Neican: 14 June 2020

China Neican is a weekly column of the China Story blog that brings you concise, timely, and policy-focused analysis. Neican 内参 or “internal reference” are limited circulation reports only for the eyes of high-ranking officials in China, dealing with topics deemed too sensitive for public consumption. But rest assured, everyone is welcome to read what we write.

1. China’s future-past

China Digital Times published a translation of a talk by retired Central Party School professor Cai Xia (蔡霞) to a private group this week. Cai, a legal scholar, criticised the state of the Party under Xi Jinping, declaring that China’s current system is broken beyond repair. Her talk highlights the internal frustration with Xi’s rule that has been building up over the last 8 years within the party. Her talk echoes criticism of the Party from without, as exemplified most prominently by Tsinghua University law professor Xu Zhangrun, who spoke out against tyranny of Xi’s “new era”.

Political zombie

Cai’s central argument is that the Party has become a “political zombie”, one that is unable to move forward because of political, economic, and ideological hurdles and contradictions. In her view, there are two foundational problems: system and theory.

On China’s political system, she argues that it has not fundamentally changed since the Maoist era, with Deng repurposing that system for economic development. Economic opening, in that reading, is a tactical shift rather than an evolution of the political system. For her:

[T]his system is going nowhere. It is useless to try and change it. Fundamentally speaking, this system must be abandoned. As for the reform we are talking about, it is no longer about changing within the framework of the current system.

Monopolisation of power by top leaders, state coercion, and lack of rule of law, are prominent features of both China under Mao and Xi. Although political reform was fiercely debated in the 1980s within the party, China, in the end, went down a different path. As we noted last week in commemoration of the June 4th anniversary:

[I]t’s worth remembering just how close China came in the 1980s to head down the road towards some form of democratisation. Political reform was thought by many CCP leaders to be necessary and inevitable, especially in light of economic liberalisation. But hopes for political reform ended with the gunshots [of June 4, 1989]. Resistance from Party conservatives, the lack of public understanding and support, a frustrated public with a long list of grievances, and the eruption of protests, led to the abortion of China’s experiment with political reform.

Xi’s politics and reform

Today, in Xi’s China, political reform is unlikely to happen. Instead, Xi’s focus has been on party-building and renewal, and enhancing social control and coercive apparatuses of the state.

Cai reserves her sharpest criticism for Xi himself, labelling him a “mafia boss” and condemning his efforts to build a personality cult. Cai predicts that if the Party does not get rid of Xi, then China is faced with an imminent economic and social collapse. The Party is able to “weather the storm” while it still has financial resources, but it’s only a matter of time before its resources are depleted. What happens then when external and domestic conflicts boil over?

Certainly, Xi’s politics is a manifestation of a particular way of looking at China’s political future. In this vision, the Party is the heart and soul of China’s national rejuvenation, and that the repressive measures adopted are necessary for renewing and strengthening the ruling regime. For Xi and his apostles, the alternative is the draining of Party legitimacy leading to crisis, and national degradation.

Cai portrays Xi as the key hurdle facing China’s progress. She thinks that “the vast majority of Party members know in their hearts what is right and what is wrong.” This assumption is dangerous in light of the tragic and bloody history of the Maoist era. Can we really trust Party members to do the “right” thing when there are no systemic constraints on the Party’s power?

Economic contradiction

Beyond the political malaise, Cai also points out the economic contradiction lying at the heart of China’s “two-tiered” economic system: commodity markets have been opened up while factor markets continue to be monopolised by the state.

Despite the increasing economic choices available to the Chinese people, ultimately, access and allocation of resources are in the hands of the party-state. As she rightly points out, “[i]t has to do with power.” Without the economic levers, the Party has few tools for maintaining its legitimacy. That is why we are unlikely to see it giving up economic control despite domestic and external pressures to do so.

The lack of some kind of firewall between economics and politics means that major economic decisions are subject to political considerations of the Party. Cai highlights the chilling effects on Party officials and entrepreneurs of Xi’s coercion as examples of how current politics is running the Chinese economy into the ground. Why would people take risks to innovate when their very political survival is at stake?

