Briefing #137: Harbor NO Illusions About Communist China

Dialogue China BriefingAbout China TodayAugust 15th, 2023 – Issue 137In This IssueThe articles translated here do not necessarily reflect the views of Dialogue China Briefing or Dialogue China.
Feature Story:The United States Should No Longer Harbor Any Illusions About China

Policy/Politics (Public Opinion within the Great Firewall):The Huge Gap Created by “ShanHe University” That Will Be Really Difficult to Close

Finance and Business (Public Opinion within the Great Firewall):How Big is China’s Black Hole of Debt?

The Secret Behind the Thousands of Fake Central State Enterprises: Millions Purchase an Identity and Fake Central Enterprises Are Transformed into Group Companies

Why is Youth Unemployment So High This Year?

The Current Economic Situation Is Relatively Complicated and Cannot be Managed by the Traditional Recovery Model

Feature Story
The United States Should No Longer Harbor Any Illusions About ChinaWang Dan – Radio Free Asia Commentary – July 17, 2023

On July 7, 2023, Li Qiang (right), premier of the State Council of the Government of the People’s Republic of China, meets with U.S. Treasury Secretary Janet Yellen (left) at the Great Hall of the People in Beijing (Agence France-Presse)There seem to be some recent signs of an easing of relations between the United States and the People’s Republic of China. U.S. Secretary of State Antony Blinken, Treasury Secretary Janet Yellen, and Special Envoy for Climate Change John Kerry all have visited Beijing and have held talks with top level leaders of the government of the People’s Republic of China. It is of course better to have detente than to have conflict between the great powers as it will be conducive to international peace. For this reason, we are very happy to see a reduction in the tensions between the two countries. However, if the detente is based only on false appearances and an unstable foundation – or if it is only wishful thinking and a unilateral expectation – then such reduced hostility is very much open to question. In my opinion, there are a number of problematic aspects to current thinking about the easing of relations between the United States and China.

In terms of how Washington currently expresses its position on China, it has adopted relatively mild wording, as represented by the remarks made by Treasury Secretary Yellen at a press conference after her trip to Beijing: “President Biden and I do not see the relationship between the U.S. and China through the frame of great power conflict. We believe that the world is big enough for both of our countries to thrive.” If this is the true thinking behind U.S. policy about China, then I am not ashamed to say that it is a bit too naïve and a complete fantasy. There is an old saying “one hand clapping makes no sound.” The problem between the United States and China today is that although the U.S. government has always acted with good intentions, Washington harbors unrealistic hopes that the two great powers – the United States and People’s Republic of China – do not have to enter into conflict and that they can be tolerant of each other and develop their own strength within their respective spheres of influence. But does the Chinese side really have the same good intentions? In my opinion, the answer is of course no.

On July 6, 2023, not long after U.S. Secretary of State Antony Blinken departed China and before Treasury Secretary Janet Yellen arrived in Beijing, Xi Jinping made some very bellicose remarks. During an inspection of the PLA’s East Military Region, Xi stated that not only does he believe China’s “security situation has become more volatile and uncertain” but he also called upon the military to “deepen its operational planning and preparation for war.” He clearly and explicitly told the military to “accelerate improvements in its ability to win a war.” [1] These remarks are of course directed at the future situation in the Taiwan Strait. Xi Jinping has once again made it clear to the outside world that China is prepared to use force to resolve the Taiwan Strait issue. It is well known that the most likely focal point of intense conflict between the United States and China will be Taiwan. Xi Jinping chose the moment when the United States side had repeatedly expressed its goodwill to the Chinese side to make this inflammatory statement. Where is any effort to try to avoid a major power conflict? Although the Chinese side treated the visiting U.S. special envoys with hospitality, to the United States the real issue of substantive significance is the hope that military communication channels can be reopened to avoid the risk of an unexpected incident that could lead to war. But from beginning to end China has not made any concessions, and it is obvious that the Chinese side is simply indifferent to the goodwill on the part of the United States.

