Digest

Winter 2020 Issue 66

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The PLA’s Evolving Role in China’s South China Sea Strategy

Oriana Skylar Mastro, Freeman Spogli Institute at Stanford University

Over the course of the global COVID-19 pandemic, the Chinese People’s Liberation Army (PLA) has been actively promoting Chinese claims in the South China Sea through military exercises and operations, materiel deployments, and official statements. As discussed below, such activities are not necessarily acts of aggression but signals to enhance Chinese deterrence against the United States.

 

  • US military activities: Over the past eight months, the US government has countered Chinese expansion in the South China Sea with heightened pressure. In addition to some targeted economic sanctions, most of this pressure has been applied through military means. The US military’s main tool is freedom of navigation operations (FONOPs) in which the US Navy sails a vessel through areas that China has illegally claimed. In the first half of 2020, the US conducted seven FONOPs, as well as several non-FONOP operations, including the flight of two B-1B strategic bombers over the South China Sea. According to a Beijing think tank, the US flew over 40 reconnaissance aircraft over the South China Sea in September 2019. Such activities ensued against the backdrop of heightened US-China political and economic tensions.

 

  • Chinese military activities: In 2020, PLA operational and exercise activities in the South China Sea increased in frequency, a somewhat expected trend as the Chinese military’s capabilities and technologies evolve. In early July, the PLA Navy (PLAN) conducted five days of military exercises in the Paracel Islands, following the docking of a PLAN warship at Woody Island. Later that same month, the PLA moved at least eight fighter aircraft to Woody Island, which were followed by the PLAN’s newly revealed bomber in mid-August. The PLAN also successfully tested a torpedo, launched several ballistic missiles, and held multiple naval exercises in the South China Sea. The China Coast Guard (CCG) also frequents the disputed waters, ramming Vietnamese fishing ships near the Paracel Islands in April and July.
     

  • Increasing Chinese aggression or signaling: Both the deployments of weapons systems to and PLA exercises in the South China Sea suggest that China is trying to enhance its deterrence capabilities without provoking the United States. First, the PLA has not adopted an outright offensive posture. Although the PLA has successfully tested missiles, it has not deployed any such capabilities to the artificial islands, and it has never landed fighter aircraft on any of the Spratly Islands. Additionally, many of the military exercises that the PLA conducted in the past eight months occurred shortly after a US military action or official statement. For example, the deployment of fighter aircraft to Woody Island occurred several days after a US FONOP and Secretary of State Michael Pompeo’s condemnation of Chinese claims to the South China Sea; the PLA launched anti-ship ballistic missiles, which threaten aircraft carriers, days following US aircraft carrier operations in the disputed waters. Notably, with various deployments and exercises, the Chinese state-controlled media often highlights the PLA’s deterrence capabilities as warnings to the US. In this way, increased PLA activity in the South China Sea may be interpreted as a means of enhancing Chinese signaling value.

 

  • Further media signaling: The PLA has publicized its operations via China’s state-controlled media platforms, emphasizing Chinese capabilities in the South China Sea in light of what it describes as instances of American meddling and provocation. Although the Chinese government has never directly indicated that its activities in the South China Sea are warnings to the United States, Chinese media has cited such events as warnings. Moreover, the media affirms the PLA’s commitment to defending the South China Sea should America attempt to militarily challenge its claim. Finally, the media maintains that the US has stoked tensions in the South China Sea as a means of distracting the world from its failings in dealing with COVID-19 at home; one op-ed in China Daily asserts that American provocation in the South China Sea is Washington’s attempt to deflect perceived weakness.

 

The PLA remains cautious in its dealings with the US military, as the United States still holds a strong military advantage in the South China Sea. However, the PLA’s willingness to demonstrate its offensive capabilities, a deviation from traditional Chinese military tactics, suggests growing insecurity in Beijing.

Continuous Purges: Xi’s Control of the Public Security Apparatus and the Changing Dynamics of CCP Elite Politics

 

Guoguang Wu, University of Victoria

Over the course of Xi Jinping’s tenure, purges among the leading cadres of the Chinese political-legal system have become commonplace. The public security sector in particular has become the site of frequent changeover. Such purges in the Chinese public security apparatus, which may be categorized into three distinct waves, indicate that CCP elite politics is increasingly controlled through internal repression and coercion.

