SinoInsight 1
On July 21, the PRC authorities fined Chinese ride-hailing company Didi Global 8.026 billion yuan (about $1.2 billion) for breaking cyberspace security, data security, and personal information protection laws. The fine accounted for about 5 percent of Didi’s revenue in 2021. Meanwhile, Didi chief executive officer Cheng Wei and Didi president Liu Qing were each fined 1 million yuan.
The Cyberspace Administration of China said that “even with clear orders from regulatory authorities to correct the issues, Didi failed to carry out comprehensive and in-depth rectifications,” and “the nature of the issue was vile and it should be severely punished.” The statement noted that Didi had collected excessive personal information from many of its users, including their age, facial and job data, as well as home and office locations.
Didi said in a statement on its official Weibo account that it “sincerely accepted and will resolutely comply” with the authorities’ decision and other regulations. The company also pledged to comprehensively go over its practices and work with regulators to make required changes.
In late June 2021, Didi listed on the New York Stock Exchange. Days later, the cyberspace authorities announced a review of the company, and 26 Didi apps were removed from domestic app stores. In December 2021, Didi announced plans to delist in New York and list on the Hong Kong exchange instead. In May 2022, Didi’s majority shareholders voted overwhelmingly in favor of delisting from the New York Stock Exchange.
OUR TAKE
The PRC authorities’ fine of Didi indicates that investigations into the company have been concluded. The fine follows news in early June that Didi and two other companies who were subjected to cybersecurity reviews around the same time in 2021 are expected to offer 1 percent equity stakes to the state and give the authorities a direct role in corporate decisions.
In anti-corruption cases, Beijing usually ends a probe and proceeds with prosecution after it has gotten what it wants from the official in question. The investigations into Didi and other tech companies over cybersecurity issues and the conclusion of those investigations almost certainly adhere to a similar logic. We see at least two reasons for why the authorities are choosing to call time on the Didi probe at this time.
First, the Xi Jinping leadership could now be satisfied with the Party’s level of control over Didi. Speaking about Beijing’s tech crackdown in early June, economist and former People’s Bank of China adviser Li Daokui told the UOB Private Bank forum that “the political influence of internet companies is now nil” and senior officials are no longer worried. It is possible that the PRC state quietly took equity stakes in Didi sometime during the past year and is now capable of stopping the company from taking actions that threaten regime security as it did last June by listing on the New York Stock Exchange. The CCP is concerned that Chinese tech companies like Didi could be forced to hand over sensitive data to foreign governments as part of listing requirements on overseas exchanges.
Second, the Xi camp could be concluding the Didi probe now as part of a “ceasefire” arrangement with factional rivals around the period of an important informal conclave. Senior officials and Party elites are either in or will be headed to the resort town of Beidaihe around mid-July to mid-August. At Beidaihe, Party elites will very likely seek to weigh in on Xi Jinping’s norm-breaking third term bid and his list of preferred personnel to take over key positions at the 20th Party Congress. To better bring the elites to a “consensus” on his political agenda, Xi appears to be using both carrot and stick, including indicting Jiang faction officials and fining the Jiang faction-associated Didi. Xi’s carrot and stick measures serve to simultaneously put on notice the Jiang faction and others in the “anti-Xi coalition” while signaling that he will not purge those higher up the chain of factional patron-client networks as long as they support his 20th Party Congress agenda items.
SinoInsight 2
Semi-official mainland media The Paper reported on July 15 that Shi Shuihong, the former vice mayor of Datong City in Shanxi Province and the Datong Municipal Public Security Bureau director, was transferred to Shanxi Datong University to serve as vice president and a Standing Committee member of the school’s Party Committee.
Shi, 56, spent the bulk of his career in the Shanxi public security system. He once served as deputy director of the Taiyuan Municipal Public Security Bureau as well as director of the anti-triad office and political commissar of the criminal investigation corps at the Shanxi Provincial Public Security Bureau. Shi became director of the Datong Municipal Public Security Bureau in 2020 until he was removed from the position on June 30. His move to Shanxi Datong University can be considered to be a demotion.
Mainland media also reported that several public security chiefs in Shanxi were recently transferred out, including:
- Chen Hao (44), former vice mayor of Jincheng City and director of the Jincheng Municipal Public Security Bureau, was transferred to Shanxi Institute of Science and Technology to serve as vice president and a member of the school’s Party Committee.
