Briefing #138: Xi Jinping Becomes Powerless?

Dialogue China BriefingAbout China TodaySeptember 1st, 2023 – Issue 138Topics in This IssueThe articles translated here do not necessarily reflect the views of Dialogue China Briefing or Dialogue China.
Feature Story:Two Major Suspicions about the Qin Gang IncidentWhat Was Discussed at the Beidaihe Meeting? Xi Jinping Is Powerless to Recover from the Crisis
Policy/Politics (Public Opinion within the Great Firewall):New Characteristics of Generative Artificial Intelligence and National Security against the Background of the Rise of ChatGPTThe Logic Behind the Most Recent Sino-U.S. Chess Game: Why China Gave Kissinger Such Polite Treatment?
Finance and Business (Public Opinion within the Great Firewall):Former Wealthiest Man in China Wang Jianlin Once Again Sells Off Assets to Pay Debts, Will Wanda Survive the Crisis this Time?China’s “Atypical Economic Recovery”: Why Should We Be on High Alert?Evergrande Epitomizes China’s Current Debt Crisis

Feature Story
Two Major Suspicions about the Qin Gang IncidentWang Dan – Radio Free Asia – August 1, 2023

Newly Appointed Foreign Minister Qin Gang takes the oath of office during a meeting of the National People’s Congress at the Great Hall of the People in Beijing, March 12, 2023. (Associated Press)The mystery surrounding former Foreign Minister Qin Gang – who has long been the subject of intense political speculation – has finally been half-resolved. The so-called half-resolution is that he has been removed from his post as foreign minister and replaced by former foreign minister Wang Yi, who has now been returned to his previous position.

The Chinese Communist Party (CCP) never disappoints; there are always elaborate palace intrigues. Qin Gang, who joined the CCP Central Committee in October 2022, became minister of Foreign Affairs, was promoted to the rank of full minister at the end of December, and was promoted to the rank of State Councilor in March 2023. A triple jump within half a year, such as Qin Gang’s rising star to the rank of Vice State Councilor, attracts a lot of attention in China’s political arena. However, in less than three months, the new star has turned into a comet, and Qin Gang has evaporated into thin air, proving once again that being an official in the CCP system is a high-risk occupation. This can be called half a resolution not only because the government has given no official explanation but also because there are two major doubts in the development of the case so far:

First, to the great bewilderment of the outside world, Qin Gang was obviously in trouble before he was removed from his post as minister of Foreign Affairs. But he retained his status at the vice-state level, that is, he retained his position as state councilor. Some reports on social media state a state councilor can only be removed by the National People’s Congress (NPC), and the NPC Standing Committee has no power to remove a state councilor. However, this is not the case as the NPC Standing Committee removed State Councilor Yang Jing, secretary-general of the State Council, from his post in 2018. Obviously, this special treatment gives Qin Gang great face. Some people speculate that Qin’s dismissal may be due to health factors; after all, members of the State Council do not have to run around much, whereas the foreign minister must travel around the world. This sounds reasonable, but the problem is: if it is a health factor, why can it not be discussed? “The minister of Foreign Affairs resigns due to health reasons.” Isn’t this a just and honorable statement? If such a reasonable and sensible explanation cannot be given, then it is not the real explanation. Then what is the explanation? Personally, I think the fact that Qin has retained his vice-state rank is an indication of his close relationship with Xi Jinping, who is obviously still trying to protect him.

The second suspicious thing is why has Wang Yi been returned to his former post? It has been widely rumored that the qualifications and record of service of Vice Minister of Foreign Affairs Ma Chaoxu are very good, and he is relatively young and talented. Then why did he not take over as foreign minister? Wang Yi was already director of the Foreign Affairs Office of the State Council, and now he is also the minister of Foreign Affairs. At the advanced age of 70, he must carry heavy buckets on both shoulders, so it seems that Xi Jinping could not find anyone else to take the position. Then, the problem becomes: why is it that Xi cannot find anyone else? Wang Yi’s return is not a normal decision, and it shows that the problem is more complicated than it appears. This may be because in the diplomatic system, the only person whom Xi Jinping can trust is Wang Yi. Or it may be because Xi Jinping has decided to maintain the so-called “wolf warrior diplomacy” on the diplomatic front. From this perspective, Wang Yi is indeed the safest choice. Xi Jinping is trying to show the outside world that nothing serious has happened in China’s top political echelons and that everything is stable.