 

  • The first wave: Xi Jinping’s ascent to power was coupled with a sizeable political shakeup. Zhou Yongkang, once the leader of the political-legal (zhengfa) system with jurisdiction over the police and public security apparatus at large, was removed from his position, along with many of his high-ranking confidants; this was the first time since 1989 that a member of the Politburo Standing Committee fell from power. Upon his inauguration, Xi was a relatively weak political player. However, his ability to mobilize support from within the public security sector proved vital. In general, it was four groups of public security officials who supported Xi’s initial purge: 1) former protegees of Zhou who switched their loyalty to Xi, referred to in Chinese politics as “traitors”; 2) those with close ties to Shanghai politicians such as former Party chief Jiang Zemin and Party official Meng Jianzhu, who replaced Zhou; 3) those with close ties to Xi’s political allies; and 4) Xi’s long-time associates and allies. The subsequent purges of the public security and zhengfa systems represent an ongoing redistribution of power among the members of these four groups.

 

  • The second wave: The following round of purges began in 2018, following the Nineteenth Party Congress. Many of the Zhou “traitors” fell from power or were sidelined into less powerful positions. Meng Hongwei, a prominent vice minister of public security who served in the position for 14 years, was removed from all of his government positions. Another prominent figure is Fu Zhenghua. During Zhou’s tenure, Fu served as director of the Beijing Municipal Public Security Bureau before being promoted by Xi to the second-highest position in the Public Security Ministry. Both he and Huang Ming, another Zhou protegee-turned-Xi-loyalist, were transferred from the public security apparatus to less prominent ministries. Fu Zhenghua’s role in the Public Security Ministry was filled by Wang Xiaohong, a long-time Xi associate. The second wave of purges saw the downfall of Zhou’s former protegees, many of whom Xi had promoted following their betrayal of Zhou.

 

  • The third wave: In April 2020, Chinese authorities announced that Sun Lijun, a vice minister of public security appointed in March 2018, was under investigation. Despite Sun’s close connections to officials such as Meng Jianzhu who aided Xi in the first wave of purges, he was removed from office, along with several provincial heads of public security bodies with close ties to Meng Jianzhu. Although Meng retired in 2017, there are rumors that he may be the next target of investigations, given the large network of protegees he fostered during his time in office. Currently, the nine leaders of the Ministry of Public Security – the minister, five vice ministers, a Party discipline official, and two senior officers – all have some sort of personal connection to Xi, or to longtime Xi associate Wang Xiaohong. Wang, currently number two in the Ministry of Public Security, is expected to become the minister in 2023. The cadre of officials likely to succeed Wang are already waiting in the wings; all have some personal or professional connection to Wang or Xi, if not both.

 

  • Changing dynamics: Given the series of purges described above, it is possible that removing former allies may become a hallmark of Xi’s consolidation of power. This strategy may be attributed to several factors, including rising discontent among China’s ruling political elite, coupled with their criticism of Xi. Additionally, Xi’s likely goal of attaining life-tenure as Party chief and PRC president requires political support, necessitating loyal allies in powerful positions. The third factor is the issue of succession; in stacking elite positions with his loyalists, Xi is assuring that his successor will be an ally.

 

Xi’s special attention to the public security sector is important to note; unlike the military, which serves as a tool of last resort in power struggles, the public security apparatus is involved in daily political operations, thus making it an important lever of control for Xi.

Will China Eliminate Poverty in 2020?

Terry Sicular, University of Western Ontario

In 2015, China announced a worthy policy goal: to eliminate poverty by the end of 2020. After the investment of substantial financial, human, and political resources, official statements suggest that this target has been met, or is at least very close to being met. However, elimination of poverty – or the illusion of poverty elimination – in the present does not eliminate future poverty. 

 

  • Past poverty policies: From the early 1980s to 2012, the number of rural poor declined by about 600 million following a series of policies promoting farm productivity. However, poverty rates declined unevenly across the countryside; in the 1990s, the government concentrated poverty reduction and development efforts in the poorest counties, largely through targeted industrial and agricultural projects. In the early 2000s, the government instituted the dibao program, providing cash transfers to poor households nationwide. Nevertheless, a substantial portion of Chinese society remains in poverty, in both urban and rural locales.

 

  • The 2020 target: Initially proposed in 2014, the goal of eliminating rural poverty was included in the 13th Five-Year Plan (2016-2020), which states that by the end of 2020, “All rural residents falling below China’s current poverty line will be able to lift themselves out of poverty, all poor counties will be able to rid themselves of poverty, and poverty alleviation will be achieved in all regions.” The goal of lifting 55.75 million people (the 2015 official rural poverty headcount) above the poverty line is ambitious, given that many poor households are scattered across the countryside or located in remote areas. However, it is also a fairly pragmatic and narrow goal, as it excluded urban poor from the target goal and defined poverty using a low poverty line of 2300 yuan per person per year, or $2.30 dollars per person per day. Additionally, in 2015 the number of rural people living below 2300 yuan per year was fairly small, accounting for 4% of the total population.

