China Newsletter (Issue 95 – October 1, 2021)

Subscribed? Check “update your preferences” at the bottom of this newsletterChina NewsletterWhat China Is ReadingIssue 95 – October 1, 2021Reader Feedbacks to China Newsletterto improve our China Newsletter!In This IssueThe articles shared here do not necessarily reflect the views of China Newsletter or Dialogue China. All articles sourced from WeChat public accounts unless otherwise noted.I. Editorial1. The “Second Cultural Revolution” Meets a Backlash Within the SystemII. Policy2. The Performance System Should Not Become a Means of “Exploitation”3. The Logic of Political Legitimacy in the Construction of “Party-Society Relationship” with Chinese Characteristics: From the Perspective of Historical Legitimacy and Realistic Legitimacy4. How Can the Chinese Communist Party, Which Does Not Represent Specific Interest Groups, Control Capital?III. Politics5. United States-China Strategic Competition in the Digital Era6. The Changing Logic and Shape of United States-China RelationsIV. Society7. The Chinese State Paradigm: A Reflection and Breakthrough in Nation-State Theory8. Seeking “Men Only” But “Can Only Find Female Students”: What Are the Real Lurking Dangers of China’s Gender Imbalance?V. Finance and Business9. Behind the Sidelining of Didi Chuxing: What Kind of Information Do Chinese Companies Need to Disclose to Go Public in the United States?10. Are Chinese Enterprises Publicly Listed on United States’ Securities Exchanges Surnamed “China” or “Foreign”? This Contradiction Has Never Been More Sharp Than it is Now11. Why Did the Didi Chuxing Incident Rise Immediately to the Level of National Security? This Article Gives Important HintsEditorial1. The “Second Cultural Revolution” Meets a Backlash Within the SystemWang Dan – Radio Free Asia Commentary – September 7, 2021Recently, the Chinese Communist Party under the leadership of Xi Jinping has adopted a new slogan, introduced new regulatory policies, and imposed measures to strengthen its control of social and cultural spheres. This has led the outside world to fear China is on the verge of launching a “Second Cultural Revolution.” Not only is there an international public outcry, domestic private enterprises are also very anxious. However, it is worth noting that these new policies, which do have the ominous feeling of a “Second Cultural Revolution,” have already initiated a public backlash in the system. This shows that the so-called “common prosperity” slogan has not only not reached a consensus within the Communist Party, but has already given rise to dissenting opinions.
A group of economists within the system first came forward to speak out. State Council [China’s Cabinet] member Wei Jianing pointed out that “anti-monopoly” measures must be fair and just in handling matters, and first and foremost must oppose the monopoly of state owned enterprises and administrative monopolies. People’s University Vice President Liu Yuanchun also spoke out about the need to stabilize market expectations, and warned that the new regulatory measures would lead to volatile market sentiment not conducive to economic development. Zhang Weiying, an outspoken economics professor at Peking University, was even less polite, pointing the finger of criticism at the slogan of “common prosperity.” He believes “lost faith in the market, introducing more and more market interventions, will only lead China toward common poverty.”
Then there is the issue of public opinion. The piece of writing that stirred up the most controversy among outside observers was Li Guangman’s* article 每个人都能感受到,一场深刻的变革正在进行! “Everyone Can Sense That a Very Profound Change is Underway!” This was collectively published in China’s state run media. This article had not been out for long when editor-in-chief of the Global Times Hu Xijin – who serves as an unofficial public voice for the Communist Party to test the public mood – leaped in to criticize Li Guangman’s article. He urged concerned observers to not be alarmed, indicating a possible shift in political winds. Although Li Guangman himself was once the chief editor of the Huazhong [Central China] Electrical Power News, he is not an influential figure in the system and has already retired. He expresses opinions on social media, and is an old-school nationalist. The authorities ordered the official media to collectively reprint it, implementing the old tactic of using an average person to test public opinion. As soon as they saw that the negative reaction was too strong, they set Hu Xijin free to counterbalance it a little. Whether the “Second Cultural Revolution” will continue to be vigorously pursued is still under observation and evaluation.
* Who is Li Guangman? In his blog, he describes himself as born in 1957 and a former teacher at the Central China [Huazhong] Electrical Workers College, a job he characterized as “boring and depressing.” The pinnacle of his career was being made editor of the Central China [Huazhong] Electrical Power News. He then retired, and started being active as a blogger.
A more authoritative backlash, or counterbalance, is of course the position of high ranking Communist Party officials. On September 4, 2021, Vice Chairman of the China Securities Regulatory Commission (CSRC) Mr. Fang Xinghai delivered a speech at the annual “China International Finance Forum 2021.” He vowed that the leadership would “further promote the institutional liberalization of China’s capital markets.” This was an attempt to clarify for the outside world that China will not adopt a “closed door policy.” On September 6, 2021, Vice Premier Liu He attended by video the China International Digital Economy Exposition held in Shijiazhuang, Hebei Province. In his speech, he said, “China’s policy of supporting the development of the private economy remains unchanged. There is no change now, and there will be no change in the future.” He also emphasized that “China must insist on economic openness,” consistent with Fang Xinghai’s remarks, making clear this is a unified official statement. As Xi Jinping’s economic policy advisor, Liu He’s special status makes his public comment carry extra weight and should be seen as authoritative. It shows that Xi Jinping has realized that some recent regulatory measures have undermined the confidence of private enterprises. The pace of nationalization needs to be readjusted, to avoid negatively impacting economic development.