Overall, the development of Qin Gang’s case so far proves that the rumors about sex scandals and his health are not the real reasons for Qin Gang’s downfall. I think the reasons are more likely related to internal CCP struggles over Sino-U.S. relations. After all, Qin Gang is considered relatively pro-American, whereas Wang Yi is considered relatively more pro-Russian. China now faces a dilemma in its relations with both the United States and Russia.

Of course, it is very difficult for us to find concrete evidence from the black-box operations of the CCP, but we can make the following judgments: 1.) The top echelon of the CCP is not stable. Xi Jinping has not fully consolidated power since the 20th Party Congress in October 2022 when he secured an unprecedented third term as top leader. Some powerful people are sabotaging Qin Gang, but of course, the real target is Xi Jinping. Xi Jinping has always warned of “tumultuous waves,” and it now appears that his fears are well-founded. 2.) Xi Jinping’s decision-making has never been as erratic as it has been in this case. The fact that it took a month for even the half-resolution and the fact that this resolution is so unclear show that Xi Jinping’s absolute decision-making power has declined, and it is beginning to appear that his ability is not equal to his ambition. Qin’s retention of the title of State Councilor gives face to Xi, but we cannot rule out the possibility that he may lose this status in the future as well, since the NPC will convene in seven months and there may well be new changes at that time. Perhaps by then the effects of the Qin Gang incident will be more readily apparent. The Qin Gang mystery remains a work in progress, and all possibilities still exist. This round in the ongoing power struggle within the CCP has only just begun.Think Tank Viewpoint
What Was Discussed at the Beidaihe Meeting? Xi Jinping Is Powerless to Recover from the CrisisYe Bing – Voice of America – August 11, 2023

On June 19, 2023, Chinese leader Xi Jinping and U.S. Secretary of State Antony Blinken meet at the Great Hall of the People in Beijing. (Reuters)There are signs that CCP leader Xi Jinping and other members of the Politburo Standing Committee are taking their customary beachside vacation at Beidaihe this week, where they are believed to be meeting to discuss important issues. Observers are speculating about what major national issues they might discuss in light of the current pressing issues facing Beijing, including the potential political, economic, military, diplomatic, and domestic problems. Some commentators have suggested that although Xi Jinping has accorded himself an unprecedented amount of power since the 20th CCP Congress in October 2022, he has actually lost the ability to utilize that power, and in addition to the most pressing economic crisis, he is also facing a series of other crises, including a crisis in governance and an existential crisis in external relations.

During the first half of this year, China’s foreign trade, exports, and real-estate markets continued to report a steady decline, and a large number of new college graduates joined the ranks of the unemployed, making the already tense employment and economic situations even more serious. Since July, the dismissal of Foreign Minister Qin Gang after he mysteriously disappeared, the sudden change of generals in the rocket force, the collapse of the roof of a gymnasium at Qiqihar Middle School, and the natural and man-made flooding disasters in Beijing, Hebei, and Northeast China have become the focus of attention of both Chinese society and international media. However, what the outside world has seen is not a proper handling of the situation by the CCP authorities but rather soaring public grievances and an almost unhinged official response.

Wang Dan, a Chinese political scientist and pro-democracy activist based in Taiwan, believes that although on the surface Xi Jinping appears to have solid power, in reality he is facing numerous crises. If this were not the case, Xi Jinping would not be consistently referring to so-called “tumultuous waves.”

Wang Dan has said: “The biggest crisis facing this regime is the economy. Xi Jinping’s inability to revitalize the economic downturn is particularly evident in three areas: the failure to revitalize the real-estate industry, the high unemployment rate among young people, and the financial constraints facing local governments. These are three potentially fatal threats to the regime. But at the moment we cannot see how the authorities can do anything to defuse the crisis.”