 

  • Efforts to meet the target: China’s poverty policy strategy is referred to as “Precision Poverty Alleviation” (PPA), as it aims to target households and individuals, not villages and countries. Similar to Mao-era, high-priority policy programs, PPA has been carried out through a “campaign” approach, in which personnel across all levels of government are mobilized to address the goal in question. PPA identifies five types of interventions based on the household in question: (1) economic development through employment opportunities for households with work capabilities; (2) relocation of poor households in mountainous regions to more developed areas; (3) ecological compensation for poor households in ecologically sensitive areas; (4) investment in education for households with children; and (5), social security support for those unable to work.

 

  • Will China Meet the Goal: Although official poverty statistics suggest that China is on track, or close to being on track, to achieving its goal, the veracity of such numbers is debatable. There have been reports of falsified poverty statistics, as well as corruption among local officials that have led to the misallocation of funds and faked entries to the poverty registry. Data published by the National Bureau of Statistics (NBS) appears more reliable than official statistics and numbers published by other government bodies, as they are based on large, annual sample surveys of household incomes and expenditures, not direct reporting by local officials. Regardless of the accuracy of the statistics, achieving the 2020 target does not mean the eradication of poverty in China. The number of people at risk of poverty – including many aided by PPA programs – is far from zero, and the economic livelihoods of the nearly 10 million people relocated from remote regions remain vulnerable.

 

The policy’s definition of poverty does not necessarily reflect what it actually means to be poor in China, or what poverty will look like in the future. Understanding the situation through a relative poverty approach, in which the poverty threshold changes over time with rising incomes, provides a more multidimensional picture of poverty in China. Relative poverty in rural areas is much higher than the rural poverty levels reported by the NBS. Additionally, the rate of relative rural poverty from 2013 to 2018 remained stable at 17%, while the NBS poverty rate declined from 8.5% to 1.7%.

From “China Inc.” to “CCP Inc.”: A New Paradigm for Chinese State Capitalism

 

Jude Blanchette, Center for Strategic and International Studies

Following China’s ascension to the World Trade Organization in 2001, the term “China Inc.” came to describe the far-reaching power of the country’s state capitalist system. As the CCP has become more entrenched in operations up and down the value chain, the once-clear boundaries between state-owned and private firms have become blurred; locating where CCP influence ends and firm autonomy begins is nearly impossible. The result is a new, complex political-economic order – CCP Inc. – in which Party objectives are embedded in the commercial processes of state-owned enterprises (SOEs).

 

  • The origins and rise of China Inc.: In the 1990s, the CCP restructured both state-owned and private firms into corporations, introducing concepts of limited liability and transferable shares, thus corporatizing state-assets. The result was the creation of hundreds of business groups, many of which were granted government subsidies and protections. In 1999, state-owned enterprise restructuring continued, as large SOEs were merged into even bigger conglomerates, over which the central government or local governments had control. Although limited shares were sold publicly, the CCP remained the ultimate owner and controller of these mega firms. By focusing on a select number of SOEs operating in strategic industries (steel, telecommunications, banking, and energy), the CCP ensured that the resulting conglomerates would remain a prominent characteristic of the Chinese political economy. After gaining membership to the WTO, Beijing was set on securing Chinese investments overseas. In the early 2000s, SOEs dominated overseas investment, accounting for more than 80% of China’s outbound foreign investment. However, the goals of the Party-state often clashed with the commercial objectives of the SOEs, rendering China Inc. a much less coordinated network than originally perceived.

 

  • Redefining the CCP’s relationship with firms: The inefficiencies of the China Inc. system were not lost on Beijing’s economic planners and CCP leadership. Following the 2008 financial crisis, the Party-state came to redefine its role; instead of being owner and regulator of state assets and enterprises, Beijing transformed itself into an investor, or an “investor state.” As a result, the Party-state became an increasingly interventionist body, directing SOEs through tools of finance, most notably through state investment entities. These CCP-run entities, which by definition serve the interests of the state, took equity stakes in private, public, and hybrid-ownership firms, allowing the Party-state to pursue directly its strategic objectives through investment. By 2014, there were ten central and over 100 local state-owned capital investment companies.

 

  • Furthering CCP influence over SOEs: At the time of Xi’s ascension to office, the CCP was in a precarious situation. Although membership had ballooned, organizational discipline and loyalty to party ideology had decayed. In an effort to shore up the CCP’s ruling status and capabilities, Xi declared that Party organizations in SOEs should take on a leading role within firms. In October 2017, the Party Constitution was revised, adding that Party committees of SOEs should “set the right direction, keep in mind the big picture, ensure the implementation of Party policies and principles, and discuss and decide on major issues of their enterprise in accordance with regulations.” In other words, SOEs’ Party representatives were to take on a steering position in firm affairs.

