1 Party Central’s research and investigation campaign foreshadows purges
On March 19, the CCP General Office issued a work plan to launch a Party-wide “investigation and research” campaign (關於在全黨大興調查研究的工作方案). Party Committees at all levels are required to “conscientiously implement” the plan.
The work plan described “investigation and research” as “heirlooms” of the CCP. The work plan also noted that Xi Jinping attaches great importance to and “profoundly clarified” the “extreme importance” of “investigation and research.”
The work plan explained that the “investigation and research” campaign was necessary because the regime was facing serious crises. “Great changes unseen in a century in the world are accelerating, uncertain and unpredictable factors are increasing, and domestic reform, development, and stability are facing many deep-seated contradictions that cannot be avoided or circumvented,” the work plan said. “Various risks, challenges, and difficult problems are more severe and complex than ever before. There is an urgent need to grasp the nature and laws of things through investigation and research, as well as find ways and paths to solve difficult problems.”
The work plan further noted that the “investigation and research” campaign is an “inevitable requirement” and “concrete practice” of “learning and implementing” Xi Jinping’s political thought (“Two Establishes,” “Two Safeguards,” etc.), and the Party’s mass line must be adhered to in carrying out the campaign.
The work plan listed 12 areas of focus:
- Key issues related to the implementation of Party Central’s decision-making and deployments, as well as Xi Jinping’s instructions.
- Key issues related to the implementation of economic policies, including “new ideas, new patterns, self-reliance in science and technology, expansion of domestic demand, supply-side structural reform, construction of a modern industrial system, implementation of the ‘two unwaverings,’ attracting and utilizing foreign investment, and rural revitalization.”
- Issues involving coordinating development and security (food, energy, industrial chain, supply chain, production, food and medicine, public health, etc.), as well as the key issue of preventing and resolving major economic and financial risks.
- Key issues in comprehensively deepening reform and opening up.
- Key issues in comprehensively implementing the “rule of law.”
- Key issues in the challenges faced in the field of ideology, including “cultural confidence, cultural strong country, guidance of news and public opinion, comprehensive network management, etc.”
- Key issues in the promotion of “common prosperity.”
- Specific issues related to people’s livelihood, including “employment, education, medical care, childcare, pension, housing, etc.”
- Key issues related to the environment.
- Key issues related to social stability.
- Key issues related to comprehensively and strictly governing the Party.
- Long-standing, unresolved persistent problems at local departments and work units.
The work plan also proposed six steps and four work requirements for the “investigation and research” campaign.
Mao’s ‘investigation and research’ campaign
Mao Zedong introduced an “investigation and research” campaign at the Ninth Plenum of the Eighth Central Committee in January 1961. The campaign was partly intended to reverse some of the disastrous Great Leap Forward policies and fix the economy. For instance, central and local leading cadres would carry out “investigations and research” at the grassroots after the Ninth Plenum. In March 1961, the central government adjusted its rural policy to obliquely move away from the communes system to a “farmland contract responsibility system.” More adjustments were made shortly thereafter.
Mao’s “investigation and research” campaign was also part of his broader factional struggle efforts targeting opposition to his rule that rose up as a result of the failures of the Great Leap Forward. At the Lushan Conference in 1959, Mao purged defense minister and vice premier Peng Dehuai, who had criticized some aspects of the Great Leap in a private letter to Mao. In 1963, Mao launched the Four Cleanups Movement (also known as the Social Education movement) to “clean up” politics, the economy, organizations, and ideology. Chinese researchers found that the Four Cleanups Movement led to at least 77,560 deaths and 5,327,350 people being persecuted.
Big picture
Xi’s ‘investigation and research’ campaign comes after several policy failures under his leadership, notably the abrupt cancellation of “zero-COVID” after nearly three years. The end of “zero-COVID” coincided with a massive wave of infections and deaths (see here and here).
Our take
The areas of focus of Xi Jinping’s “investigation and research” campaign and Mao Zedong’s precedent suggest that Xi is taking a leaf out of Mao’s playbook. We see three reasons why Xi wants to carry out “investigation and research” at this time.
First, Beijing wants to gather more information to figure out the actual state of affairs in China and better navigate the regime through its various crises. Three years of “zero-COVID” and strict lockdown almost certainly made it harder for the central government to get a sense of how things were doing at the local level. The central government would also want to more accurately gauge the impact of “zero-COVID” and its other policies, as well as the Chinese people’s sentiments (anger and dissatisfaction towards the CCP, etc.), to help it make policy adjustments, lower social tensions, and more effectively carry out “stability maintenance” work.
