Neican: 23 August 2020

China Neican is a weekly column on the China Story blog written by Yun Jiang and Adam Ni from the China Policy Centre in Canberra. 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. You can find past issues of Neican here.

1. Economic statism and marxist political economy

A recent article in The Economist looked at the rise of China’s new state capitalism, arguing that:

Xi is not simply inflating the state at the expense of the private sector. Rather, he is presiding over what he hopes will be the creation of a more muscular form of state capitalism. The idea is for state-owned companies to get more market discipline and private enterprises to get more party discipline, the better to achieve China’s great collective mission. It is a project full of internal contradictions. But progress is already evident in some areas. […]

It is getting harder to distinguish between the state and private sectors. It is getting harder to distinguish between corporate and national interests. And for all its inefficiencies, contradictions and authoritarianism, not to mention its increasingly pious cult of personality, it is getting harder to claim that state capitalism will hobble China’s attempts to produce companies and master technologies that put it on the world economy’s leading edge.

The Economist’s conclusion warns us against the “complacent and dangerous underestimat[ion] of China’s potential trajectory” based on the notion that state capitalism can’t work. This is a surprising conclusion, especially for The Economist.

From our perspective, Xi’s version of state capitalism is based on three core elements. The first is stronger Party control over the economy. For example, a leading role for state-owned enterprises. And for private enterprises, party committees have mushroomed, and these committees have become more influential in business decision making.

The second is enhanced legal, administrative and financial systems to support of the economy. Essentially, on non-political matters, the Party is trying to make the regulatory and legal environment more conducive for private enterprises.

Third is the integration of state and private interests. This includes the increasing number of partnerships between state-owned and private enterprises, and the clear articulation of national priorities, including through industry policy.

We have seen mixed results from all three streams of efforts above. For example, in enhancing legal systems, even as business red tape is cut, corruption continues to be rampant. The jury is out on whether Xi’s statist economic development could work for China in the long run. 

The fundamental problem we keep coming back to is the dominance of CCP’s political writ over economic decision making, public or private. At minimum this leads to inefficiencies, including corruption. At the riskier end, it enables economic catastrophe as shown by the painful lessons from the Mao era.

Regardless of its efficacy, understanding where this economic statism comes from can be useful. To many outside China, Marxist teachings on political economy may seem grossly outdated in this era of connectivity and technology. But this is not so for the Party. Indeed, Xi’s economic statism is based on the foundation of Marxist political economy theories.

In the latest issue of Party journal Qiushi, Xi has an entire article dedicated to this topic (based on a November 2015 speech). Here are a few quotes from the horse’s mouth on the relevance of Marxism for Xi’s approach to political economy:


Nowadays, there are various kinds of economic theories, but the foundation of [China’s] political economy can only be Marxist political economy, not other economic theories.


Some people believe that Marxist political economy and “Das Kapital” are both outdated. This conclusion is arbitrary, and indeed, wrong. Putting aside the long term, just from the international financial crisis, many capitalist countries have continued to suffer economic downturns, serious unemployment problems, increased inequalities, and deepening social conflicts. The facts show that the inherent contradiction between the socialisation of production and the private possession of the means of production still exists in capitalism.

Marxist political economy for Xi, among other things, means that “the mainstay status of public ownership and the leading role of the state-owned economy must not be altered.” Beijing’s experience from the COVID-19 pandemic and the US-China decoupling currently underway are likely to reinforce the need for more, and not less, state involvement in the Chinese economy.

2. Xi’s new rectification campaign

Chinese party-state’s legal and security apparatuses, including the courts, procuratorates and the police force, will undergo nation-wide rectification for a year from 2021 to early 2022. The campaign officially aims to root out disloyalty to the party, abusive and corrupt behaviour, and enhance party control over the legal and security apparatuses.

While these are undoubtedly some of the aims, the unstated paramount objective is to further consolidate Xi’s control over the coercive apparatuses of the party-state. He will be seeking to achieve this through selective purges. This campaign forms a key part of a larger groundwork for Xi’s continued rule past the 20th Party Congress in 2022.

Like Xi’s anti-corruption campaign between 2013 and 2017, in this campaign, the political logic of purging enemies will be married with the governance logic of reducing abuses and corruption. The message is simple: get in line, or else…

What will this campaign actually look like? Well, we can be sure there will be mass propaganda, study sessions, mobilisation, denunciations, official investigations, and verdicts. During the campaign, officials will be encouraged to inform on their colleagues in the highly-charged atmosphere. In fact, pilot programs are underway with 21 cadres already under investigation. The campaign will predictably end with celebrations and declarations of all-round success.