 

  • Bigger and better SOEs: In 2003, there were 189 central SOEs. Through mergers, that number now rests at 96, and it will likely continue decreasing this decade. Guided by Party objectives and not beholden solely to shareholders or quarterly results, these SOEs guarantee Beijing’s unrivaled access to technology, infrastructure, and natural resources around the world. Consider COSCO Shipping Group: it has 300 subsidiary companies, a fleet over 1200 ships strong, total assets of $100 billion, equity stakes in a range of other SOEs, and it owns and operates dozens of foreign ports, such as the port of Piraeus in Greece. In 2018, Huawei was awarded a contract to replace the port’s network infrastructure, and in 2019 a COSCO subsidiary acquired Piraeus Europe Asia Rail Logistics, allowing it to run rail into Europe. Two state-run Chinese banks received licenses to set up local operations. This is just one example of the fruits of the CCP Inc. network.

 

The CCP Inc. system rejects the notion that the “state” and “market” operate in opposition to each other. Rather, they work in tandem, each reliant on the other. As global markets stumble out of the COVID-19 pandemic and China tightens its capital purse strings, the resiliency of this system will be put to the test.

China’s Fateful Inward Turn: Beijing’s New Economic Strategy as Spelled Out by the Resolution of the CCP Central Committee’s 5th Plenum

Minxin Pei, CLM Editor

At the 5th plenum of the 19th Central Committee of the Chinese Communist Party (CCP) in October 2020, Chinese leaders announced a new 15-year economic strategy. The strategy’s long-term development objectives emphasize domestic growth and technological self-reliance over foreign interdependence. Although specifics of the strategy remain unknown, analysis of open-source materials, such as Xi’s relevant speeches and the resolution of the 5th plenum, offers an initial understanding of the CCP’s rationale behind the shift, as well as the main components of the strategy.

 

  • CCP reasoning behind the shift: In several of his recent speeches, Xi Jinping has pointed to an increasingly volatile external environment as the main animus for a shift to domestically focused growth. Citing instability and uncertainty in the international system, as well the unilateralism and protectionism of an unnamed foe, Xi positions China’s foreign economic reliance as an issue of national security that must be addressed. In addition to this geopolitical reasoning, Liu He, a vice-premier and Xi’s most trusted economic advisor, offers economic reasoning that necessitates the shift to domestic growth. According to Liu, China has long relied on external markets to achieve growth, as its low per capita income did not allow for a strong domestic market. However, now that China’s per capital income has risen, domestic demand can now sustain growth. Additionally, Liu points to the dangers of Chinese reliance on critical production components from the West, as well as the many challenges currently facing global production and supply chains.

 

  • Generating domestic demand: Although the new strategy will orient development toward domestic growth, the resolution offers few concrete means of achieving such an end. Such plans are forthcoming. Pro-consumption policies and an increase in household incomes feature as important goals in the resolution, though policy specifics remain unknown. Investment will be another source of domestic demand, with high priority projects such as the Sichuan-Tibet Railway, the National Water Network, and others listed in the resolution by name. Additionally, Xi’s speeches and the resolution point to the need for better “domestic big circulation.” In other words, China must undergo a number of market reforms to ease production, distribution, and consumption processes, break up monopolies, and reduce transaction costs, thus improving the economy’s efficiency to nurture domestic demand and subsequent growth.

 

  • Shoring up the supply side: In one speech, Xi points to the vulnerabilities in Chinese production and supply chains revealed by the pandemic as both industrial and national security risks. Such weaknesses are to be addressed through increased reliance on domestic innovation, technology, and critical components, allowing China to maintain self-sufficiency when needed. Each sector must take a “strategic” approach in designing its supply chains. Additionally, increasing China’s competitiveness in sectors in which it already leads, such as telecom and highspeed railway equipment, will increase global dependence on China and offer stronger choke points for national security objectives.

 

  • Technological innovation and self-reliance: Although domestic technological innovation is a key component of supply chain securitization, the resolution dedicates a separate section to this objective. The resolution lists several notable measures to achieve technological self-sufficiency, including tax-based incentives to encourage firms to invest in innovative scientific and technological projects, as well as the reform of state-run research institutions to grant greater research autonomy and strengthen intellectual property protections. Additionally, China seeks to become a leader in life sciences, artificial intelligence, quantum information, and other cutting-edge scientific and technological fields. In this respect, China desires to lessen its reliance on foreign scientific innovation, which will aid in its quest to secure supply chains.

 

  • Lingering questions: Although detailed policies to achieve the aforementioned goals are forthcoming, several general questions remain unanswered. Both the resolution and Xi’s speeches make clear that, although efforts will focus staunchly on domestic growth, the international market will still play a role in China’s economic development. However, the exact nature of this relationship is uncertain. Additionally, Xi’s praise of state-owned enterprises and the prominence of the state-owned economy in the resolution indicate that the state sector will be the leading force in implementing the new economic strategy.