Second, Beijing needs to carry out “investigation and research” to better figure out how to drive development. The Xi leadership cannot afford too much “trial and error” or more serious policy failures as the stakes of regime survival have risen dramatically in recent years due to rapid economic decline and growing “containment” of the PRC by the U.S. and its allies. Stepping up fact-finding theoretically allows Beijing to more smoothly advance its ongoing efforts to build up the PRC’s science and technology self-sufficiency and other development items on its agenda.
Third, the Xi leadership wants to more thoroughly “rectify” the regime of those who oppose or are reluctant to go along with the central government’s plans. Xi also needs to find scapegoats to blame for his governance failures and “unify” the Party in the face of strengthening Western opposition. Officials familiar with Mao’s “investigation and research” campaign and subsequent “rectification” movements could believe that Xi is learning from Mao and be intimidated into falling in line behind the “centralized and unified leadership of Party Central (with Comrade Xi Jinping at the core).” We earlier observed from Xi’s trip to Yan’an after the 20th Party Congress, in propaganda issued in late October and November 2022, as well as from propaganda and messaging from the anti-corruption authorities in the lead up to the Two Sessions (see here and here), that Xi Jinping is looking to launch another wave of anti-corruption/“self-revolution” investigations this year.
There is a chance that the Xi leadership could take advantage of the “investigation and research” campaign to carry out surveys that can be later used to “legitimately” purge the remnant Jiang Zemin faction and interest groups that benefited immensely when that faction was in power. Xi Jinping could also take the opportunity to blame Jiang Zemin and his faction for many of the problems facing the regime today.
2 Cai Qi named as General Office director, Ding Xuexiang reportedly takes HK and Macau portfolio
March 20
New Politburo Standing Committee member Cai Qi joined Xi Jinping on his visit to Russia in the capacity of CCP General Office director, according to state mouthpiece Xinhua.
March 21
Premier Li Qiang reportedly announced the portfolios of the new State Council senior officials at the first plenary meeting of the body on March 17, according to Hong Kong media. Hong Kong media said that first-rank vice premier Ding Xuexiang was placed in charge of development and reform work, as well as Hong Kong and Macau affairs.
General Office director rank
Cai Qi serving as General Office director bumps up the position two ranks from the sub-national level (副國家級) to the national level (國家級).
There is a historical precedent of national level officials heading the General Office. General Office director Wang Dongxing was promoted to the Politburo at the 10th Party Congress in August 1973. After Mao Zedong’s death, Wang would assist Hua Guofeng in taking down the “Gang of Four (September 1976) and be promoted at the 11th Party Congress in August 1977 to the Politburo Standing Committee (national level rank) and Party vice chairman. However, Wang would be removed from his position as General Office director a little over a year after his promotion (December 1978) as a result of factional fighting between Deng Xiaoping and Hua Guofeng.
Our take
The appointment of Cai Qi as CCP General Office director and Ding Xuexiang’s rumored portfolios offer several clues about the current state of Xi Jinping’s political position and CCP elite politics at large.
1. Xi broke another personnel appointment norm in making his ally Cai Qi director of the CCP General Office. As a secretary of the Central Secretariat, Cai meets a key prerequisite for assuming the post of General Office director. However, Cai is also “over-qualified” to head the General Office—essentially the secretary of the Central Committee—as he is a Politburo Standing Committee member. By having the fifth-rank Politburo Standing Committee member serve as his “secretary-general,” Xi is boosting his “quan wei” (authority and prestige) and ability to influence Party operations so as to better deal with the political risks facing himself and the regime and strengthen security controls.
There could be another possible reason why Xi is elevating the General Office director to the Politburo Standing Committee. During the Mao era, Wang Dongxing was bumped up the ranks because Mao Zedong wanted the General Office to have more authority in handling security matters in the wake of Lin Biao’s failed attempt to assassinate him. Wang was promoted again under Hua Guofeng for his factional struggle contributions. If historical precedent is anything to go by, then Xi having Cai Qi serve as General Office director suggests that he is taking extra precautions against assassinations and is preparing a great purge (on par with the takedown of the “Gang of Four”).
