and resolved a number or major financial risks in a timely fashion;
- Oversaw “bumper” grain production for another consecutive year.
Li expressed “satisfaction” with the CCP’s political performances in 2020, adding that the accomplishments can be “recorded in the annals of history.”
2021 work plan
This year, the CCP plans to ensure employment and price stability; promote technological innovation and the establishment of a modern industrial system; promote domestic and international “dual circulation” and expand domestic demand; revitalize rural areas and step up the transfer of people to urban areas; build and develop regional economic arrangements; deepen reform and opening up; strengthen national security, etc.
Specific targets include:
- GDP growth of 6 percent or more;
- Control urban unemployment rate at around 5.5 percent;
- Strictly observe the “red line” of retaining 1.8 billion mu (畝, roughly a sixth of an acre) of arable land;
- Control the rise of consumer prices at around 3 percent;
- Keep grain output above 1.3 trillion catties (斤, equal to half a kilogram);
- Keep the fiscal deficit rate at around 3.2 percent (lower than the 2020 rate), and cease issuing special government bonds to finance epidemic-related spending;
- Maintain “reasonable and sufficient liquidity,” as well as a “basically stable” macro leverage ratio;
- Reduce by half the income tax of small and macro enterprises, as well as individual industrial and commercial households, who have an annual taxable income of less than 1 million yuan;
- Increase the per capita financial subsidy for resident medical insurance and basic public health services by 30 yuan and 5 yuan, respectively.
- Resolutely stick to the position that “houses are built to be lived in, not for speculation.”
Word count
- Li Keqiang’s government work report was comprised of 16,000 characters, and mentioned:
- “Stable” (穩) 62 times (including when paired with another character to form “stability”);
- “Stability” (穩定) 46 times;
- “Reform” (改革) and “innovation” (創新) 43 times each;
- “Employment” (就業) 34 times;
- “Guarantee” (保障) 31 times;
- “Safety” (安全) 26 times;
- “Science and technology” (科技) 23 times;
- “The people” (人民) 22 times;
- “(Chinese Communist) Party” 20 times;
- “Xi Jinping” 14 times.
OUR TAKE
1. Li Keqiang’s government work report is yet another exercise by the CCP to depict itself as “great, glorious, correct” (偉光正), “spin tragedy into cause for celebration” (喪事當喜事辦), and spread “all’s good” (形勢一片大好) propaganda.
We previously looked at why the CCP’s coronavirus situation is much bleaker than what its official figures state, and why its claim to have eliminated “extreme poverty” is disingenuous. Yet the CCP repackaged what would count as scandals in normal countries into “accomplishments” worthy of being “recorded in the annals of history.” Meanwhile, the Party’s role in covering up the COVID-19 outbreak and failing to control its spread from Wuhan in the early days of the epidemic, as well as its poor policies that impoverished the Chinese people in the first place, are conveniently disappeared down the Orwellian memory hole.
2. We have long expressed skepticism about China’s actual economic growth, including its 2020 GDP numbers. Debunking the CCP’s claim that it “gave up 1.5 trillion yuan in profits for the real economy” reveals unspoken economic and financial problems faced by the regime.
According to China Banking and Insurance Regulatory Commission data, Chinese commercial banks generated a net profit of 1.9932 trillion yuan in 2019. The following year, Chinese commercial banks’ net profit decreased 54 billion yuan to 1.9392 trillion yuan. Given that Chinese commercial banks generate the bulk of the financial system’s profits and were operating under money-losing epidemic conditions in 2020, it is highly implausible that the PRC financial system “gave up 1.5 trillion yuan in profits for the real economy.” This would imply that Chinese commercial banks either generated astounding profits in 2020 (at the expense of epidemic-hit businesses and individuals), or the 1.5 trillion yuan they “gave up” was hugely inflated (not difficult to conjecture up for CCP officials who “prefer left rather than right”).
The impact of the 1.5 trillion yuan on the real economy (assuming the CCP’s boast is accurate) also does not appear to be significant. On March 2, mainland media reported that 3.01 million small businesses canceled their business licenses (indicating the failure of those businesses) between January to November 2020, citing data from government enterprise credit agency “Qi Chacha.” Qi Chacha data analyst Cui Fan told mainland media that “excluding street stores and online vendors, millions of small stalls closed down” in China last year. Many of the small stores that shut down in 2020 were heavily concentrated in China’s eastern coastal region, with a significant difference between the eastern and western regions of the country. Jiangsu, Guangdong, and Shandong ranked among the top three provinces with the most number of small business closures. Of the small businesses that failed, more than 757,800 (35 percent) have between 100,000 yuan to 1 million yuan in registered capital, while about 610,000 (29 percent) have 1 million yuan to 2 million yuan in registered capital.
3. “Stability” is clearly a key theme of the CCP government work report, and reflects a central concern of the regime. Beijing is aware that the Chinese people are unhappy with its draconian epidemic prevention and control measures, particularly its lockdowns (welding people into their homes, food delivery problems, etc.).