Quarterly digests written by Genevieve Collins

Digest

Fall 2020 Issue 65

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Investigation of a Death Long Feared: How China Decided to Impose its National Security Law in Hong Kong

 

By Minxin Pei, CLM Editor

China’s recent imposition of a national security law (NSL) in Hong Kong has gutted the “one country, two systems” (OCTS) model. Open-source materials shed light on the obscure decision-making process that led to the law’s implementation.  Below are the main findings.

 

  • The Umbrella Movement in 2014 likely served as the main turning point for CCP leadership in determining future plans for the status of Hong Kong. However, it was not until Xi Jinping’s speech delivered in Hong Kong on July 1, 2017, the 20th anniversary of the region’s return to China, that these plans were partially articulated to the public, albeit vaguely. Xi also coined a phrase in his 2017 speech that later became a marker for Beijing in evaluating the severity of the crisis in Hong Kong: his “bottom line.” In his speech, Xi declared that “any activities that endanger national sovereignty and security, challenge the authority of the central government and the authority of the Basic Law of the Special Administrative Region, and use Hong Kong to engage in infiltration and sabotage in the mainland touch [our] bottom line and will absolutely not be permitted.”

  •  Between Xi’s 2017 speech and the unrest in Hong Kong in 2019, Chinese authorities were preparing various options, including its own national security law, to assert control in Hong Kong. The New York Times revealed that Chen Duanhong, a Peking University academic specializing in constitutional theory, had submitted a report entitled “The Dilemma of Enacting a National Security Law in Hong Kong” to the General Office of the Central Committee in 2018.

 

  • By the end of July 2019, the protests in Hong Kong had apparently breached Xi’s “bottom line.” On July 22, the day after protestors defaced the national emblem on the building of the central government’s Central Liaison Office in Hong Kong, official spokespeople for both the Chinese Foreign Ministry and the Hong Kong and Macau Office of the State Council employed Xi’s “touching the bottom line” in describing the protests. Carrie Lam used the same phrase, also on July 22, as she condemned the protestors during a press briefing. Given the coordinated use of identical language, it is likely that Beijing’s top leaders had issued instructions to disseminate throughout the Party on how to characterize the protests directly following the events of July 21. In the following days and weeks, the CCP’s news and propaganda network also picked up language identical or extremely similar to the language of Xi’s 2017 speech.

 

  • In late August, the Politburo set the date and agenda for the Fourth Plenum of the 19th Central Committee for late October. The full text of the Fourth Plenum’s resolution, released on November 6, contains Beijing’s plan to take control of Hong Kong. It included an unspecified “legal system and enforcement mechanism to safeguard national security” in Hong Kong. At the time, this was interpreted as yet another attempt by Beijing to pressure Hong Kong into passing an NSL. However, in January and February, the CCP appointed loyal Party hardliners to key positions, including the director of the Central Liaison Office and the head of the Hong Kong and Macau Office. Soon thereafter, China announced its decision to impose the new national security law in May 2020.

 

  • Given that the CCP employs plenums to endorse decisions already made by the top leadership, it is likely that top Chinese leaders had already decided upon an NSL, likely during the meeting of the Politburo on August 30, when the convention of the Plenum was also decided upon. From this we may determine that Chinese leaders had approved an NSL by August 2019, at the very latest. To be sure, to maintain maximum flexibility, the Chinese government did not take the final official step until the opening of the annual session of the National People’s Congress in late May 2020. 

 

Tracing the decision process in the case of China’s NSL for Hong Kong shows that by laying down a set of hardline positions or markers in his speech on July 1, 2017, Xi significantly reduced his room for maneuver after mass protests directly challenging Beijing’s authority erupted in Hong Kong in 2019.  He faced the dilemma of retreating and losing credibility and cracking down and destroying the “one country, two systems.”  At the end, he opted for the latter, most probably because it provided short-term political benefits while its costs – the loss of Chinese international credibility and escalation of tensions with the West – are long-term. 

The Chinese National Security State Emerges from the Shadows to Center Stage

By Tai Ming Cheung, University of California, San Diego

From the recent imposition of the National Security Law in Hong Kong and the construction of fortified islands in the South China Sea, to the reform of civilian national security strategies and a sweeping anti-corruption campaign, Xi Jinping has been unrelenting in his quest to build China’s national security capacity in the face of acute international and domestic challenges. This transformation has profound implications on China’s ability to respond to present and future security threats.

 

  • China is in the process of pivoting from a largely defensive national security state, mainly focused on domestic security, toward a hybrid security state engaged in both defensive and offensive posturing. In addition to border and domestic defense, this plan couples extraterritorial pre-emptive use of force with internal repression and economic mobilization to support the state’s external policies. No single event or shock triggered China’s move toward pursuing enhanced national security. However, Xi’s ascension to office in late 2012 marked a fundamental shift from the traditional realpolitik perspectives of his predecessor Hu Jintao.