From the above developments, we can speculate that Xi Jinping is attempting to build up public support for his reappointment for a third term as Communist Party leader at the 20th National Communist Party Congress next year. Some new policies and slogans must be proposed, and even major policy changes initiated. But these policies, which are seen by outsiders as auguring a “Second Cultural Revolution,” are too aggressive, launched with too much haste, and already having a negative impact. These include scaring off many foreign investors, inciting fear that an unemployment wave is coming, as well as other negative factors. These are all deleterious to the development of China’s economy, which is already on a downward trend. For Xi Jinping, becoming “Mao II” is still very important. But if China’s economic growth slows or collapses, forget about “Mao II,” even “Xi’s Third Term” may be placed in jeopardy. Now letting the system exert some backlash is also part of his expedient, opportunistic plan.
Li Guangman: How an Obscure Electric School Teacher Scared Millions of Chinese
Official Communist Party media reprinted a blog article claiming that Xi Jinping is preparing a second Cultural Revolution—this time against the rich.
China is full of leftist bloggers, who hail Chairman Mao and reminisce about the good old days of the Cultural Revolution with nostalgia. If they exaggerate, they are punished and are prevented from posting. What is happening now, from August 29, is however totally different.
On that date, Li Guangman published a post under the title “Everyone Can Sense That a Very Profound Change is Underway!” (每个人都能感受到,一场深刻的变革正在进行!) on his WeChat blog page. Li put together different facts: the prosecution for tax evasion and other crimes of prominent Chinese millionaire entertainment celebrities; the regulations promulgated by the Cyberspace Administration of China (CAC) on August 27 against fan groups supporting celebrities; the crackdown by regulatory authorities on Jack Ma, the most famous billionaire of China, and his Alibaba group; the investigations launched against other large companies and super-rich citizens; new rules on rentals limiting the profits of real estate moguls; and Xi Jinping’s speeches about “common prosperity.”
Li suggested that all these developments should be read together. “What these events tell us, Li wrote, is that a monumental change is taking place in China, and that the economic, financial, cultural, and political spheres are undergoing a profound transformation—or, one could say, a profound revolution. It marks a return from ‘capitalist cliques’ to the People, a shift from ‘capital-centered’ to ‘people-centered.’ It is, therefore, a political transformation in which the People will once again be front and center, and all those who obstruct this people-centered transformation will be left behind. This profound transformation also marks a return to the original intent of the Chinese Communist Party, a return to a people-centered approach, and a return to the essence of socialism.”
“This transformation will wash away all the dust, Li continued: capital markets will no longer be a paradise for get-rich-quick capitalists, cultural markets will no longer be a heaven for sissy-boy stars, and news and public opinion will no longer be in the position of worshipping western culture. It is a return to the revolutionary spirit.” If this revolution had not been started by Xi Jinping, “we would have brought destruction upon ourselves, much like the Soviet Union back in the days when it allowed the nation to disintegrate, its wealth to be looted, and its population to sink into calamity.”
It was a typical “leftist” blog post, of which there are plenty. Rather than being mildly disciplined as has happened in similar cases, however, Li had his post republished by the official mouthpiece People’s Daily, the government’s Xinhua News Agency, CCTV national television, China Youth Daily, China News Service, and the daily newspaper of the People’s Liberation Army. News items published by these media are then reprinted by hundreds of provincial and local newspapers. In short, the Communist Party made sure that Li’s post reached the whole Chinese population, which made somebody wonder whether it had not instigated it in the first place.
Who is Li Guangman? In his blog, he described himself as born in 1957 and a former teacher at the Huazhong Electrical Power Workers College, a job he characterized as “boring and depressing.” The pinnacle of his career was being made editor of the Huazhong Electrical Power News. He then retired and started being active as a blogger.
Li Guangman, or more precisely the fact that his blog post has been reprinted by all the most official state media, has scared both Chinese capitalists and foreign investors. Li’s article was interpreted to mean that a new Cultural Revolution was underway, this time targeting the rich and the famous.
Li’s text was criticized by economist Zhang Weiying, who argued that such a second “Cultural Revolution” would end up destroying China’s economy just as the first one did. Although Zhang’s article was circulated by other economists, he is regarded as a dissident of sorts, and his opinions do not carry great weight within society.
More significant is the criticism of Li’s text by Hu Xijin, the editor-in-chief of the Global Times, the international propaganda mouthpiece of the Communist Party. Hu accused Li of trying to set China’s clock back to the time before Deng Xiaoping’s “reform and opening” that followed the Cultural Revolution, and called the text “misleading.”
Normally, Hu Xijin is a faithful interpreter of the feelings of Xi Jinping’s circle. Yet, if his opinion of Li’s article was shared by the powers-that-be in China, the article would have been eliminated from the websites of the official Party media. It wasn’t, and it continues to be republished.
It would not be the first time that the Party sent contradictory messages to test the waters and gather domestic and international reactions. What is certain is that “it is likely that for months if not years to come, observers of Chinese history and current affairs will weigh the significance of an article” written by an obscure electrical college teacher.【Back to TopPolicy2. The Performance System Should Not Become a Means of “Exploitation”Li Yong – China Law Review – June 15, 2021Why Read This?
The performance system is an important incentive system, but it must not become a new means of “exploitation.” This article is not a renunciation of competition, nor does it deny performance evaluation or seek excuses for killers. But no extreme approach is worthy of recognition, and the same is true for the performance system.(Read the full text