As the fifth-rank Politburo Standing Committee, Cai Qi will likely take over the job of propaganda overseer from Wang Huning (this has not been officially reported yet) in addition to his other duties. Yet Cai is not likely to be “overburdened” by having to deal with propaganda along with his other roles because Li Shulei, another Xi ally, is currently propaganda minister. With Li’s factional allegiance not being an issue and by virtue of running the operational side of the propaganda apparatus, Cai will not have to do too much on the propaganda front and can focus on overseeing the General Office.
In analyzing potential General Office candidates, we outlined a scenario whereby Xi seeks to more fully consolidate internal regime security functions under public security minister Wang Xiaohong and has the latter succeed Ding Xuexiang at the General Office. We added that Xi would have to find ways to check Wang’s power if he becomes General Office director. The current arrangement where Cai Qi heads the General Office suggests that Xi is indeed uncomfortable with centralizing too much power in any ally lest it threatens his authority and safety as Party boss. Xi’s sense of paranoia could increase the more he strengthens the strongman dictatorship model.
There are three possible reasons why Cai Qi only recently replaced Ding Xuexiang as General Office director. As we wrote in November 2022, Ding could have stayed on as head of the General Office after the 20th Party Congress to provide important continuity in the Xi leadership just when Xi Jinping was resuming his foreign travels; we further noted that Xi could “break another personnel reshuffle norm by elevating the General Office director to the Politburo Standing Committee” in doing so. Ding could have also remained in his position a little longer to oversee the passage of Party and state institutional reforms at the Two Sessions. Finally, Ding was formally appointed first-rank vice premier at the Two Sessions and had to give up his Party apparatus job.
2. Ding Xuexiang being tasked to handle Hong Kong and Macau affairs would be in line with the work arrangement of the previous Politburo Standing Committee. As the seventh-rank member of the 19th Politburo Standing Committee and first-rank vice premier, Han Zheng oversaw Hong Kong and Macau affairs among other portfolios. Xi placing Ding in charge of overseeing Hong Kong and Macau work is also in line with the former’s agenda of strengthening Party Central’s control over the two key territories and further integrating them into the mainland.
Just before Hong Kong media reported Ding’s new portfolio, HK01, a media outlet that previously carried articles indirectly critical of Xi, switched its tune. In a March 19 piece on Party and state institutional reforms concerning the Hong Kong and Macau apparatus (港澳辦的機構改革——香港要看得見中共), HK01 defended the CCP’s increased control over both territories and slammed Xi’s predecessors for having “misconceptions” about Hong Kong matters. The article also said, “After the 18th Party Congress, Party Central under Xi Jinping’s leadership made a very contemporary interpretation of China’s development and relationship with the world. A reassessment was made from historical perspective, past mismatches were corrected, and the relationship between the CCP and China and the world was set straight.”
HK01 is owned by Yu Pun-hoi, the former owner of the now-defunct Duowei News. Duowei is known for carrying messaging from various factions in the CCP elite and frequently published articles that were highly critical of Xi Jinping and his policies. After Duowei was folded into HK01, the latter media outlet “inherited” for a period Duowei’s function of being a channel for Xi’s opposition to vent their dissatisfaction with his rule and conduct political mobilization. HK01’s current “flattery” of the Xi leadership suggests that the Xi camp is more or less in control of things in Hong Kong and has the clear upper hand in the factional struggle in the CCP elite.
Another Hong Kong and Macau apparatus matter worth tracking is who will replace Xia Baolong as director of the Hong Kong and Macau Affairs Office. Xia is already over 70, no longer serves as a vice chairman of the National Committee of the Chinese People’s Political Consultative Conference after the 2023 Two Sessions, and is not a member of the 20th Central Committee. This means that Xia could retire within the year and make way for another Xi ally to replace him at the HKMAO.
3. While the top leadership appointments are being confirmed, it is still unclear who the head of the Central Organization Department will be. If Xi Jinping does not break personnel reshuffle norms and appoints a Central Secretariat secretary to the position, then Li Ganjie is the only option as he is the only secretary of the Central Secretariat currently without a portfolio.
However, it cannot be ruled out that Xi could keep the current Central Organization Department head Chen Xi in charge until Party and state institutional reforms at the central government and local governments are completed in 2024. In this scenario, Li Ganjie could be appointed head of the Central Social Work Department. But if Li goes to the Central Organization Department, then the Central Social Work Department could instead be helmed by Wang Xiaohong or a ministerial-level official who is lower ranked than both Wang and Li, as we earlier analyzed.
