To support us with a donation? Click here!Dialogue China BriefingTalking About China NowIssue 117 – October 1, 2022In This IssueThe articles shared here do not necessarily reflect the views of the briefing or Dialogue China. All articles sourced from WeChat public accounts unless otherwise noted.I. Dialogue China Viewpoints1. Li Keqiang May Transfer from Serving as Prime Minister to Chairman of the National People’s CongressII. Policy2. Central Financial Revenue and Expenditure: the Four Coastal Provinces Account for More than 60% of the Net Local Financial Contributions to the Central GovernmentIII. Politics3. How to Achieve a New Stability in TaiwanIV. Finance and Business4. Decline in Production, Crop Failure, Rising Vegetable Prices… What is in Store for the Rural Areas Under the Resumption of High Temperatures and Drought?5. Under Eight Variables, a Chinese Economist’s Thoughts are Intriguing6. The Biggest Contradiction in China Right Now is Actually the “Capital Surplus”Dialogue China Viewpoints1. Li Keqiang May Transfer from Serving as Prime Minister to Chairman of the National People’s CongressHu Ping – Radio Free Asia Commentary – August 25, 2022The 20th National Congress of the Communist Party of China will be held soon. What will be the composition of the future Politburo Standing Committee? There are various speculations and serious discussions among scholars. Here I would like to share my views. My analysis is based on official information and reports, not on unidentified gossip, and there is no “exclusive scoop.” Xi Jinping, Li Keqiang, Li Zhanshu, Wang Yang, Wang Huning, Zhao Leji and Han Zheng are now the seven members of the Politburo Standing Committee. Xi Jinping is up for re-election as General Secretary. According to the unwritten rule of “seven up, eight down*,” Li Zhanshu, 72, and Han Zheng, 68, will both step down, leaving two seats for newcomers; the other four will remain in office. * 七上八下 qī shàng bā xià f.e. confused; at sixes and sevens; in disorder. Double entendre – A derivative of the general 七…八… [7/8] structure for Chinese proverbs. Comparable to the English phrase: At sixes and sevens. Here a cheeky reference to mandatory Communist Party leader retirement at age 68. Some people say that Premier Li Keqiang will retire and Wang Yang will stay in the Politburo Standing Committee at the 20th National Congress. I think it is impossible. Wang and Li were both born in 1955. If the “seven up and eight down” rule is accorded with, they both can stay. Wang Yang was born on March 5, 1955. During this year’s 20th National Congress he will not yet be 68 years old. But by next March’s “Two Meetings*” he will be 68 years old. Li Keqiang was born on July 1, 1955. Even by next March’s Two Meetings he won’t be 68 years old. Therefore, Wang and Li may both continue to serve, but it is impossible for Wang to continue to serve and Li to retire. Since Wang and Li both retiring is very unlikely, it is most likely that Wang and Li both continue to serve. * The Two Meetings, known as Lianghui in Chinese, is the name given to the back-to-back annual meetings of two of China’s major political bodies – the Chinese People’s Political Consultative Conference (CPPCC) and the National People’s Congress (NPC). If Li Keqiang remains in the Politburo Standing Committee, what duties will he hold? He has already served two terms as prime minister, and according to established rules cannot be re-selected. The 2018 constitutional amendment only removes the two term limits for the president and vice president, but not for other leadership positions, including the State Council premier. Therefore, Li Keqiang can no longer serve as premier. He is likely to become chairman of the National People’s Congress. There is a precedent: Li Peng served two terms as prime minister and then became the chairman of the National People’s Congress. After Li Peng transferred to become chairman of the National People’s Congress, he was still ranked second place in the Communist Party hierarchy, ahead of then Prime Minister Zhu Rongji. If Li Keqiang becomes the chairman of the National People’s Congress in the future, it is believed that he will still be ranked second in the Communist Party, just like Li Peng was. If Wang Yang stays in the Politburo Standing Committee, he may still become Chinese People’s Political Consultative Conference [CPPCC] chairman next. He has only served as the CPPCC chairman for one term, he can still be the chairman for another term. There are only two newcomers to the Politburo Standing Committee. One is definitely Hu Chunhua. In a commentary last month, I wrote that Hu Chunhua would succeed Li Keqiang as Premier. Many people think that Hu Chunhua is so young [59] that it is against the ethics of the party to become the prime minister as soon as he joins the Politburo Standing Committee. They forget that Hu Chunhua and Sun Zhengcai, the two members born in the 1960s who joined the Politburo at the 18th National Congress, were originally arranged by the patriarchs to succeed each other, and Xi Jinping did not reject them at that time. According to the plan of the patriarchs back then, Hu Chunhua and Sun Zhengcai should have joined the Politburo Standing Committee in the 19th National Congress, and Hu Chunhua should have replaced Xi Jinping as the General Secretary and Sun Zhengcai should have become the Premier at the 20th National Congress. In 2011, I wrote an article analyzing that the winner takes all in the 18th National Congress, and that Xi Jinping’s power would be far greater than Jiang Zemin and Hu Jintao’s before him. Therefore, Xi Jinping could not accord with patriarchs’ plan. Unexpectedly, on the eve of the 19th National Congress in 2017, Sun Zhengcai was sentenced to life imprisonment for accepting bribes. At the 19th National Congress, Hu Chunhua failed to enter the Politburo Standing Committee. Then Xi Jinping paved the way for his indefinite re-appointment as General Secretary by amending the constitution. In this way, the intergenerational succession arrangement intended by the patriarchs for the 18th Congress was abolished. However, it is not possible to abolish it completely, because after all, Hu Chunhua was jointly elected by the seniors, and he has shown his loyalty to Xi Jinping for all these years. Therefore, a compromise solution is to make Hu Chunhua the prime minister on the condition that Xi Jinping is re-selected as the Communist Party general secretary. The other new member of the Politburo Standing Committee to replace Han Zheng as Vice Premier is expected to be Li Qiang, the Shanghai Communist Party General Secretary. Leaving aside the fact that the political position of Shanghai Party