◎ There is a pattern in recent years of “explosive information” about CCP elites being revealed during crucial periods in the factional struggle.
On Feb. 25, Gu Zhuoheng, boss of the Hong Kong newspaper Sing Pao Daily, announced in a series of tweets that he is planning to disclose details of corruption by Xi Jinping’s family members. “The corruption of the Xi clan far exceeds that of Jiang [Zemin], Zhu [Rongji], Li [Peng], Hu [Jintao], Wen [Jiabao], Zeng [Qinghong], and other power clans,” Gu wrote.
In recent years, “explosive” accusations of corruption in the ranks of the Chinese Communist Party elite have surfaced during crucial periods in the CCP factional struggle. Gu’s accusation of the Xi clan comes at a critical juncture in the factional struggle and while a Sino-U.S. trade deal is being finalized, and is unlikely an unmediated action on his part.
Based on our research, we believe that Gu Zhuoheng’s accusations could be part of a pushback by the CCP’s intelligence apparatus. The intelligence apparatus has long been swayed by the Jiang faction, and it and other key organs controlled by the Jiang faction continue to resist Xi Jinping.
Our take:
We previously explored the Xi-Jiang struggle and the Jiang faction’s control over the CCP intelligence apparatus (for a sampling, see here, here, and here). We also looked at the escalation in the factional struggle after the trade war commenced in July 2018 in several articles (see here, here, and here). The observations below build on our past analysis.
1. Gu, a Chinese businessman who was involved in fund management on the mainland and Hong Kong, became chairman and executive director of Sing Pao Daily’s parent company in October 2014.
According to overseas Chinese language media, Gu has encountered a string of legal (slander) and debt (involving sums worth tens of millions of Hong Kong dollars) problems in recent years.
In March 2017, the Interpol, which was then led by Ministry of Public Security vice minister Meng Hongwei, issued a “red notice” for Gu’s arrest. Gu is wanted by the Chinese authorities for “illegally taking public funds” worth 900 million yuan.
2. Based on our research, Gu appears to have links with the People’s Liberation Army General Staff Department (now Joint Staff Department of the Central Military Commission). Those links, and Gu’s position as boss of a Hong Kong newspaper, see that he is well-placed to conduct disinformation and intelligence operations on behalf of CCP elements.
The General Staff Department oversees military intelligence. Both the military and state branches of intelligence in the CCP regime have roots in the intelligence networks seized power in 1949. And Zeng Shan, father of Jiang faction member and former Chinese vice president Zeng Qinghong, was a key official in the CCP’s pre-PRC intelligence network.
In the early 1990s, the CCP intelligence apparatus started working with Chinese businessmen to gather intelligence or do other intelligence-related work. In a practice known as “using business to support intelligence operations” (“以商養情”), the intelligence apparatus would grant businessmen official credentials to give them a business advantage, and the recruited businessmen would in turn hand over a slice of their profits to the intelligence apparatus. For example, fugitive businessman Guo Wengui has ties with Ma Jian, the purged former vice minister of the Ministry of State Security, and is known to leverage on his connections with the intelligence apparatus to get ahead in business. Guo has also claimed on social media that he had carried out overseas intelligence work for the CCP, including establishing ties with the Dalai Lama.
Meanwhile, CCP factions have historically used the more liberal Hong Kong media environment to release “explosive information” (“爆料”) about each other. By waging proxy wars in Hong Kong media, the various factions seek to gain an edge in the factional struggle on the mainland. Oftentimes, figuring out why “explosive information” is published is more important to discerning trends in factional politics and the mood in Zhongnanhai than confirming the veracity of the information.
3. In 2016, Sing Pao Daily ran many highly critical commentaries targeting then National People’s Congress Zhang Dejiang, then Hong Kong chief executive Leung Chun-ying, and then Hong Kong Liaison Office director Zhang Xiaoming. All three officials are Jiang faction members.
Sing Pao gradually stopped attacking Leung and both Zhangs after Carrie Lam replaced Leung as chief executive.
4. Gu Zhuoheng made his accusations against the Xi clan a day after President Donald Trump announced “substantial progress” in the Sino-U.S. trade talks. Gu’s accusations also come in the lead up to the Two Sessions in March. Given the context, Gu’s accusations do not seem spontaneous.
