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. US-China relations update
US policy on Tiktok is still up in the air although a decision will likely be announced in the next week. Trump has reportedly said he will ban TikTok. Some reports suggest that Microsoft may purchase the US operation of TikTok from ByteDance.
We have previously written about the concerns that some governments have about TikTok — data and privacy, censorship and propaganda. Now the question is what to do about it. It appears that the likely outcome will be one of two:
- ByteDance divests TikTok
- US Government bans TikTok
With the first option, if ByteDance only sells the US operation of TikTok, what about its other global operations? How is the separation between TikTok-US and TikTok-global going to be maintained? It would be somewhat unrealistic for TikTok-US to be separated out from the rest of the operation, like Douyin (PRC’s version of TikTok) is.
It is also worth pointing out that Microsoft owns LinkedIn, which has also been accused of censorship on behalf of the Chinese Government, amongst other concerns.
With the second option, it is unclear whether the US President has the power to ban an app, and if so, how it is going to be implemented. This could potentially throw up many legal challenges. One option is whether he could invoke? his Emergency Economic Powers — but one wonders what “emergency” even means these days. You could make the argument that we are in a constant state of emergency, for example. On top of that, there do not appear to be any extra benefits provided by this significant government intervention over the first option.
No matter which option it is, at this moment the US Government is more focused on TikTok as a specific threat rather than general concerns with social media and technology companies. Perhaps enacting regulatory changes will take a long time — congressional hearings on this issue are continuing — and the US Government believes that the threats from TikTok are imminent and serious enough to warrant immediate action.
If the US does ban TikTok, what does this mean for its allies and partners? Will the US pressure its allies to follow suit? Which Chinese apps and companies are next in line? And what does it mean for the hundreds of current and upcoming Chinese apps and companies with global impact?
More Xinjiang sanctions
The US has sanctioned Xinjiang Production and Construction Corps (新疆生产建设兵团, XPCC) over its role in the human rights abuses currently occurring in Xinjiang. This is a significant step, as the target is an important party-state entity (rather than an individual or small company).
The history of the XPCC is very interesting. During the Cultural Revolution, 11 corps were established in various regions across China. However, XPCC is unique — it was established before the Cultural Revolution, making it the first corps. It is also the only one that is still operating. XPCC, along with all other corps, was disbanded in 1975. But XPCC was the only one that was re-constituted (in 1981).
XPCC is a “paramilitary” organisation and uses military terminology for its different units. It is a unique administration unit, reporting to both the central government and the Xinjiang Uyghur Autonomous Region (XUAR) government. In many statistics (such as for COVID numbers), you will find XPCC listed separately from XUAR. The stated aim of XPCC is to “settle” and “defend” the “frontier”, which has a rather long precedence from imperial China times. To fulfil its mission, it builds cities, farms, dams and other structures. It also has a history of settling Han people from other parts of China to Xinjiang.
XPCC administers some cities in the Xinjiang region and runs a large part of Xinjiang’s economy (around 275 billion Yuan in 2019). It owns many companies, as well as schools and hospitals.
2. A tale of two eras: engagement vs competition
Cui Tiankai, China’s ambassador to the US, urged this week for a reset in China-US relations and for the US to “return to the right track”. This is wishful thinking as we are beyond that now.
It is striking just how far US attitudes and policy on China have shifted in the last decade. To highlight the extent of that shift, we compared two important documents.
The first document is Robert Zoellick’s well-known September 2005 speech ‘Whither China: From Membership to Responsibility?’ As Deputy Secretary of State, Zoellick was a key architect of the Bush administration’s China policy. The second document is Trump White House’s report United States Strategic Approach to The People’s Republic of China, released in May.
The shift from engagement and competition is clearly demonstrated when these two documents are read alongside each other. In fact, the two China policy documents could not be more different. Zoellick advocates US engagement, and welcomes “a confident, peaceful, and prosperous China”, while the White House report focuses squarely on competition:
Guided by a return to principled realism, the United States is responding to the CCP’s direct challenge by acknowledging that we are in a strategic competition and protecting our interests appropriately.