The Ministry of Justice has characterised the upcoming campaign in the following way: “this is a self-revolution of scraping bones to rid the poison, and a cleansing like the ‘Yan’an Rectification Movement’. Mention of Yan’an Rectification 延安整风 is quite chilling. While Party historiography portrays it in a positive light, as a campaign of “thought reform” that forged common purpose and iron will, other perspectives can enlighten…

Yan’an Rectification (1942 to 1945) was the first mass ideological movement under Mao. The goal was to forge the ideological conformity, political unity and organisational coherence necessary for future struggle. To do this, Mao’s enemies were purged, and the liberal idealism of the May Fourth Movement was stamped out in favour of the strict and militant dogma of communism and (what became known as) ‘Mao Zedong thought’. Criticism, self-criticism and confession, struggle sessions, and torture were commonplace. More than 10,000 were killed during these rectification years. All subsequent CCP political campaigns, including the Anti-Rightist Movement (1957-1959), the Socialist Education Movement (1963-1966) and the Cultural Revolution (1966-1976), were built on the model developed during the Yan’an rectification years.

Moreover, Yan’an was where Mao set the foundations to his cult of personality, which was to have tragic implications for China in the 1950s and 1960s.

Xi is not Mao; today’s China is far moved from the China during the high Maoism. But these bloodstained lessons of yore must inform our thinking on the trajectory of the People’s Republic as it travels down the road of Xi’s vaunted “new era”, in which many of his own ‘Xi Jinping Thoughts’ have an eerie resemblance to Mao’s.

3. The Guo Wengui connection

Trump’s former counselor and chief strategist Steve Bannon has been charged with fraud and money laundering. Notably, he was arrested on board the yacht of Guo Wengui (also known as Miles Kwok). Since leaving the White House, Bannon has been focusing his attention almost exclusively on China, portraying himself as a vanguard of an anti-CCP crusade.

Bannon has a close relationship with Guo, a wealthy exiled Chinese businessperson. They were both involved in GTV Media, now under investigation. GTV Media claims that it aims to be “the only uncensored and independent bridge between China and the Western world.”

Guo is a controversial figure. He made his fortune in China, unlike most outspoken exiled dissidents. His hyperactivity on social media and flamboyant style has helped him build a large following, especially among the Chinese diaspora. Some have lauded his criticism of the CCP and believe his insider knowledge will help expose its corruption and ultimately bring its downfall. But there are also those who believe that Guo is a self-aggrandizing narcissist who is more than willing to cut deals with Beijing when it suits him.

Neither Guo’s claims about individual CCP leaders nor others’ claims about Guo have been verified. Nevertheless, his connections to powers in Washington means that he may have had some role in shaping the Trump Administration’s attitude towards China.

The Bannon-Guo connection is an example of the linkages that sometimes can develop between far-right groups and anti-CCP groups. Another prominent example is the active campaign supporting President Trump by Epoch Times, a Falun Gong newspaper. Many Chinese dissidents, such as Chen Guangcheng, have publicly supported Trump’s tough stance on China. Many conservative Republican politicians, such as Tom Cotton, have also spoken out on human rights issues in China, such as Hong Kong.

Human rights and democracy in the US have deteriorated under the Trump Administration. But some of Trump’s supporters turn a blind eye to this and continue to support him, simply because he is “tough on the CCP” To Trump and other far-right politicians, “tough” on the CCP gives them human rights credentials. It can also serve as a handy distraction from domestic issues, as we have seen with COVID-19 responses.

A marriage of convenience based on a common enemy rather than convergence of principles not only makes strange bedfellows, but is also unlikely to stand the test of time.

4. LGBTQ in China

ShanghaiPRIDE announced abruptly that it has cancelled all activities, after 12 years of running, with reports that team members of ShanghaiPRIDE have been questioned by the police.

LGBTQ issues are still controversial in China. On the one hand, some parts of the media (especially the outward-facing ones, such as People’s Daily on Twitter) seemingly support LGBTQ rights in China. On the other hand, the National Radio and Television Administration routinely censors LGBTQ-related content in films and television shows . For example, the Untamed 陈情令, a TV show from last year that gained a wide following outside China, changed the relationship between the two main male characters from lovers to friends, as part of adaptation from a web novel. In general, discriminatory laws exist, and the attitude can be summarised as “no approval, no disapproval, no promotion” (不支持,不反对,不提倡).

In ancient Chinese literature, there are quite a few famous stories about homosexual relationships. The most famous one, “Cut Sleeve” 斷袖, was from the Han dynasty. “Cut sleeve” was a term that is often used for gay men. A common term for lesbians was “Polish Mirror” 磨镜. Two other prominent stories were from pre-Qin times: the story of shared peach 分桃 and the story of Lord Longyang 龍陽.

Compared to ancient times, the Chinese Government has been less tolerant of gay people. Prosecution of homosexual acts became the dominant trend from the late Qing and early Republican era. Under the People’s Republic, homosexuality was only decriminalised in 1997. It was classified as a mental illness in China until 2001.

Attitudes are changing. However, conservatism, family pressure, and discrimination remain, which creates significant barriers for LGBTQ people to be open about their sexual orientation or identity.In contrast to the legal barriers in the PRC, Taiwan became the only country in Asia to legalise same-sex marriage last year. Taiwan is also the home of the Rabbit God temple, the world’s only religious shrine for homosexuals. The Rabbit God is the deity responsible for homosexual love (and incidentally rabbits are featured prominently in the Untamed).