Back to topPolicy3. The Logic of Political Legitimacy in the Construction of “Party-Society Relationship” with Chinese Characteristics: From the Perspective of Historical Legitimacy and Realistic LegitimacyLiu Jingxi, Li Zehua – Political Scientist – July 29, 2021Why Read This?
Because of the great inertia of its own revolutionary philosophy and its ideological interest after coming to power, the historical legitimacy resources of the Communist Party of China are “immersed” in the era of peace building. And the realistic legitimacy resource acquisition path of the ruling party, on the basis of maintaining “economic performance legitimacy,” upgrade to “social performance legitimacy” with equity and justice at its core, and eventually towards freedom, have the “legitimacy of political performance” with the core socialist values of rule of law and democracy as its main theme.(Read the full text

Back to topPolicy4. How Can the Chinese Communist Party, Which Does Not Represent Specific Interest Groups, Control Capital?Lin Yanzhi – Beijing Cultural Review – July 1, 2021Why Read This?
The Communist Party of China just marked the historic occasion of its 100th anniversary. Standing on the new starting point of the new millennium and century, especially at a time when global capitalism is facing major difficulties and the world’s biggest change in a century and a new stage of development in which challenges and opportunities coexist in the world, how to deal with the ruling party and capital, the relationship between socialism and the market economy, there is no doubt that the future and destiny of China is at stake.(Read the full text

Back to topPolitics5. United States-China Strategic Competition in the Digital EraYan Xuetong – Political Science and International Relations Forum – June 25, 2021Why Read This?
According to reports, on June 8, 2021 the United States Senate passed the “United States Innovation and Competition Act of 2021” []. Its aim is to provide more than US$200 billion in investment to United States technology, science and research fields. It emphasizes competition with China through strategic, economic, diplomatic, and technological means to comprehensively counter the steadily increasing influence of the People’s Republic. The United States’ reaction to China’s technological development – and the technological competition between China and the United States – have not been weakened by the change of administration in the White House. They are on the contrary further escalating.(Read the full text