So, what does this mean for the world? For one, as we noted last year in relation to the US-China trade war:

[M]any US grievances are rooted in the role played by the party-state in the Chinese economy, which is vital for the party’s survival. The current trade pressures [from the US side] are not going to force a fundamental transformation of China’s political economy. And because of this, even if China and the US come to an agreement on trade, long-term economic and strategic competition is here to stay.

Political theory

The Party is big on theory, because that provides the ideological foundations for political organisation, direction, and legitimacy. In Cai’s view, the ideological foundations of Maoist China have not been uprooted when that is necessary for China to move forward. Instead, China is struck with ideological incoherence and farce. In her words:

We need to correct past mistakes and set things right–this is a step we must take. Just like when the Cultural Revolution ended, we corrected past mistakes and set things right. But the clean-up this time has to be done from the root. We must completely abandon the theories of the so-called New Era of Socialism with Chinese Characteristics. They are nonsense. For something that does not even make sense logically nor read with any sense of flow, it is preposterous that we are making the entire Party study them as if they were some kind of a divine text. 

As we noted earlier this year:

Underneath all this bolster about confidence and inevitability of progress, just how many of [CCP members] really know what Socialism with Chinese Characteristics 中国特色社会主义 is, or exactly how Xi’s “New Era” 新时代 is different from the now old days under Hu, Jiang and Deng?

If Marx and Mao returned from the dead today, they would both be abhorred at what China has become, with its Frankenstein hybridity, combining (some of the better as well as some of the worst) elements of Communism and Capitalism.

All in all, the Party continues to scramble for ideological coherence, moral legitimacy, and self-renewal in a race against… time.

The Party can’t move ahead ideologically because it still has not openly repudiated its past, and dealt with its mistakes. It needs to open Pandora’s box of history and deal with its contents. But that is thought to be highly dangerous to Party legitimacy. This is why we are unlikely to see this from happening under Xi, especially at a time of heightened uncertainty and flux.

The longer this drags on, the harder it is to face up to the past. Without proper ideological and theoretical support, the regime is ruling via material incentives, propaganda, and coercive tools. They can not be effective over the long term.

The future-past

Cai finished her talk with a conclusion that is bleakly optimistic:

[Xi has] already atomized the entire Chinese society into scattered sand. All of civil society and the capacity for self-organization have been shattered. Running the country with the police, violently monitoring the people. Society itself is at the point of death. 

Just like in 1976, after Mao’s passing, many believed that was the end for China, yet we’ve come through. That’s why we need to believe in this nation—it is resilient and alive.  

China’s trajectory is neither linear nor determined, it can change. The pendulum is always swinging between liberalisation and repression. Following the tragedy of the Maoist era, we saw economic opening and signs of political reform. The pendulum has swung the other way under Xi. The key question is how long before the pendulum changes direction yet again.

2. Online content: Zoom and Twitter

Zoom, the video-conferencing company that many organisations are using during COVID lockdown, has closed the account of a group of US-based China activists. This occurred after this group of activists held a Zoom event commemorating June 4th.

After this emerged, Zoom spokesperson said they have reactivated the US-based account, and stated that “just like any global company, we must comply with applicable laws in the jurisdictions where we operate”.

This episode highlights an acute problem faced by many companies operating across jurisdictions. As Zoom stated, companies have to comply with laws in the jurisdictions they operate. Many governments request online platforms to take down specific content that is illegal in their jurisdictions. Some are less contentious, for example, takedown of terrorism and violent extremist contents. Others are more contentious, for example, in 2019, Twitter suspended some Indian accounts, upon request by the Indian Government, for contents that criticise the Indian Government over Kashmir.

In Zoom’s case, the accounts are based in the US rather than China. So even if it was abiding by local laws, it seems that US laws should be applying to these US accounts.

But from a company’s perspective, there are more considerations for than simply deciding which laws to follow. For companies that want to access the enormous Chinese market, it may be more willing to censor contents on behalf of the Chinese Government. Yet, it can also sustain reputational damage outside China. When such cases are publicised, it creates negative sentiments against the company.