 

  • Organizationally, Xi unveiled both the Central National Security Commission (CNSC) and the Overall National Security Outlook (ONSC) in April 2014. The former reports directly to the Politburo Standing Committee and has been described as the “nerve center” of national security decisions. A high level of secrecy obscures the CNSC’s activities from public view. The ONSC is the overarching national security framework. It couples ideological purification with a repressive national security state, reforms justified by a central premise: China is now faced with internal and external factors unrivaled in their complexity. In this way, Xi reconceptualized national security as a means of combating non-traditional, political, and emerging threats, thus necessitating a new national security approach.

 

  • The motivating factors include both threats and opportunities. The three threats are: 1) Invasion, subversion, and splittism, which include disputes in the South and East China Seas and unrest in Tibet and Xinjiang; 2) disturbances to reform, development, and stability processes, such as issues of unemployment, social inequality, and corruption; and 3) disturbance to China’s socialist system, including domestic authority. This is the ultimate concern of CCP leaders, who perceive domestic and international forces (particularly western constitutional democracy) pushing for regime change. The three opportunities include 1) China’s uniquely rapid rise to global power and its disruption of the global economic status quo; 2) the renewal of the Chinese nation due to the central role of the CCP; and 3) China’s unprecedented capabilities and confidence in soon achieving great power status. However, the leadership recognizes that these opportunities are ephemeral, necessitating the quick adoption of an assertive national security posture to respond to the aforementioned threats.

 

  • Short-term results: a comprehensive anti-corruption campaign within public offices; a political discipline campaign to investigate senior Party members; an overhaul of the civilian national security apparatus; full reform of the military high command; and the 2015 passing of a National Security Law (NSL), which encompasses all conceivable elements of state security, from energy, food, and nuclear security to political, military, ethnic, religious, and even outer space security. The NSL has secured the Party’s grip on power, providing a sweeping legal framework and justification on which to build the new national security state (NSS).

 

  • The Chinese NSS has five main coercive arms: the public security system, which deals with issues ranging from traffic management to cybersecurity; the state security/intelligence and counter-espionage system, composed of the Ministry of State; the People’s Liberation Army, the most politically influential and powerful component of the Chinese NSS; the People’s Armed Police, which Xi recently brought under the domain of the Central Military Commission; and the political-legal system, composed of public and state security and judicial bodies. The NSS’s far-reaching scope has enabled it to proactively prevent security threats in a way previously impossible, realizing Xi’s call to respond to emerging and nontraditional threats.

 

  • Challenges facing the NSS: Despite China’s initial slow response during the first weeks of the virus’s spread, CNSC leadership has applauded the national security state’s capacity at dealing with the pandemic, crediting its highly centralized and coordinated leadership system. These assets are, and will continue to be, crucial in dealing with the prolonged US-China struggle. Given the crisis’s increasingly all-encompassing nature, Xi’s integrated, holistic, and centralized approach to national security will work in Beijing’s favor.

 

In the years ahead, the national security state will increasingly be centralized as Xi continues to place himself at the core of critical NSS bodies and mechanisms. However, given that Xi has, for the most part, appointed political allies rather than seasoned national security experts to senior NSS positions, the longevity of China’s NSS in a post-Xi world remains questionable.

The Saohei Campaign, Protection Umbrellas, and China’s Changing Political-Legal Apparatus

Sheena Chestnut Greitens, University of Texas at Austin

 Xi Jinping launched a campaign called the “Crack Down on Underworld Forces” (saohei) in 2018. The three-year crackdown has significantly impacted China’s internal security apparatus (known as the political-legal system).

 

  • Targets of the campaign: criminals and “protection umbrellas,” or members of the law-enforcement apparatus who harbor individual criminals or organized crime networks. Saohei aims to investigate and punish all criminal and governmental actors involved in protection schemes, thus cleansing the party at the grassroots level. The CCP rolled out the saohei campaign rapidly. In under two weeks after the CCP’s initial announcement in late January 2018, four administrative and judicial departments released regulations for the campaign. By the close of 2018, over twenty other departments had announced their own specific guidelines for saohei, including those that wield authority over core industries, reflecting the comprehensive and far-reaching nature of the campaign.

 

  • Who’s leading the crackdown: The campaign’s main coordinating body, the National Saohei Office, is headed by Chen Yixin, the secretary-general of the Central Political and Legal Commission (CPLC) and close Xi associate, while the National Leading Small Group for the Saohei Campaign is headed by Guo Shenkun, head of the CPLC. The campaign was divided into three, year-long stages, with each year targeting a set geographical location.