- Ge Bowei (45), former vice mayor of Taiyuan City and director of the Taiyuan Municipal Public Security Bureau, was transferred to Shanxi Police College to serve as vice president in October 2021. In March 2022, Ge was transferred to Shanxi Energy Institute to serve as vice president and a member of the school’s Party Committee.
- Zhao Yongsheng (59), former member of the Shanxi Provincial Public Security Bureau Party Committee and political department director, was transferred to Taiyuan Normal University to serve as vice president and a Standing Committee member of the school’s Party Committee.
Many of the aforementioned officials were former colleagues or underlings of Liu Xinyun, the former vice governor of Shanxi Province and director of the Shanxi Provincial Public Security Bureau who was officially investigated in April 2021.
OUR TAKE
The Xi leadership is likely looking to kill two birds with one stone by transferring Shi Shuihong and other former public security bureau chiefs in Shanxi to local colleges and educational institutions.
Social anger and unrest has been on the rise in China since draconian “zero-COVID” measures were imposed and as economic conditions deteriorate. The CCP has always been wary of the potential of students to stir trouble at crunch time, and has taken steps to beef up security in schools (we earlier analyzed the outbreak of student protests in June 2021 and May 2022). Since last year, Beijing has been assigning public security and judicial officials to senior positions and key Party roles in universities and higher education institutions. The transfer of Shi Shuihong and other Shanxi public security officials to schools follows the trend of increased securitization of China’s higher education institutions as the CCP moves to “maintain stability” amid “great changes unseen in a century.”
Factional struggle is another likely reason why Shanxi public security officials are being transferred out of the public security system. We previously analyzed that former Shanxi public security director Liu Xinyun is a Jiang faction associate and a former “610 Office” official. Two of the three former colleagues and subordinates of Liu in Shanxi who were recently transferred to schools also happen to be connected with Jiang Zemin’s anti-Falun Gong campaign:
- Chen Hao served in the Anti-Cult Corps of the Shanxi Provincial Public Security Bureau (Sept. 2003 to April 2005) when the persecution of Falun Gong was at its peak. He was later promoted to director of the Shanxi Public Security Bureau’s command center when Liu Xinyun was bureau director (Oct. 2018 to July 2020). Chen’s transfer to a school at this time is unusual because he is still young for an official and appeared to be on course to rise further in the public security system.
- Ge Bowei served as a cadre and deputy chief officer of the Ministry of Public Security’s First Bureau (Aug. 2003 to April 2006) during the peak of the anti-Falun Gong campaign. The First Bureau oversees domestic political security and Hong Kong security affairs, and also handles certain duties connected with the persecution of Falun Gong. Ge was Liu Xinyun’s subordinate (Dec. 2014 to Jan. 2018) at the Ministry of Public Security’s 11th Bureau (cyber security) before both were “parachuted” into Shanxi from the central government. In Shanxi, Ge headed the network security team at the Shanxi Public Security Bureau (Jan. 2018 to July 2020, deputy bureau rank). Like Chen Hao, Ge Bowei’s transfer out of the public security system is odd given his age and career trajectory.
- Zhao Yongsheng appeared to have been transferred out because he is approaching retirement age.
The Xi leadership would naturally view Liu’s former colleagues and subordinates with suspicion given their association with the Jiang faction via their previous “610 Office” position. We tracked that the Xi leadership has purged at least 10 former 610 Office leading cadres in city, provincial, and central administrations that have been purged in 2021, including Liu Xinyun. As things deteriorate in China and social instability rises, the Xi leadership would not want those officials in more crucial “stability maintenance” roles ahead of the 20th Party Congress. While Jiang faction associates could still cause trouble in schools, such mischief is likely to be limited, at least in theory. Going forward, former “610 Office” personnel in Shanxi and other provinces could also be transferred out of the public security system as the Xi leadership looks to clean out Jiang faction influence and eradicate lingering power networks associated with Jiang Zemin’s supra-authority organization.
The effort to marginalize Liu’s associates, however, seems to be milder than the move against the “Sun Lijun political gang” (孫力軍政治團伙) and its “poisonous influence.” The Xi leadership could be transferring those former public security heads in Shanxi away from their longtime base of operations to facilitate investigations into them. It is also possible that the Xi leadership does not have enough evidence of corruption to make arrests, but believes that it is imperative to disconnect them from their power networks lest they cause trouble for Beijing ahead of a sensitive political period.