Why it matters
Song Tao’s new appointment suggests that Xi is sticking to his personnel reshuffle formula (see here, here, and here). This is further evidence that Xi is firmly in charge and is changing the way things are done in the regime.
Xi is also preparing to step up “peaceful reunification” methods and needs someone that he can trust in the Taiwan Affairs Office. This, however, does not mean that Xi is going to invade Taiwan imminently.
Read more
Xinhua:
3 Negative effects of China’s car price war surface
March 17
The China Automobile Dealers Association published an article on its official social media account titled, “The Impact of the Wuhan Car Price Reduction Event on the Automobile Market” (武漢市汽車降價事件對汽車市場的影響).
The article wrote that the Wuhan city and district governments’ subsidizing of locally produced car brands had sparked “controversy” and “may cause a series of problems that affect the orderly development of the automobile market.”
The article proceeded to list three problems with the Wuhan government subsidies:
- Subsidizing only locally-produced car brands and not those manufactured elsewhere is “unfair.”
- The subsidies have led consumers to hold on to their cash (as they wait for more generous rebates and price cuts) instead of pushing car sales.
- The subsidizing of only locally-produced car brands in Wuhan and elsewhere will inevitably cause market fragmentation and disrupt market order, which is contrary to the central authorities’ effort to construct a “unified national market.”
2. The Chengdu authorities launched a new car subsidy program that offered buyers up to 150,000 yuan in financial assistance for purchasing a vehicle. The program will hand out 100 million yuan in total subsidies and will end on June 30.
March 18
The Wall Street Journal reported that foreign car companies like Ford, BMW, and Volkswagen are offering steep discounts and promotions on electric vehicles in China, while other companies like General Motors and Citroën are cutting prices on gas-powered vehicles.
March 21
The Harbin Municipal Bureau of Commerce announced a car purchase subsidy program from March 21 to March 31. Buyers in Harbin can enjoy rebates of up to 5,000 yuan per vehicle if they pay the full amount for new passenger vehicles and new trucks (including new energy vehicles) using UnionPay point-of-sale machines during the aforementioned period. The Harbin authorities are also not restricting the issuing of rebates by a buyer’s geographic location or household registration.
Backdrop
Car companies have been engaging in a price war in China since early March as vehicle sales failed to pick up despite the end of “zero-COVID,” the CCP authorities ended tax cuts for car buyers and new energy vehicle subsidies this year, and Tesla began slashing prices since the start of the year. At least 40 automobile brands have currently joined the “subsidies war,” according to mainland media reports.
According to the China Automobile Dealers Association, China’s passenger car sales fell by nearly 20 percent in the first two months of 2023 to 2.7 million cars. Car sales from March 1 to March 12 totaled 414,000 units, down 17 percent from a year ago and 11 percent from the previous month. Cumulative car sales for the year were down 19 percent to 3.094 million units.
Meanwhile, data released by the National Bureau of Statistics on March 15 showed that total retail sales of consumer goods in January and February had increased by 3.5 percent from the same period in 2022 to 7.7067 trillion yuan. Of the total, automobile sales had decreased 9.4 percent year-on-year to 665.8 billion yuan.
Our take
We previously noted in analyzing the vehicle price war and “subsidies war” in China that the systemic deficiencies of the CCP’s authoritarian dictatorship could see local officials take things to extremes and create greater problems for the regime. Recent developments are affirming our analysis.
The price and subsidies war has compelled more car companies to slash prices and prompted more local governments to offer rebates as they struggle to move inventory, boost consumption, keep up production, and prop up local economies. However, the price and subsidies war appears to be having the opposite effect of decreasing car sales as consumers wait for prices to bottom out before making purchases. Plummeting car prices create the conditions for deflation and economic stagnation to follow. As we wrote, “The cost of car companies reducing prices will be passed on to the entire supply chain, and the PPI will inevitably fall. Continuous PPI declines could eventually result in deflation … Deflationary conditions could in turn trigger vicious cycles that lead to economic recession. A recession will result in more debt defaults and collateral devaluation, increasing bad debts held by banks.”
Local governments and officials will unlikely end the “subsidies war” in the short term unless ordered to by the central government. This will fuel the price war and cause the price of new cars to drop sharply. Falling new car prices will in turn affect second-hand car prices and dealers, creating another vicious economic cycle.