 

  • Scope of the crackdown: the campaign’s first round covered Hebei, Shanxi, Liaoning, Fujian, Shandong, Henan, Hubei, Guangdong, Chongqing, and Sichuan. This year-long period reportedly eradicated nearly 100 criminal groups and investigated almost 1800 corruption and protection umbrella cases.  A report released by the Supreme People’s Procuratorate (SPP) in March 2019 reported that it authorized the arrests of 11,183 people suspected of gang-related crimes. The second round, which began in April 2019, covered Tianjin, Jilin, Zhejiang, Anhui, Jiangxi, Hunan, Guangxi, Hainan, Guizhou, Yunnan, Xinjiang, Beijing, Shanxi, Heilongjiang, Inner Mongolia, Shanghai, Jiangsu, Qinghai, Gansu, Tibet, and Ningxia. Official media reported an increase in prosecutions for involvement in protection umbrellas; another SPP report released in May 2020 lists 30,547 prosecutions for gang-related activities, 67,689 prosecutions for criminal activity, and 1385 prosecutions for actors involved in protection umbrellas. Data for 2020, the campaign’s third and final full year, are not yet available. However, preliminary data on the first six months of 2020 reflects further expansion of the campaign’s breadth.  Among those investigated and punished were 13 provincial- and ministerial-level cadres, over 13,000 department/bureau-level cadres, 9,000 country/department cadres, 33,000 township/department cadres, and 39,000 general cadres. This data reflects the campaign’s focus on low-level government workers and bodies.

 

  • A new campaign is looming: Although the Saohei campaign is set to conclude in early 2021, its leaders have already announced a new “education and rectification” campaign to follow in its wake. The new campaign has four major goals: root out disloyal and dishonest party members, implement greater supervision over enforcement and judicial bodies, promote model examples of law enforcement officials, and expand the ability and capacity of law enforcement agencies and individuals.

 

A rectification campaign so all-encompassing of the political-legal system has not yet been implemented during the post-Mao era, suggesting Xi’s intention to consolidate personal power and purge rivals from party ranks. Although this forthcoming education and rectification campaign will target the lower ranks of the political-legal apparatus, it will complement Xi’s recent successes in replacing top political-legal leaders, such as the minister of Justice and deputy minister of Public Security, with his own personal associates.

China’s Economy Bounces Back, But to Which Growth Path?

By David Dollar, The Brookings Institution

Managing the COVID-19 Pandemic Part II: The International Dimension

Michael Swaine, The Carnegie Endowment for International Peace

Quarterly digests written by Genevieve Collins

Although China is leading the pack in its economic recovery, its road to recovery is not a simple reversion to the old ways and tactics.

 

  • Immediate impact of COVID-19: The Chinese economy came to an abrupt halt after the country imposed strict lockdown measures in February. An independently calculated index from Yicai Global tells us that GDP growth was normal in January but substantially declined in February to a rate nearly –20% compared to the growth rate of February 2019. GDP growth recovered slightly in March but was still negative. The Yicai Index determined a –6.7 growth rate for the first quarter, followed by –4.4% in April, 0.6% in May, and 1.4% in June, reflecting a slow but steady return to positive growth. However, growth was, and continues to be, uneven across and within sectors. The manufacturing sector experienced a good month of exports in April, likely because of pent-up demand, especially for medical equipment and supplies. However, manufacturing and exports experienced a downturn in May and June, while non-manufacturing sectors started to recover. The auto industry is experiencing a small surge in demand, while air and rail travel have both sharply contracted. Hospitality and entertainment services also hit a downturn and have yet to recover, while delivery services have experienced substantial growth. Moreover, the boom in construction is a reflection of the housing market’s successful recovery, as well as the government’s effective stimulation of infrastructure projects.

 

  • Projections: China will likely experience a low but positive growth rate for 2020, with various forecasts ranging from 1.0% to 2.5%. Compare this to the projected –8% growth rate for the US. Moreover, China will likely experience healthy positive growth in 2021, as the IMF forecasts 8.2%. The US, by comparison, is projected to rebound by 4.5% in 2021.

 

  • More US-China decoupling:  The first and most immediately felt long-term change is China’s decreasing dependency on exports. Prolonged economic weakness among importing countries means that China cannot rely on exports to spur immediate recovery. This issue is closely related to the US-China trade war. Although China and the US negotiated a deal in January 2020 requiring China to purchase an additional $200 billion of US goods and services, this is an impossible goal to meet. Most economists do not see the deal surviving for two years. This will likely necessitate greater economic de-coupling between the two countries. China is pursuing enhanced ties with European, Asian, and African states. China has already started this process by signing on to the Regional Comprehensive Economic Program (RCEP), a free-trade agreement among the ASEAN states, China, South Korea, Japan, Australia, and New Zealand. This deal will largely, though not entirely, offset the drop in world incomes caused by the US-China trade war.