In July 2021, Rush Doshi, deputy senior director for China and Taiwan in the Biden administration, published The Long Game: China’s Grand Strategy to Displace American Order. The book analyzes the adjustments in China’s foreign relations strategy toward the United States from the Deng Xiaoping era’s “韜光养晦” tao guang yang hui – “maintain a low profile, hide our abilities and bide our time” – to President Hu Jintao’s more aggressive attempt to “積極作為” – “actively accomplish something” – to the Xi Jinping era’s “vigorous and proactive” adjustments to United States strategy, pointing out that since 1989 China has established an aggressive three-step strategy of “weakening, building up, and expanding.” I would recommend that American policy makers on China take a serious look at this book, which is based on rigorous data analysis. One of the most insightful points in the book – and one with which I strongly agree – is the following sentence: The belief that China’s dictatorship in recent years is due to the character of President Xi Jinping is in fact a misunderstanding. It ignores the fact that “China’s behavior is actually rooted in a long-standing consensus within the Chinese Communist Party.” [2] In other words, it is the long-term strategic intention of the Chinese Communist Party to compete with the United States for world power, to replace the United States as the global hegemon, and to establish a new international geopolitical order. If we accept this point, we will understand that it is only wishful thinking on the part of Treasury Secretary Yellen if she expects that the United States and the PRC can prosper together without conflict. I do not think that a policy toward China based on such wishful thinking can provide sufficient protection to U.S. national interests. I hope that the United States will not harbor any more illusions about the Chinese Communist Party.

[1] https:/s/twitter.com/RFA Chinese/status/1677022975013408786 
[2] Rush Doshi, The Long Game: China’s Strategy to Undermine the U.S. and Establish Global Hegemony, tr. Li Ningyi (Eight Banners Cultural Publishing, September 2022), p. 38.Policy/Politics (Public Opinion within the Great Firewall)
The Huge Gap Created by “ShanHe University” That Will Be Really Difficult to CloseZhang Donghai & Li Li – Peking University Education Review – July 7, 2023

Various materials on “ShanHe University” produced by netizens (Web Resources)Summary:
China’s Ministry of Education has responded to a recent online meme that states that “a ‘ShanHe University’* at the border of Shandong, Shanxi, Henan, and Hebei provinces was established by crowdfunding.” The viral discussions caused by the “ShanHe University ”incident reflects people’s concerns and hopes for the development of higher education, and expresses their enthusiasm for a redistribution of higher-education resources. Based on an analysis of the enrollment rate in higher education of the school-age population and the enrollment rate in high-quality universities of the school-age population in each region, the author divides the country into an absolute advantaged area, a relatively advantaged area, and a relative disadvantaged area in terms of enrollment opportunities, and calculates the changes in higher-education enrollment opportunities among the various regions. Although the government has tried to improve the problem of unequal access to education through a series of policy interventions, the results are not obvious. The fundamental solution to this phenomenon will depend on balanced regional economic and social development and promotion of a balanced allocation of high-quality higher- education resources.（Read The Original Text）

*ShanHe University, a fictional university created by students, is intended to serve the people of Shandong, Shanxi, Hebei, and Henan provinces (a combination of the names of the four bordering provinces), where competition on China’s national college entrance examination is fierce. Netizens joked that if each high-school graduate in the three provinces were to donate ¥1,000 yuan (US$138) each, there would be more than ¥3 billion yuan, enough to establish a real “Shanhe University” that could admit more graduates from those regions. The meme quickly captured the imagination of Chinese students across social media platforms. Many netizens began to enthusiastically contribute to the development of the university. Along with a motto and an emblem, a website was created that included even faculty lists and an admissions brochure.Finance and Business (Public Opinion within the Great Firewall)
How Big is China’s Black Hole of Debt?Ge Jila – Gelonghui APP – July 19, 2023

An unfinished apartment building as part of Evergrande Group’s Health Valley Project on the outskirts of Nanjing, Jiangsu province, October 22, 2021 (Getty Images)Summary:
After waiting two years, Evergrande’s financial report was finally released with less than three months left before the delisting deadline. The truth about a massive hole of debt has been revealed. The debt is RMB ¥2.44 trillion! As of the end of 2022, Evergrande’s cash and cash equivalent was only US$4.334 billion, which amounts to almost nothing in terms of the size of the hole. What can be used to fill this hole of debt? Evergrande’s supplemental financial report puts all the problems on the table, indicating that the evolution of this giant thunderbolt has reached a new milestone. Presently, the most valuable asset in Evergrande’s hands is that it still holds as much as 210 million square meters of land, much of which consists of high-quality plots in core cities. These quality assets are likely to fall into the hands of existing powerful players at attractive prices and become their new money-making treasures. In short, a new era in real estate development is about to begin.（Read The Original Text）Finance and Business (Public Opinion within the Great Firewall)
The Secret Behind the Thousands of Fake Central State Enterprises: Millions Purchase an Identity and Fake Central Enterprises Are Transformed into Group CompaniesSong Bingchen – Southern Weekend – July 20, 2023