Back to topPolitics6. The Changing Logic and Shape of United States-China RelationsLiao Zhengrong – Great Nation Statecraft Think Tank – July 28, 2021Why Read This?
The United States-China relationship has surpassed all the poles of interstate relations. The logic of change also covers all the elements that affect the relationship between countries, including ideology and the motivation for actions. Policy transformation through three presidential administrations – Obama, Trump and Biden – has resulted in the United States’ policy toward China completing the transformation from quantitative to qualitative change. It is hard to go back to the past in United States-China relations. Focal points for the future development of United States-China relations are striving for the formation of new common understanding and rules of the road regarding high technology, digital economy, network security, new frontier development and other aspects.(Read the full text

Back to topSociety7. The Chinese State Paradigm: A Reflection and Breakthrough in Nation-State TheoryZhang Huilong, Zhu Bibo – Political Scientist – July 14, 2021Why Read This?
State theory is a central issue in political science. This article mainly responds to the Chinese national paradigm issue. Based on a review of Western nation-state theory, examining the nation-state theory with China’s national condition as the cornerstone, it is difficult to explain the soul and spirit of the modern Chinese state with the nation-state theory, nor is it appropriate to represent the integration of ancient and modern Chinese national models.(Read the full text

Back to topSociety8. Seeking “Men Only” But “Can Only Find Female Students”: What Are the Real Lurking Dangers of China’s Gender Imbalance?Li Chunling – Beijing Cultural Review – July 7, 2021Why Read This?
The author points out that, taking a global perspective, the educational advantage of women is an inevitable trend. China is no exception. Growth in women’s college enrollment will continue over the next decade, and the resulting social readjustment will be increased. Attempting to adapt to this change, and mitigating the social conflicts involved, will require the joint efforts of individuals, work units, the people in charge of enterprises, as well as society’s managers.(Read the full text

Back to topFinance and Business9. Behind the Sidelining of Didi Chuxing: What Kind of Information Do Chinese Companies Need to Disclose to Go Public in the United States?Xie Jiu – Sanlian Life Weekly – July 5, 2021Why Read This?
As early as July 2, 2021, Didi Chuxing was required by Chinese regulatory authorities to implement network security audits. The purpose of the audit was “to prevent national data security risks, protect national security and safeguard the public interest.” Domestic Internet companies collecting personal information in violation of the law has long been commonplace in the industry. But rising to the level of national security concerns was still beyond many people’s expectations.(Read the full text

Back to topFinance and Business10. Are Chinese Enterprises Publicly Listed on United States’ Securities Exchanges Surnamed “China” or “Foreign”? This Contradiction Has Never Been More Sharp Than it is NowLeng Jing – Beiijng Cultural Review – July 10, 2021Why Read This?
The Didi Chuxing incident gave rise to a great amount of debate regarding data security, network security, and national security risk protection from the perspective of cyber law and data law. This paper is concerned with the same sensitive issues involved in this incident, and the equally important issue of regulation of cross border securities activities. It also highlights the prospect that private Chinese enterprise securities in sensitive industries will face both advocacy and tightening of territorial jurisdiction by securities regulators and industry authorities when they are listed overseas as red chip stocks.(Read the full text

Back to topFinance and Business11. Why Did the Didi Chuxing Incident Rise Immediately to the Level of National Security? This Article Gives Important HintsMa Qijia, Li Xiaonan – Beijing Cultural Review – July 5, 2021Why Read This?
In the process of creating rules for cross-border data flow, China should pay attention to the protection of national security, data subject rights, interests and safeguards, and economic and trade development interest relationships should also be balanced. In the context of deep coupling of information communications technology and economic and trade globalization, it should be recognized that the cross border flow of data is absolute, and the restrictions on data flow are relative. China currently lacks specialized legal regulation to promote the orderly flow of data across borders. It is not conducive to the global development of China’s digital trade. It is also not conducive to the effective protection of national security, personal privacy, and other related issues of concern.(Read the full text

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