 

  • Financial reform needed: The current state-owned, bank-dominated system worked well during China’s export-growth phase in the 1990s and 2000s. But now, with growth dependent on productivity and innovation, the present system is proving inefficient and stagnant. Moreover, the presence of high leverage in the economy prior to the onset of the pandemic put China in a weak position to stimulate the economy. Compared the US’s fiscal stimulus of about 10% of its GDP, China’s response amounts to only 5%.  China needs to open up its market to international banks and institutions, make interest rates more flexible, and de-bureaucratize the process of stock and bond financing for firms.

  • Social safety net needs strengthening: COVID-19 has exposed the weakness in China’s social safety net, especially for the nearly 300 million migrant workers. The vast majority work in urban areas but are registered through the hukou system in rural locales, meaning social benefits do not move with them. As such, about 200 million of these workers do not have access to public health and education services or pensions. Another issue is China’s aging population. By 2049, the population over the age of 65 will double to 400 million. The lacking health systems in rural parts of the country where most of this aging population resides will become all the more strained. Because of these reasons and the drop in private consumption due to the pandemic, now is the ideal time to abandon the hukou system, allowing migrant works to access pensions, health insurance, and education where they work.

 

Although China is leading the world in its economic revival, a quick “V-shaped” recovery is neither attainable nor advantageous. The pandemic has made even clearer the threats faced by the Chinese financial system. Implementing reforms to both the financial and social systems would advance China’s efforts in the long run.

China’s international COVID-19 strategy consisted of three elements: 1) China’s willingness to work with the international community through diplomacy, bilateral and multilateral efforts, and propaganda; 2) defending against foreign criticism of China’s lacking domestic response in early 2020; and 3) in rebutting such criticism, Beijing has attempted to prove the superiority of China’s political system over western democracies, such as the US.

 

  • Charm offensive: Beijing launched a comprehensive campaign to fight the global spread of the virus through open contact with foreign leaders, heads of international organizations, scientists, and doctors. By late May, China had sent nearly 30 medical teams around the world and provided assistance to 150 countries and four international organizations. This was in addition to establishing various inter-country best-practices sharing mechanisms and implementing the Debt Service Suspension Initiative for nearly 80 countries. Beijing has also used the opportunity to call for greater international cooperation on global health matters, even proposing a “Health Silk Road.”

 

  • Propaganda blitz: China has unleashed the full power of its news and propaganda apparatus to counter foreign criticisms of its initial poor handling of the pandemic. Various state-run media outlets have detailed the foreign aid and assistance provided by China and the positive responses from recipient countries. Additionally, it has been used to deflect blame for China’s initial mishandling of the virus in the hope of boosting Chinese standing, not only in international eyes but in the mind of the Chinese public. In response to international calls for independent inquiry into the origins of the virus, Chinese officials, including Xi Jinping, have called on the international community to set aside criticism and instead focus on international cooperation. Other officials have rebutted criticism by emphasizing the amount of foreign aid China provided in the wake of the virus’s spread.

 

  • “Wolf Warrior” diplomats: Some Chinese officials have used particularly harsh language or unfounded claims in refuting critics, a relatively new phenomenon termed “Wolf Warrior diplomacy” by Chinese observers. This “Wolf Warrior diplomacy” is a likely reaction to multiple factors: Xi Jinping’s call on Chinese officials to express a “fighting spirit” in response to foreign criticism, China’s growing international clout, a younger and more outspoken generation of Chinese officials, and resentment due to continued attacks on China in the wake of the virus.

 

  • Pot calling kettle black: In rebutting foreign criticism, China has compared its own approach to the failure of many democracies, particularly the US, in coping with the pandemic. In a June speech, Xi Jinping declared that China’s control of the virus “demonstrated the remarkable political advantages of the leadership of the Communist Party and the socialist system of our country.” Various news and propaganda pieces have praised the superior Chinese response in comparison to the failings of multiple western political systems.

 

  • Holding the line on WHO: In response to Trump’s initial decision to suspend WHO funding in light of perceived WHO favoritism toward China, Xi addressed the World Health Assembly on May 18, stressing China’s early cooperation with the WHO and applauding the international organization’s important work. Later in the month, Foreign Minister Wang Yi reiterated that the WHO does not serve individual country’s interests, even those that provide more funding than others (a subtle jab at America). However, Washington’s own criticism and defunding of the WHO and baseless attacks of China have undoubtedly damaged America’s international standing, too.

 

In sum, China’s international actions in response to COVID-19 are wide-ranging in their respective successes and errors. Many Chinese-led efforts have contributed to combating the virus abroad, boosting Beijing’s global image in the process. Moreover, state-controlled media has been successful in furthering positive Chinese narratives. However, perhaps the most negative consequences have resulted from increasingly sour relations with the United States.