U.S. President Joe Biden officially signed a high-profile executive order on August 9 that prohibits private-equity and venture-capital firms from investing in Chinese high-tech companies in three areas: semiconductors and microelectronics, quantum computing technology, and certain generative artificial intelligence systems. The following day, Biden described China’s economy as a “ticking time bomb,” saying “these bad guys do bad things when they have a problem.” Two months ago, just after Secretary of State Blinken’s visit to China, the U.S. President called Xi Jinping a dictator. Beijing has expressed strong dissatisfaction with Biden’s actions and statements.

Wang Dan said, “The second problem is that the relationship between the two major powers, China and the United States, cannot be repaired. U.S. technological control of China has severely limited the development of China’s high-tech and military industries. This Sino-U.S. conflict is based on a conflict between political systems and values that is irreconcilable.”

Wang Dan said he believed that the economic, internal, and foreign affairs issues mentioned above will all be discussed at Beidaihe. In his view, Xi Jinping is more worried about the internal power struggles. As a political scientist long concerned about China’s problems, Wang Dan has cited the strange incident in which Qin Gang, whom Xi Jinping had promoted to the vice-state councillor level, was removed from his post as foreign minister only one month after he disappeared.

Wang Dan continued, “For example, in the case of the Qin Gang incident, I would guess that at this meeting in Beidaihe, a conclusion should come out on the issue of the Qin Gang incident.”

The CCP, which has been in power now for nearly 74 years, is facing many challenges both at home and abroad. Whether Xi’s ability to govern and his position are as solid as the official propaganda suggests has become a topic of concern in international media and many Chinese-language social media commentaries on current affairs.

Observers have pointed out that during his term of office, when the Wuhan coronavirus pandemic erupted, Xi stubbornly insisted on his zero anti-pandemic policy at all costs, but then he hastily ended the stringent control measures after the “white paper protest’ initiated by young dissidents. It is widely believed that this led to a near-collapse of the Chinese economy and a loss of credibility in the government.

On August 8, news of a US dollar debt default by the Chinese government-backed real-estate “model” company, Country Garden, led to reports that the real-estate giant was facing a debt crisis.

Blue V [an institutional affiliation on Chinese social media] user stupidwz on the overseas social platform X (formerly known as Twitter) posted: “Country Garden’s default marks a new stage of the crisis in China’s real-estate market. Since the Evergrande crisis erupted at the end of 2021, the wave of real-estate defaults sweeping through China has finally extended to the world.”

Wang Jian, an independent commentator in the United States and the host of the social media channel “Wang Jian’s Daily Observations,” told Voice of America that the current economic situation is the most urgent problem to be discussed at the Beidaihe meeting and the most urgent issue is real estate. A violent storm is possible.

He said: “The real estate problem is the most serious problem of all current problems in terms of its consequences, and if this bomb explodes, the Chinese economy will be in ruins. We have seen that the Chinese economy is currently facing one of the rarest crises of the past few decades. This is because China’s existing capabilities, including those of the CCP and Xi Jinping’s political visions, all will require some economic resources for their realization. If the economic crisis continues, it will directly threaten the CCP’s political objectives, including threatening Xi Jinping himself. Therefore, I think the first problem at present is the economic crisis.”

Wang Jian pointed out that due to Xi Jinping’s constant policy vacillations over the past 11 years China has lost a good opportunity for development, and the current economic crisis marks the end of the favorable situation created by China’s reform and opening up.

He said: “China’s current economic crisis is not a cyclical problem, nor is it a problem in only a certain sector. It has brought the Chinese economy into a state previously referred to as a balance-sheet recession, a bit similar to the situation in the late 1980s, when Japan went through a period of 20 or 30 years of stagnation. But the situation in China is even more serious and the conditions are far worse. So from this perspective, Xi Jinping is facing the end of the very favorable situation of the past few decades since China’s reform and opening up. The Chinese are starting to play against the wind. The headwind is based on changes like this in the economic situation.”

Wang Jian believes that Xi Jinping’s various decision-making errors have led to the current governance crisis facing the CCP authorities.