On values, Zoellick says that Beijing is not spreading “anti-American ideologies” nor “does not see itself in a twilight conflict against democracy” whereas the White House report contends that not only is Beijing in an “ideological competition with the West” but that it is challenging the “bedrock of American belief”.
On economics, Zoellick’s speech highlights the mutual benefit of economic engagement, but also notes “increasing signs of mercantilism” from Beijing. The White House report, on the other hand, rips into China for economic predatory and coercive behaviour that are harming Americans and the international community.
On security, Zoellick is largely silent whereas the White House report accuses Beijing of using its new-found muscles for “intimidation and coercion in its attempts to eliminate perceived threats to its interests and advance its strategic objectives globally”.
On international order, Zoellick urged China to be more involved as a responsible stakeholder of the global system whereas the White House report decries the failed promise of convergence, and accuses Beijing of exploiting and reshaping the order to suit its favour, which in its view “harms vital American interests”.
In short, whereas in the 2000s, the US wanted China to become a stakeholder in the global order that it led, today the US has turned towards confronting China because it believes that China is undermining key US interests and values. Of course, the change in US policy is partly a response to a change that happened inside China as well as changes in the international system.
We have put together a table with quotes from these two documents for you to compare across different areas.
3. Fifth Plenum announced
This week the CCP announced that the Fifth Plenum of the 19th Party Congress will be held in October in Beijing. Plenums are the most important political event for the CCP outside of Party Congresses. The upcoming plenum will consider China’s 14th Five-Year Plan.
What is a plenum?
A plenum (“plenary session”) is a formal meeting of the CCP Central Committee convened by its Political Bureau (Politburo). The Party constitution requires that plenums be convened at least once annually. The purpose of a plenum is to review the work of the Politburo, discuss and/or approve major policy proposals, and make personnel changes. The Fifth Plenum will probably last three to four days.
Relationship to Party Congress and the Politburo
The CCP National Congress, the highest Party decision-making body, is convened every five years (the last one was in October 2017 with the next one in 2022). The CCP National Congresses set the party’s direction on major political and economic issues, and selects the members of the Central Committee. The Central Committee exercises the power of the National Congress when it is not in session through its plenums.
Generally, each Central Committee has a term of five years and will convene seven plenums. Immediately after the Central Committee has been selected by the Party Congress, the First Plenum is held to select among its ranks the Party General Secretary and Chairperson of the Central Military Commission, Politburo and Politburo Standing Committee.
Source: Jude Blanchette and Mingda Oiu, Red Flags: Why was China’s Fourth Plenum Delayed?, Centre for Strategic and International Studies, August 30, 2019.
When Party Congresses or plenums are not in session, the day-to-day decision-making lies in the hands of the Politburo. That power is further centralised in a subset of the Politburo, the Politburo Standing Committee, which is the apex of power in the People’s Republic.
Imagine a Matryoshka doll with each doll smaller but more powerful than the one preceding it: CCP members (92 million), Party Congress (2,354 representatives), Central Committee (205 full members, 171 alternate members), Politburo (25 members) and Politburo Standing Committee (7 members).
How important is a plenum?
Outside of the Party Congress, a plenum is the most important event on the CCP’s political calendar. All top CCP leaders are required to attend. In fact, past plenums have marked historical shifts. For example, the Third Plenum of the 11th Party Congress in 1978 moved China towards economic reforms and opening up. Moreover, plenums could also lead to major personnel changes at the top of the Party.
Agenda and assessments
The Fifth Plenum’s focus will be on the 14th Five-Year Plan for national economic and social development, and setting long term goals for 2035.
In the official reporting of the Plenum announcement, the Politburo also put forward its assessment of the current strategic environment and its priorities. First, on the strategic environment facing China, the Politburo assesses:
At present [China’s] development is still in a period of strategic opportunity. This will also be the case in the next forward period. However, [both] opportunities and challenges are evolving. Today’s world is undergoing foundational shifts. Peace and development are still the main themes of the times, but concurrently, the international environment is becoming increasingly complex, and the instability and uncertainties are clearly increasing.
On economic development, the Politburo notes:
[China] has entered a stage of high-quality development. While [economic] development has many advantages and conditions, the problem of unbalanced and insufficient development is still prominent. We must deeply understand the new characteristics and requirements of the development and changes of the main contradiction in [Chinese] society.
