SinoInsight 1
The Chinese Communist Party (CCP) has been unusually “quiet” about its escalating trade conflict with the United States. In a break from the past, no official or semi-official supported anti-American protests have broken out on the mainland. Meanwhile, the CCP propaganda apparatus and “fifty-cent army” has been taciturn, probably the outcome of edicts from Beijing to soften criticism of the U.S. and the Trump administration on the trade war. Party mouthpiece People’s Daily even ran a three-part commentary series which slammed “arrogant” and “exaggerated” writings.
Chinese netizens have been mocking the CCP for its silence and apparent embarrassment over its failure to lower trade tensions with the U.S. A popular opinion being circulated online goes: “If giving away land would resolve the trade dispute, then [the CCP] should give away our provinces [to America]!” (The implication here is that the Chinese people are eager to join the U.S. because they detest CCP rule.)
OUR TAKE
The CCP has long been reliant on the gun (military), the pen (propaganda), and the purse (economic prosperity) to maintain its political legitimacy. With the onset of a trade war and the CCP having problems with the pen and the purse (using the gun would be committing political suicide in this day and age), the CCP is now stuck in an awkward and unprecedented situation. It does not help that the Chinese people are also voicing out their desire to be free from CCP rule and have positive sentiments about trying democracy. Indeed, the CCP’s gloating about its “glorious achievements” on the fortieth anniversary of reform and opening up is proving to be just hot air with the onset of a trade war with the U.S.
We believe that societal problems in China would exacerbate as its economy worsens. Political risks would increase for the CCP as its propaganda apparatus loses control over the narrative, while foreign companies’ exposure to political risks in China would rise correspondingly.
SinoInsight 2
In the first half of 2018, the Party and government heads of 14 provincial capitals were replaced. Also replaced were the chief executives from 19 state-owned enterprises.
In the same period, 26 Chinese officials who were born in the 1970s and after were appointed to key Party and government posts in various local governments. As of June 30, there are a total of 94 “post-70s” officials heading local Party committees and governments.
OUR TAKE
Chinese leader Xi Jinping may have consolidated power to a high degree, but there remain many officials who rose up the ranks during the Jiang Zemin era still holding important posts. One of the methods that Xi has used to thin out the Jiang faction is promoting “young guard” officials from the “post-70s” generation. This personnel movement, when carried out a period of five to 10 years, would allow Xi to grow his power base organically.
In other words, Xi’s grip on power is nowhere near as robust as foreign observers believe, and he still faces substantial opposition from within the officialdom. Xi may have accelerated the promotions of his confidants, but they lack experience and political clout to advance Xi’s policies without facing great difficulties.