He said, “I think the second most important crisis is the crisis of governance. From the point of view of the CCP regime, the problem ahead is that, since the 20th Party Congress when he was given a third term, Xi now has full control of the country. The Japanese call it a one-ruler system. This means that Xi no longer faces any legitimate competitors. In this situation, there is a governance crisis. This governance crisis is not a problem of power but rather that the CCP has lost an ability to utilize its power. Although Xi Jinping has control of all the levers of power, he does not have the ability to manipulate them successfully. There are two reasons for this lack of ability: The first reason is that Xi Jinping does not have any personal ability to control such a large amount of power. The second reason is that traditional Communist Party decision-making has been systematically deconstructed over the last decade under Xi’s administration. The result of this systematic deconstruction is that there is no way to exercise power through the traditional system of authority.”

Many observers believe that Xi Jinping’s political credentials are in tatters because of his total political regression since he came to power and because of the March 2018 constitutional amendment which revealed his ambition to end the term limits for national leaders in order to rule for life. His political credibility is now bankrupt. Most of the policies and projects he advocated, such as “wolf warrior diplomacy,” the “Belt and Road Initiative,” and the “Xiong’an New Area,” have been reduced to fragments. During the past ten years, his style of governance has been criticized in Chinese political circles as “ambitious but lacking in ability and unworthy of his position,” and among netizens he has been jokingly called the “Chief Accelerator” (driving the country backwards).

In Wang Jian’s opinion, Xi Jinping should not only be rated an “incomplete emperor” but also a “bare branch [no followers] commander.”

He said: “Xi Jinping has been called an incomplete emperor. What does it mean to be an incomplete emperor? In fact, if you ruin everything you touch and everything lies fallow, you will not be able to carry out your policies and of course you will not be able to realize your political visions. No one is challenging you. It is you yourself who has spoiled things. The reason why you were able to mess up things like that is that there is something wrong with the entire power system. That is why we are talking about a diverse and thriving system turning into one-man rule under a ‘bare branch’ commander with no followers. If you are insufficiently capable, then you cannot control a country with a population of more than one billion people. If you cannot control the country, then you cannot realize your political vision. You have the resources, you have the power, you have the people, and you even have a team, but you cannot use these conditions to realize your political vision. You cannot blame anyone for being unable to realize your political vision – it is due only to your own lack of ability. There is no one else to blame.”

Commenting on the wolf-warrior diplomacy promoted by Xi Jinping, U.S-based commentator Wang Jian pointed out that since the start of the Russia-Ukraine war, China has been caught in an existential crisis in the international arena, in which it is being besieged from all sides.

He said, “This kind of existential crisis is, if you look at China today, how many countries in the entire world regard the CCP and China as their strategic rivals or as their number-one strategic rival? I believe that in the world today, there is not a single person, nor a single country, that faces such a situation as China is now facing, even though it is a big country, in terms of its population and economy, and a country with a big military. … There is no doubt that China is a big country, no one doubts that. But when you have offended the entire world, it does not matter how big the country is; you cannot sustain having so many people against you. That is why I have all along been saying that China is facing an existential crisis.”

Wang Jian further analyzed what the international community’s recent talk of “delinking” and “de-risking” means for China.

He said: “Delinking is a specialized strategy adopted by the West in response to China, although it is now euphemistically referred to as ‘de-risking.’ But what it is called does not matter. De-risking is meant to prolong the process, do it a little bit more gently, and try to avoid initiating a violent conflict. Why is there no substantive difference between delinking and de-risking? Look at the Chinese economy. We often say that China is a very typical export-oriented economy. Raw and semifinished materials are imported from abroad and then after manufacturing and processing on the world’s largest factory floor they are turned into industrial products and manufactured goods and exported to the rest of the world. This is the previous model described as ‘two heads abroad.’ The two heads are raw and semifinished materials imported from abroad and from foreign markets.”

Asked whether the Chinese Communist Party would start a war in the Taiwan Strait to divert the crisis at home due to public discontent, Wang Jian said he thought it was highly unlikely that Xi Jinping will send troops in the near future to use force against Taiwan because of Russian dictator Vladimir Putin’s successive defeats in Ukraine, which have led to a decline in military morale.