Secretary has a higher value than Chongqing Party Secretary, there is also the fact that Li Qiang was born in 1959 and will be 68 years old in five years, so if he doesn’t join the Standing Committee this time, it will be his last chance. Chen Min’er, the Party Secretary of Chongqing, was born in 1960 and will be 67 in five years, so he still has a chance to join the PBSC at the next national congress. Ding Xuexiang, director of the General Office of the Communist Party Central Committee, works in Communist Party affairs and is unlikely to succeed the vice premier. Besides, Ding Xuexiang was born in 1962 and will be just 65 in five years, so he still has a chance to join the Politburo Standing Committee at the 21st National Congress. Some say that Xi Jinping may want to break the unwritten rule of “seven up, eight down.” Others say that Xi Jinping may change the number of standing committee members from seven to nine, in order to cram in more members of the “Xi Family Army.” I don’t share this view. The reason is that Xi Jinping has broken the convention of three consecutive terms, taking the largest share of power redistribution, and people from other factions are definitely dissatisfied so he cannot go too far and overdo it. He needs to share the remaining power with others. Also, the rule of “seven up and eight down” is beneficial to Xi Jinping. He can use the rule to replace his senior colleagues who have been assigned to him by the former patriarchs without having to find a reason, and to install his own trusted followers in the vacant seats. My judgment is that the new team agreed upon to lead the Communist Party and state so far are likely to be: Xi Jinping – General Secretary, Li Keqiang – Chairman of the NPC, Hu Chunhua – Premier of the State Council, Wang Yang – Chairman of the CPPCC, Wang Huning – Secretary of the Secretariat, Zhao Le Yi – Secretary of the Central Commission for Discipline Inspection [CCDI*], and Li Qiang – Executive Vice Premier of the State Council. * The Central Commission for Discipline Inspection (CCDI) is the highest internal control institution of the Chinese Communist Party (CCP), tasked with enforcing internal rules and regulations and combating corruption and malfeasance in the party.【Back to Top】Policy2. Central Financial Revenue and Expenditure: the Four Coastal Provinces Account for More than 60% of the Net Local Financial Contributions to the Central GovernmentWu Chao – Southern Weekend – August 26, 2022Why Read This? The central government’s transfer payments to localities in 2022 will be nearly RMB 9.8 trillion, the largest in recent years and the highest increase in recent years. 2021, the provinces that will receive the most tax refunds and transfer payments from the central government are Sichuan, Henan and Hunan, in that order. If localities can successfully complete the task of financial contributions, it means that the central government has capital protection, through transfer payments and other means, can supplement part of the local financial resources, balancing regional economic development differences.（Read the full text） 【Back to top】Politics3. How to Achieve a New Stability in TaiwanDa Wei – China-US Focus – August 25, 2022Why Read This? Over the last 50 years, the Taiwan issue has always been the most important and sensitive issue in the Sino-US relationship. Over the past few years, many observers have concluded that the U.S. and China have become trapped in a vicious cycle of action and retaliation over Taiwan, making the Taiwan Strait the only area that could lead to conscious conflict or war between the U.S. and China. Knowing the danger of the Taiwan issue, U.S. House Speaker Nancy Pelosi still went ahead with her visit to Taiwan on August 2 and caused the latest round of tensions between the U.S. and China.（Read the full text） 【Back to top】Finance and Business4. Decline in Production, Crop Failure, Rising Vegetable Prices… What is in Store for the Rural Areas Under the Resumption of High Temperatures and Drought?Peng Li – Sanlian Life Weekly – August 21, 2022Why Read This? On August 18, 2022, the Central Meteorological Station announced that there are moderate and above meteorological droughts in many parts of the country, with local special droughts. The drought mainly occurs in the Yangtze River basin and some western areas. In the rural areas of these areas, the drought came earlier, and vegetables, corn, rice and fruit trees were affected to varying degrees, and even the daily water supply for residents in some areas was not available. Experts say that compared to previous years, this year’s drought is influenced by unusual atmospheric circulation and overlapped with extreme high temperatures, which may bring more complex effects than before.（Read the full text） 【Back to top】Finance and Business5. Under Eight Variables, a Chinese Economist’s Thoughts are IntriguingQuan Heng – Academic Monthly – August 18, 2022Why Read This? Since 2022, the global economy has been under adverse warnings and the Chinese economy has been under pressure. For a period of time in the future, the domestic and foreign economies will continue to face the difficult problem of transformation under pressure. This article points out that the world economic growth practice is undergoing profound changes. From the perspective of practice, the eight most important variables are: the new pandemic, the new changes in international investment and trade rules, the regionalization and peripheralization of the global economy, the spillover effects of the economic policies of major powers, the “Belt and Road” initiative, the new dual-cycle development pattern, the implementation of global carbon reduction strategies, and big data and artificial intelligence.（Read the full text） 【Back to top】Finance and Business6. The Biggest Contradiction in China Right Now is Actually the “Capital Surplus”Wen Qianjun – Evolution – August 24, 2022Why Read This? At present, the Chinese economy is facing downward pressure under the multiple pressures of epidemic, geopolitics and counter-globalization. The author analyzes the current situation and proposes a proposition: rural and ecological resources are the “third asset pool” to cope with the capital surplus. The external economic environment we are facing is the imported inflation brought by the monetary easing policy of the United States and the trade conflict. The real estate market has been controlled by the policy and has become cold, which has brought about a capital surplus. The purpose of this paper is to propose a solution to the problem of capital overhang.（Read the full text） 【Back to top】

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