Quote of the week


A Spirit Independent, a Mind Unfettered

These famous words are from the epitaph written by 陳寅恪 Chen Yinque (1890-1969) in commemoration of 王國維 Wang Guowei (1877-1927). Wang and Chen are among the greatest scholars of modern China. In June 1927, Wang committed suicide by drowning himself in a lake at the Summer Palace. He was commemorated as a dignified scholar with an independent spirit in a tumultuous era of violence and upheaval. Wang’s life coincided with the late-Qing period and the advent of the Chinese Republic.

Fast forward 26 years to 1953. In the aftermath of decades of war and revolution, the communists had come to power. 郭沫若 Guo Moruo, the first President of the Chinese Academy of Sciences, most likely with Mao’s consent, offered Chen a prestigious position as the head of a history research institute. Chen, in his reply, invoked the spirit of Wang and the epitaph, emphasising that scholarship must be underpinned by independence and freedom of inquiry. The new regime’s political dogma, ideological conformity and anti-intellectualism, for Chen, was at odds with the pursuit of true scholarship.

A decade later during the Cultural Revolution, Chen, by this point blind and frail, would be labelled a “reactionary academic authority” and suffer terrible indignities. One of the greatest modern Chinese historians and a staunch defender of intellectual freedom, Chen supposedly uttered these words in 1969 as he lay dying: “Chairman Mao is great!” The bitter irony of these words was evident, for Mao and his revolutionary horde had sought to destroy the intellectual tradition and freedom that Wang was celebrated for, and which Chen cherished.

Back to the present…freedom of thought and intellectual freedom is again under serious threat in Xi’s China, as the Party tightens its grip on Chinese society. 许章润 Xu Zhangrun, an outspoken law professor, has written in a number of influential articles in recent years criticising Xi Jinping and his regime. For his audaciousness of speaking his mind to power, he has been harassed, detained and barred from leaving China. In July, he was unceremoniously fired from his Tsinghua University post.

This week, the Fairbank Center for Chinese Studies at Harvard University appointed Xu as an Associate in Research in a symbolic gesture of solidarity to Xu and the oppressed intellectuals in China that many see him to represent. In his eloquent reply, Xu invokes Chen’s epitaph for Wang and that spirit of intellectual freedom and persistence:


The exemplary significance of this invitation relates directly to indomitable individuals with unbending character, as well as to those who would truly champion ‘an independent spirit and intellectual freedom’. After all, if one lacks an independent spirit there is little chance that you can ever ‘break free of the shackles of mundane ideologies’. Without intellectual freedom how can scholars possibly traverse the boundless realm of the mind without impediment?

For it is through Independence and Freedom alone that we mere flesh-bound mortals, individuals inured to this commonplace life in a secular world, can hope to aspire to the sublime. And it is in that we may pursue both plenitude and advancement, even as we live in a tireless diurnal reality calibrated by the rising sun and the waning moon. So then we strive, no matter how hesitant our step or how inconsistent the passage forward may prove to be.

It is here, yes, in the here and now, that those who are devoted to the life of the mind can follow The Way of Learning and resist thereby the blandishments of power. They can offer some worthy model of rectitude to those countless others who would seek it, and even have the courage to persist no matter ‘that there is a sharpened sword above one’s head, hanging there by the thinnest simple thread.’ And so I too will persist and refuse to submit and in this truly intersect with eternity.

(emphasis added; translation by Geremie Barmé)

Xu Zhangrun at the stele commemorating Wang Guowei on the campus of Tsinghua University in Beijing. Chen Yinque’s famous epitaph is on the backside of the stele. Photo source: China Heritage.

This week on China Story:

  • Straton Papagianneas, Smart Courts: toward the digitisation and automation of justice: The automation and digitisation of justice (司法信息化 ‘judicial informatisation’) in China has been ongoing for two decades. The latest development is the emergence of “smart courts” (智慧法院), which are part of the Chinese party-state’s efforts to reform and modernise its administration of justice and governance capacity. The advent of Smart Courts is an example of the willingness of the party-state to harness new technologies for its governance reform goals. Technology is seen almost like a ‘cheat code’ that can bypass the long and painstaking process of genuine structural reform in the judicial system.
  • Ling Li, Xi’s 2021 political-legal rectification campaign: A new nation-wide rectification campaign targeting political-legal institutions, including courts, procuratorates, police, prisons, and administrative bodies for lawyers will begin in 2021 and run for one year. The campaign has four main tasks: removing the “herd-harming horses”, purging “two-faced” men who are disloyal and dishonest to the Party, thorough investigation on those providing protection to “black and evil influences”, and in-depth investigation into corruption in law enforcement and judicial agencies that have persisted after the 18th Party Congress.