He further pointed out that although Taiwan is not comparable to the other side of the Taiwan Strait in terms of size, the United States and Japan will not stand idly by in the event of armed aggression by Beijing. The island’s military has been provided with advanced weapons and training by the United States for decades, and its military strength is far greater than that of the Ukrainian army of one year ago.

Wang Jian said that although this Beijing leader is not smart, in terms of protecting his power he is not stupid; he is even very shrewd and will not lightly decide to use force to attack Taiwan.

Torrential rains began to fall just as top CCP leaders were heading to vacation in Beidaihe. In order to ensure the safety of Beijing and Xiong’an New Area, the CCP official in charge of Hebei province declared that he was willing to be the “capital city’s moat,” and Zhuozhou-Bazhou and other places in the province were designated by the authorities as flood discharge zones, where countless local people were reduced to disaster victims as they cried out for help.

On August 5, 2023, Xinhua News Agency published a lengthy article entitled “One Heart Through Trials and Hardship, People First – The Communist Party Central Committee – With Comrade Xi Jinping as the Core – Firmly and Forcefully Leads Beijing Flood Control and Flood Relief.” Observers noted that the article was limited to disaster-relief operations in Beijing and it did not mention the serious loss of life and property in Zhuozhou and Bazhou in neighboring Hebei province or the flood areas in Mudanjiang and Shangzhi in Northeast China. Netizens used video captured at the scene to expose a series of posed and faked images published by the official media in an effort to cover up the authorities’ delay in rescuing the victims.

This follows a purge of the top generals of China’s elite rocket force, with Xi Jinping temporarily appointing and parachuting in commanders and political commissars from the navy and air force, respectively. Speculation is rife that the military is not as “absolutely loyal” to Xi as is necessary to allow him to “sleep on a high pillow without worries.”

On August 4, 2023, Wei Jingsheng, a Chinese pro-democracy activist living in exile in the United States, wrote on his X social media account, “During these floods, the military did not come out to rescue the victims or to provide disaster relief, and the leaders did not come out to offer condolences. Instead they were busy gathering in Beidaihe. This shows that both the military and the political situation are extremely unstable. In addition, the people’s hearts are extremely indignant, and the horse’s ass is thinly veiled. It is all coming together. It is a post-apocalyptic scene.”

As for how the Chinese Communist Party dealt with the emergencies during the Beidaihe meeting, a mainland Chinese scholar wrote in a written response to a question from Voice of America, “There is no rule and order, just like Japan’s military government during World War II, and no one is in charge.”Policy/Politics (Public Opinion within the Great Firewall)
New Characteristics of Generative Artificial Intelligence and National Security against the Background of the Rise of ChatGPTHuang Rihan, Yao Haolong – International Security Studies – July 20, 2023

The rapid development of generative Artificial Intelligence technology has produced concerns about invasion of privacy and security, potentially biased content, and the potential to spread fraud and misinformation. (Reuters)Summary:
ChatGPT, as a new milestone in the development of Large Language Model [LLM] neural networks/generative Artificial Intelligence [AI], has attracted much attention in many fields in China because generative AI represented by ChatGPT will predictably change the national security landscape. At the level of ideological security, the malicious use of generative AI has led to more diversified infiltration methods and more significant infiltration efficacy. At the international public-opinion level, the large-scale use of generative AI further complicates the field of public opinion. At the military-security level, generative AI empowers the collection of battlefield information and battlefield command, with an increase in the importance of cognitive warfare countermeasures among countries. In terms of social stability, generative AI impacts the labor market and reshapes the talent-development model.（Read The Original Text）Policy/Politics (Public Opinion within the Great Firewall)
The Logic Behind the Most Recent Sino-U.S. Chess Game: Why China Gave Kissinger Such Polite Treatment?Shi Yinhong – Political Science and International Relations Forum – July 25, 2023