The current economic situation is still complex and severe, with great instability and uncertainty. Many of [China’s economic] problems are medium and long-term. We must understand them on the basis of long-term thinking, and accelerate the formation of the new developmental configuration with the domestic market as the principal and international market as support. We must also establish a medium- and long-term coordination mechanism between epidemic prevention and control and economic and social development. We need to keep to the strategic direction of structural change, rely more on technological innovation, improve the multi-cycle macroeconomic planning and control, and achieve a long term balance between stable growth and risk prevention.
On the 14th Five-Year Plan (running from 2021 to 2025), the Politburo notes:
In driving [China’s] 14th Five-Year Plan…the Party’s basic theories, basic line, and basic strategies must be fully implemented…[we must] coordinate development and security, push forward the modernisation of governance system and capability, complete the institutional mechanism for the Party’s leadership of economic and social development. We must also apply the New Development Concept throughout the entire development process and in every field.
4. Lee Teng-hui
The former President of Taiwan Lee Teng-hui died this week at the age of 97. He was the first directly elected President in Taiwan. He was also credited for advancing Taiwan’s turn towards democracy, earning him the nickname “Mr Democracy”. But his views on Japan have also caused much controversy.
It is worth remembering that in contrast to Taiwan’s current political system, Taiwan (or the Republic of China) used to be an authoritarian government. Under Chiang Kai-shek’s rule, martial law lasted 38 years and persecution of political dissidents (including tracking down of those living overseas) were common. The White Terror is now remembered publicly in Taiwan.
Of course, the democratisation of Taiwan did not happen because of one person, but depends on social changes and movements that are shaped by many individuals.
5. Hong Kong
Bad news continues out of Hong Kong. Several things happened this week, which are significant for Hong Kong’s (diminishing) democracy:
- Twelve opposition candidates for the upcoming election were disqualified. The grounds for disqualification include advocating for independence and objecting to the national security law.
- HK to postpone its elections for one year, supposedly over virus concerns.
- Hong Kong police are seeking six people who are overseas for breaking the national security law, including one US citizen.
For #1, it appears that if you disagree with the HK Government, you can’t even be running for an election. If only those who agree with the current government policy can run, what is the point of elections?
For #2, what is the government afraid of? The HK Government is ready to disqualify anyone who opposes it anyway, yet it is still afraid of a rigged election? Sure governments need to be cautious about the risks of more coronavirus outbreaks, but has the HK Government explored options that can ensure both public health and democracy?
#3 appears to be an implementation of the extraterritoriality provision, that anyone anywhere can be charged under the national security law. One of the six and a US citizen Samuel Chu said:
Quote of the week is 先天下之憂而憂，後天下之樂而樂 (Be the first to worry the world’s worries, be the last to enjoy the world’s joy).
The quote is by Fan Zhongyan 范仲淹, a poet and government official, and one of the most famous people from the Song Dynasty. It came from his writing Yueyang Tower 岳陽樓記 and is directed at government officials and political leaders. It conveys a strong sense of duty to the state and people.
If you are in the market for a podcast, check out the new Pekingology. Hosted by the brilliant Jude Blanchette at the Centre for Strategic and International Studies, it aims to: “unpack the behavior of the Chinese Communist Party and implications these actions have within China and for U.S.-China relations.”
On China Story:
- Nathan Watson, Australian iron ore: the danger of American managed trade: Recent attention has been focused on whether Australian iron ore exports would be subject to Chinese economic coercion as relations deteriorate. But if the United States and China are heading into a new Cold War, Australia may face equally significant pressure from the United States to wind back these exports for security reasons.
- Denghua Zhang, Chinese foreign aid could face tough times ahead: Foreign aid has long been used by the Chinese government as a diplomatic tool to expand its influence in developing countries. Despite its impressive growth in the past two decades, Chinese aid faces challenges that limit its impact. China faces the dilemma of needing to consolidate its relations with developing countries by providing more aid while facing the challenge of a likely reduced aid budget due to financial constraints and the economic impacts of COVID-19.