The declaration of “victory” over extreme poverty will likely anger the segment of the population who used to rely on state subsidies; now that they have been “lifted out of poverty,” the state is not obliged to give them handouts because they are above the poverty line. This is already happening in parts of China. On Feb. 26, or a day after Xi Jinping held his poverty alleviation victory ceremony in Beijing, the Party Committee of Guming Village in Guangxi Province issued a notice informing its residents that the state will no longer pay out the annual 280 yuan per person rural cooperative medical care subsidies from March 1, 2021, and residents are required to pay the full 720 yuan per year. While not written in the notice, it is implied that the subsidy withdrawal stems from the village no longer qualifying for poverty payments from the state since “extreme poverty” has been “alleviated.”
The 720 yuan per year rural cooperative medical care fee is 31 percent of the 2,300 yuan poverty line figure stated by the CCP in its “2020 National Economic and Social Development Statistical Bulletin.” Without state subsidies, many of the 98.99 million villagers who are hovering at the poverty line will not be able to afford to see the doctor for minor illnesses, let alone visit the hospital for major treatment. Villagers are entitled to the highest medical cost reimbursement rate of 60 percent, but village clinics have the worst medical standards in China; fees for prescription drugs are limited to 10 yuan per visit, and 50 yuan for injections.
4. The CCP is focused on ensuring “employment and price stability” in 2021 so that it can at least meet the basic needs of the Chinese people. Doing so will keep things stable on the domestic front as the regime tackles a host of other issues, including global inflation, the growing real estate financialization bubble, pension fund shortages stemming from an aging society and fewer births (China’s newborns dropped 15 percent in 2020), etc.
Should the CCP fail to meet the Chinese people’s basic needs, it will be forced to deploy its far less politically appealing stability maintenance apparatus to keep the population suppressed.
SinoInsight 1
March 5
Xi Jinping participated in the deliberations of the Inner Mongolia delegation at the Fourth Session of the 13th National People’s Congress.
During the deliberations, Xi affirmed the achievements of Inner Mongolia officials in the past year. Xi said that he reviewed an Inner Mongolia report on “special rectifications of violations in the coal resources sector,” and noted that the coal resources sector “is a very important area in terms of anti-corruption” work. “When CCP officials and public servants of the people use national resources to engage in bribery, to engage in power and money transactions, the bill must always be settled,” he said.
March 6
Inner Mongolia rectified its coal sector-related corruption with an “iron fist,” according to a report published on the official website of the Central Commission for Discipline Inspection and the National Supervisory Commission.
Per the report, four of the five executives in central-run enterprises who were investigated by anti-corruption authorities from 2018 to the present were involved in coal sector-related corruption. The Inner Mongolia local government had also established more than 40 special working groups to carry out 20 years worth of retroactive investigations into coal sector violations. When the report was published, anti-corruption officials at all levels in Inner Mongolia registered a total of 676 corruption cases and 960 people connected with the coal sector. Of the 960 people investigated and heavily punished, 61 were bureau level officials and 216 were division level officials; 663 were punished for violations of Party discipline and government affairs, 834 were punished by their organization, and 92 saw their cases transferred to judicial organs for prosecution. Concurrently, the Inner Mongolia government investigated and dealt with hundreds of coal sector-related corruption problems that “seriously polluted the political ecology” (嚴重污染政治生態).
OUR TAKE
1. 2021 marks the fourth consecutive year that Xi Jinping participated in the deliberations of the Inner Mongolia delegation at the Two Sessions. Noticeably, Xi started involving himself in Inner Mongolia’s Two Sessions deliberations during the tenure of Inner Mongolia Party secretaries (Li Jiheng [August 2016 to October 2019] and Shi Taifeng [October 2019 – present]) whom he trusted enough to install in that position.
Xi joining the Inner Mongolia deliberations and the publication of the anti-corruption report the following day on the CCDI/NSC website indicates that Xi is highly focused on rooting out corruption in the region.
2. Xi’s anti-corruption campaign is simultaneously a genuine effort to rectify the Party at all levels and a tool to gain an edge over his factional rivals, particularly the Jiang Zemin faction that dominated the PRC for nearly two decades before Xi took office.
As we previously analyzed, Inner Mongolia is the base of top Jiang faction official Liu Yunshan, the former Politburo Standing Committee official overseeing propaganda. Liu’s son Liu Lefei, the former chairman of Citic Securities unit Citic Private Equity Funds Management, is also suspected of having a role in the Jiang faction’s 2015 “financial coup” against the Xi leadership. Aside from rooting out corruption, the ongoing “20 years retroactive” probe in Inner Mongolia is very likely an attempt by the Xi camp to eradicate the deeply entrenched Liu Yunshan/Jiang faction political network in the region. Also, Xi is likely looking to dissuade Hu Chunhua and his political patrons (Jiang Zemin and Hu Jintao) from attempting to prop Hu up as a potential successor.
Xi’s Inner Mongolia purge and ongoing effort to rectify the political and legal affairs apparatus are geared towards securing a norm-breaking third term in office at the 20th Party Congress in 2022. The Jiang faction and “anti-Xi coalition” will almost certainly find ways to retaliate and do their utmost to stop Xi Jinping from serving another term, as this would give Xi valuable time to gain an insurmountable advantage over his rivals in the “perish together” factional struggle.