The decades-long history of Sino-U.S. interactions has repeatedly shown that communication is often less meaningful than it should be. (Reuters)Summary:
The number-one priority in U.S. policy toward China beginning from late April 2022 has been to ensure that military conflict is absolutely prevented and avoided. But China has long feared that this will lead to continued escalation of U.S. support for Taiwan across the board, and it will lead the Taiwan authorities to pursue “Taiwan independence” without fear. The fact that the Chinese government honored Kissinger with a high level of appreciation for his historic and significant contributions to the normalization of bilateral relations some 50 years ago demonstrates that the Chinese government values all past, present, and future U.S. personnel who are committed to improving bilateral relations.（Read The Original Text）Finance and Business (Public Opinion within the Great Firewall)
Former Wealthiest Man in China Wang Jianlin Once Again Sells Off Assets to Pay Debts, Will Wanda Survive the Crisis this Time?Xie Jiu – Sanlian Life Weekly – July 29, 2023

Wang Jianlin and Wanda are once again standing at the crossroads of destiny. (Visual China)Summary:
Since July of this year, Wanda has sold off its assets on three consecutive occasions to cope with the upcoming maturity of its debts. Wanda’s crisis today, of course, from a deeper perspective cannot be separated from the downturn in the real-estate industry, the regulatory tightening, macroeconomic slowdown, and other environmental problems, but if we look at Wanda’s own operations and Wanda’s various setbacks during the past few years, the trigger for all the blame is the active delisting of Hong Kong from the previous year. In fact, due to the increasingly stringent policies on listing and financing of real-estate stocks in the mainland, progress in Wanda’s listing has been much lower than expected. For Wanda, the pressure not only comes from these institutional investors but also from the more urgent capital pressures of short-term liabilities that have been expiring in succession. Recently, Wanda has been selling off its assets on a large scale, mainly for the purpose of repaying its short-term debts that are expiring and it has been stepping up the debt repayment point to avoid defaults. At the end of June of this year Wanda submitted its listing application to the Hong Kong Stock Exchange for the fourth time. When Wanda was at its most brilliant, the Hong Kong capital market did not recognize Wanda. In the current environment, how can Wanda again win the favor of Hong Kong investors?（Read The Original Text）Finance and Business (Public Opinion within the Great Firewall)
China’s “Atypical Economic Recovery”: Why Should We Be on High Alert?Wang Qing – China Macroeconomic Forum – July 21, 2023

When China suddenly lifted its embargo and other anti-pandemic measures, many investors expected an economic recovery, but it was not to be. (New York Times)Summary:
A basic judgment is that capital markets are very pessimistic about China’s economic growth in terms of current asset prices. This expectation gap can be understood from two perspectives: First, the economic recovery has been characterized since this year by an “atypical recovery,” which has boosted the economic participants for the short term, but the huge divergence between reality and expectations after entering the second quarter has further weakened the confidence of current capital-market investors in the economy. Second, there is considerable concern in capital markets about the future growth prospects of the Chinese economy. Overall, the current problem is more of a macro cyclical issue. If the macro cyclical issues are resolved properly, China’s economy may continue its miracle, that is, realizing a “crisis-free transition” after rapid economic growth.（Read The Original Text）Finance and Business (Public Opinion within the Great Firewall)
Evergrande Epitomizes China’s Current Debt CrisisGuan Buyu – Guan Pang Ben Pang – July 19, 2023

An unfinished building at one of Evergrande’s development projects in Beijing. (Bloomberg News)Summary:
The financial report shows that by the end of 2022, Evergrande’s liabilities will total ¥2.4 trillion yuan. However, in 2022, the Gross Domestic Product [GDP] of one-third of the thirty-one provinces and cities in China will be less than 2.4 trillion yuan. If Evergrande collapses, what will happen to the entire land market and even to land finance? Local bonds pledged with land will not be able to escape and the stock of mortgages below the third and fourth tiers will be in a state of collapse. Chinese real-estate companies are essentially the middle layer of land finance. What real-estate companies are selling is not houses, but debt packages of local land finance split and transformed into residential debt of real-estate mortgages. Evergrande’s crisis is the epitome of China’s current debt crisis. A structural crisis disease cannot be cured by a prescription for a liquidity crisis. Overall, there is nothing in this world that is “too big to fail,” and the back of Xu Jiayin is the final vista of an era that has come to an end.（Read The Original Text）