If you are concerned about the encroaching censorship by the Chinese Government, then it makes sense to impose heavier penalties for companies that decide to censor, including by using alternative platforms. This would signal to the company that there may be more downside than upside for abiding by censorship laws.

This week, Twitter removed 23,750 accounts linked to the Chinese Government. At the same time, it also removed a smaller number from Turkey and Russia.

Twitter is blocked in China, so accessing from China without a VPN is not possible. However, the Chinese Government uses this social media platform to promote and amplify messages favourable to it. The targets of these messages are people in Hong Kong or the Chinese diaspora, as analysis of the tweets show that they’re usually in Chinese.

State-sponsored disinformation is a big problem on social media. It is a positive step that Twitter is taking actions to address this problem.

Perhaps it doesn’t go far enough. Both the Chinese diplomat Lijian Zhao and US Secretary of State Pomepo have amplified COVID conspiracies without being removed from Twitter. On the other hand, Twitter would not want to be seen as censoring accounts based on their political views.

In this case, Twitter has not published its methodology for determining disinformation, which raises transparency questions. Are we just supposed to have faith in corporations and governments to root out disinformation? It’s a tricky issue indeed.

3. Scientists and researchers

The US and China are in a technological competition, with China trying to take the technological leadership over the US. As a result, both China and the US are looking to “decouple” from each other and striving to be more “self-sufficient”.

Last week, President Trump made a proclamation restricting entry for certain students and researchers from the PRC, motivated by the desire to prevent these people from gaining US technology. We wrote that:

If the US was serious about technology competition with China, then the best thing it could do would be to make it easier for Chinese (and any foreign) students to stay in the US after graduation. That way, the students will help scientific progress in the US rather than their country of origin.

This week, MacroPolo’s “Global AI Talent Tracker” showed that while the US has a large lead over other countries in AI research, its lead is built on attracting international talent — with China the largest source of top-tier researchers.

From China’s viewpoint, only 34 per cent of its top-tier AI researchers have chosen to stay in China, with 56 per cent chose to live and work in the US. The figure is even worse for those researchers who completed graduate studies in the US.

This means in talent at least, China is the current “loser” from this technology “coupling”. It has suffered brain drain due to the attractiveness of the US institutions (and probably US lifestyle too). If the US continues to go down the path of restricting visas for Chinese students in the pursuit of technological decoupling, then MacroPolo found that it would “reduce the number of top-tier AI students in the United States by 32%, and it would more than triple the number of top-tier AI students in China”.

But that assumes that these researchers will return to China. With fierce global competition for talent, other countries with appropriate capital and other resources are likely to snap them up too.

This week on China Story:

  • Yun Jiang, The Scientist and the Spy — intellectual property and industrial espionageIn the current climate of escalating competition and tension between the United States and China on the technology front, Mara Hvistendahl’s The Scientist and the Spy: A True Story of China, the FBI, and Industrial Espionage is a very timely book. It raises important questions about a country’s intellectual property protection in the context of national interest and national security.
  • Julian Gewirtz, The Chinese reassessment of interdependenceXi put forward an expansive vision of national security that highlights the risks of interdependence, while also expanding China’s use of its leverage in interdependent relationships to coerce others. These efforts have intensified significantly due to the Trump administration’s coercive actions on trade and technology. Xi’s and Trump’s shifts also accelerated a reassessment of the risks and benefits of interdependence among a broader set of Chinese elites. Most significantly, many former officials and prominent thinkers appear to be newly convinced that longstanding forms of interdependence with the United States pose intolerable risks to China. For many of the Chinese elite, COVID-19 pandemic provides an opportunity for China to reset its interdependence with other countries on more favourable terms for China.
  • Meijun Qian, Do we understand China? A lesson from dealing with COVID-19: Western society needs to be more empathetic to China. Political agendas and deteriorated journalism integrity have stood in the way of information and communication. Such a trend benefits no one and imposes a danger to the world.