Of the more than 1,000 announced fake central state-owned enterprises, 768 are still in existence and in operation (Liang Shuyi)Summary:
From October 2021 to June 2023, China’s State-owned Assets Supervision and Administration Commission of the State Council [SASAC] and various central state-owned enterprises announced a total of more than 1,000 fake central enterprises and state-owned enterprises. A common practice among fake central state-owned enterprises is to choose a long-established nationally owned enterprise as a dependent party, forge registration materials to package a state-owned background, further register as a conglomerate, and then continue to set up subsidiaries at the second, third, or even higher tiers and to nest them together in layers whereby they cross and exchange shareholdings and modify beneficiaries. Fees are determined based on the prominence of being affiliated with the central enterprises and the hierarchy of the attached company. Counterfeit central state-owned enterprises [SOEs] often appear in some major local projects. Some “fake SOEs” have countless relationships with real SOEs, and there have even been cases whereby fake SOEs have formed consortia with real SOEs to win local franchise projects. The root of the problem lies in creating a good business environment; when there is a favorable business environment for private enterprises and when enterprises do not have to wave the flag of the state to obtain good projects and to secure financing, naturally, there will be no need to pretend to be central state entities.（Read The Original Text）Finance and Business (Public Opinion within the Great Firewall)
Why is Youth Unemployment So High This Year?Liu Chang – Sanlian Life Weekly – July 10, 2023

A young couple sharing a bench while playing with their cell phones in a public park of Beijing (Agence France-Presse)Summary:
The National Bureau of Statistics announced in June of this year that the youth unemployment rate had reached 20.8 percent in May. This figure, totaling six million people, has been rising since 2018 when the first statistics on youth unemployment were issued. Is youth unemployment a serious problem? It should be said that at present, this has produced many employment frictions (caused by economic adjustments and mismatches in the allocation of resources), leading to some people becoming unemployed while changing jobs or waiting to change jobs. Cyclical unemployment due to a lack of demand also exists. As the economy is still in the process of recovery, the number of business start-ups will decline and businesses will not grow in size, thus leading to a scarcity of jobs. At present, the market for employment of university students is facing four problems: insufficient demand, an excessively rapid increase in the supply of highly educated students, a mismatch in the structure of education, and a disconnect between the employment perceptions of university graduates and the reality. These can all be seen as manifestations of structural problems. In comparison to the youth unemployment rate, the contradiction between the quality of employment and the structure of employment is even more profound.（Read The Original Text）Finance and Business (Public Opinion within the Great Firewall)
The Current Economic Situation Is Relatively Complicated and Cannot be Managed by a Traditional Recovery ModelLiu Yuanchun – Baseline Thinking – July 19, 2023

On July 12, the 2023 Guangzhou Night Consumption Festival kicked off, providing consumers with nighttime food, nighttime markets, and nighttime entertainment (Visual China)Summary:
On July 17, 2023, the National Bureau of Statistics released data showing that the Gross Domestic Product [GDP] for the first half of the year grew by 5.5 percent year on year, of which the second quarter saw year-on-year growth of 6.3 percent, which was slightly lower than market expectations of around 7 percent. Due to an overlapping of factors, such as the three-year epidemic, the deep adjustments in the real estate sector, as well as the overall global economic situation and geopolitical landscape, this round of recovery is relatively complicated and we cannot follow a traditional economic recovery model to understand the current economy. First of all, last year there was negative growth in the returns of financial products, and there are now some fluctuations and shocks in housing prices. Since July of this year, Premier Li Qiang has hosted many enterprise seminars, and many of the invited enterprises are private enterprises. In this way, the central government is able to stabilize enterprise confidence both in the present and in the future in a more direct way, and this will be also conducive to understanding the situation at the grassroots levels so as to effectively carry out the next step in the policy mix. The unemployment rate in the National Urban Survey shows that on the one hand, it is difficult to find jobs, but on the other hand, many enterprises are worried about difficulties in recruiting workers. The solution to this problem requires some structural policies, the first of which is the university training system, and professional settings need to be more forward-looking and precise. Second, a forward-looking layout in industrial policy and a financial subsidy policy are needed. In short, there is no need for pessimism about annual economic development. We should approach the short-term fluctuations in the relevant data with a more rational perspective.（Read The Original Text）