5. Gu explained in a recent interview with an overseas Chinese language media outlet that he was looking to “expose” Xi as “China’s Most Corrupt” and let mainland Chinese know how rotten the ruling elites are. It remains to be seen if Gu will also release “explosive information” on Jiang Zemin, Hu Jintao, and the other CCP elite whom he mentioned to draw a comparison with the Xi clan. If Gu only attacks Xi and not the others, there is strong reason to believe that he, like Guo Wengui, is likely deeply involved in the CCP factional struggle.
6. The trajectory of Guo Wengui’s “explosive information” suggests that he is partisan in his attacks on the CCP elite. Early on, Guo claimed that he merely wanted to help Xi Jinping with his anti-corruption campaign, and was not interested in overthrowing the CCP. Eventually, Guo started “exposing” Xi ally Wang Qishan in the lead up to the 19th Party Congress, and once highly praised Xi’s rivals Jiang Zemin and Zeng Qinghong. Interestingly, Guo later attacked Jiang on occasion, but has refrained from criticizing Zeng, who controls the intelligence apparatus.
7. There is a pattern in recent years of “explosive information” about CCP elites being revealed during crucial periods in the factional struggle.
In early 2012, the Wang Lijun incident broke out, leading to the downfall of the powerful Chongqing boss Bo Xilai. In the months leading up to the 18th Party Congress that year, Western media outlets exposed the immense wealth of the families of Wen Jiabao and Xi Jinping; reporting on the corruption of elite CCP officials was scarce until that point. Wen and Xi are allies, while Wang and Bo are with the Jiang faction.
In 2017, Guo Wengui revealed “explosive information” about Wang Qishan before the 19th Party Congress, causing a stir. Wang, who was widely expected to remain in the Politburo Standing Committee, failed to make even the new Central Committee at the 19th Congress.
This year, Gu Zhuoheng suddenly announced that he is going to attack Xi Jinping before the Two Sessions in March and after President Trump suggested that a trade deal between China and the U.S. seems very likely.
8. Xi may have consolidated power to a high degree at the 19th Party Congress, but he does not appear to be in full control over several key organs that have long been controlled by the Jiang faction, including the military, the political and legal affairs apparatus, and the intelligence apparatus.
Xi moved to strengthen his control over the three organs mentioned above early in his second term. For instance, Party and state institutional reforms announced in March 2018 will effectively give Party Central (and hence Xi) direct oversight of the intelligence apparatus, a move that is undoubtedly aimed at weakening the Jiang faction’s ability to tap intelligence networks to undermine the Xi leadership.
The institutional reforms, however, are slated to be fully implemented at the provincial level and below by March 2019. That means that the Jiang faction still has a small window to take advantage of the soon-to-be-phased-out command mechanism to cause mischief; interference would be much harder post-reform. Put another way, it is not unusual for Xi to face pushback from the Zeng Qinghong-controlled intelligence apparatus at this time.
What’s next:
1. Xi Jinping will move to fully consolidate his control over the intelligence apparatus, the political and legal affairs apparatus, and the military.
2. Xi will likely continue to assert his paramount authority over the military. We previously noted that state mouthpiece Xinhua has been publishing articles about the military demonstrating fealty to Xi.
3. Xi could “kill chickens to scare monkeys” by purging prominent senior officials. Jiang faction members in leading positions in the political and legal affairs apparatus are at high risk of being investigated and arrested.
4. Even after Xi full consolidates his authority over “errant” Party and state organs, Jiang faction elements in those organs would still likely try to resist him. The probability of Jiang elements successfully troubling the Xi leadership will diminish the longer Xi remains in office. On the flipside, the Jiang faction could possibly mount a successful “soft coup” if Xi fails to resolve pressing external and internal problems (the trade war, rescue China’s worsening economy, etc.).
5. Aside from Gu Zhuoheng and Guo Wengui, other parties could suddenly emerge to expose “explosive information” about Xi and his allies in the coming weeks and months. Indeed, the more trouble and instability Xi run into, the more likely increasing opposition to his rule will emerge.
Get smart:
Monitoring the CCP factional struggle is essential for determining whether or not Xi can successfully force through his policies, as well as the limits of what he can do. And what Xi can or cannot accomplish will affect the outcome of the Sino-U.S. trade talks and the direction of the bilateral relationship.
CCP elite politics is upstream of virtually all issues in China today. Businesses, investors, and governments can avoid being blindsided by Black Swan events by closely tracking the factional struggle.
