Support for the private economy; Kerry leaves Beijing; Wang Yi meets Kissinger; Gallium

Summary of today’s Essential Eight:

1. Support for the private economy - After a multi-year beating of the private sector, the Party center is now showering private business with love, in what is likely sign of how worried policymakers are about the economy and the destruction of confidence over the last several years. On Wednesday the General Office of the Communist Party of China Central Committee and the State Council issued the 31 point “Opinions of the Central Committee of the Communist Party of China and the State Council on Promoting the Development and Growth of the Private Economy”. These measures follow a series of meetings between senior officials and private executives that signaled support. Perhaps this renewed demonstration of affection for the private sector will work in boosting confidence and reviving animal spirits, but it is understandable if some private entrepreneurs remain wary, given both the history of the Party’s treatment of private business and some of the language in the document.

The Party is not getting out of their business. Section 21:

(21) Improve the mechanism for ideological and political construction of private economy figures. Actively and steadily carry out the work of developing Party members among the advanced individuals representing the private economy. Carry out in-depth education on ideals and beliefs and socialist core values. Educate and guide Party members in the private economy to firm up their ideals and beliefs, play a pioneering and exemplary role, and resolutely implement the Party's theories and policies. Actively explore and innovate the ways of Party building in the field of private economy.

（二十一）健全民营经济人士思想政治建设机制。积极稳妥做好在民营经济代表人士先进分子中发展党员工作。深入开展理想信念教育和社会主义核心价值观教育。教育引导民营经济人士中的党员坚定理想信念，发挥先锋模范作用，坚决执行党的理论和路线方针政策。积极探索创新民营经济领域党建工作方式。

The document also calls for supporting private firms to fulfill their social responsibilities:

(28) Support private enterprises to better fulfill their social responsibilities. Educate and guide private enterprises to consciously bear the social responsibility of promoting common prosperity, actively build harmonious labor relations within the enterprise, promote the construction of a community of interests for all employees, and let the results of enterprise development benefit all employees more fairly. Encourage and guide private economy figures to be doers of development and contributors to the new era, realize personal value at a higher level, show a good image of abiding by laws and regulations and social ethics to the whole society, and achieve wealth with responsibility, wealth with righteousness, and wealth with love. Explore the establishment of an evaluation system and incentive mechanism for the social responsibility of private enterprises, guide private enterprises to enthusiastically participate in glorious causes and public welfare charities, participate in emergency relief, and support national defense construction.

（二十八）支持民营企业更好履行社会责任。教育引导民营企业自觉担负促进共同富裕的社会责任，在企业内部积极构建和谐劳动关系，推动构建全体员工利益共同体，让企业发展成果更公平惠及全体员工。鼓励引导民营经济人士做发展的实干家和新时代的奉献者，在更高层次上实现个人价值，向全社会展现遵纪守法、遵守社会公德的良好形象，做到富而有责、富而有义、富而有爱。探索建立民营企业社会责任评价体系和激励机制，引导民营企业踊跃投身光彩事业和公益慈善事业，参与应急救灾，支持国防建设。

Attacks on the private industry like this one in 2021 from Li Guangman - 每个人都能感受到，一场深刻的变革正在进行 - will no longer be allowed if this sentence is fulfilled": “Guide the whole society to objectively and correctly understand the private economy and private economy figures”.

Tencent’s Pony Ma expressed his support for the measures in an article he wrote for CCTV.com titled "Strive to achieve greater accomplishments in high-quality development 努力在高质量发展中展现更大作为" .

For those who figure out how to play by the rules, and how to adjust if they shift again, there should be a lot of money to be made.

In item #2 I look at some of the statements from Xi and others since 2020 that did not help give private businesses confidence.

2. More on the private sector - I look at some of the statements in the recent past that may have caused some skepticism in the private sector.

3. Kerry leaves Beijing - As expected there was no joint statement at the end of Kerry’s visit, but it sounds like they have agreed to keep talking. Kerry met with Vice President Han Zheng but did not get a meeting with Xi Jinping, or at least not one that was made public.

4. Wang Yi meets Kissinger - Kissinger has been staying at the Diaoyutai State Guest House and had his meetings with Defense Minister Li and Wang Yi there. Wang Yi is quoted in the readout of his meeting saying that “US policy towards China needs Kissinger-style diplomatic wisdom and Nixon-style political courage 美国对华政策需要基辛格式的外交智慧，需要尼克松式的政治勇气” and calls on the US to “clearly and openly oppose 'Taiwan independence' and draw a clear line with 'Taiwan independence' separatist activities 就应该用行动明确公开反对“台独”，与“台独”分裂行径划清界限”. There is no report of a Kissinger meeting with Xi Jinping, but it is quite possible that they did meet but it will not be publicized. That has happened in the past, and as I said yesterday it would be remarkable for the PRC’s oldest old friend to fly all the way to Beijing, even on a private jet, but then not get a meeting with Xi. But it would also be quite a snub to Kerry if Xi mets Kissinger and they publicize it, but does not meet with Kerry.

5. More US-China - Ambassador Xie Feng takes the stage at the Aspen Security Forum, among other things compares restricting tech exports to PRC firms to “This is like restricting the other side to wear outdated swimwear at a swimsuit competition while you yourself are wearing a Speedo.” The US House select committee on China is investing several venture capital firms for some of their tech-related investments in China, and will be holding a hearing Thursday at 8 AM ET on the Biden Administration’s PRC strategy with witness from State, Defense and Commerce.

6. MI6 head’s China comments - Richard Moore’s comments are guaranteed to upset Beijing, and it is interesting to see them so soon after the CIA Director Bill Burns' OpEd earlier this month that also talked a lot about China. Moore is unequivocal about China’s stance on Russia’s invasion of Ukraine: “When Putin invaded Ukraine, the Chinese very clearly supported the Russians”.

7. Timely report on Gallium supplies - The DC think tank CSIS has a new report on the PRC’s control over the supply of Gallium. Sobering, but as the report shows it is not like people have not been warning about this for many years.

8. 1.5 million Covid deaths? - That is the number experts are coalescing around in the wake of the brief publication of the Zhejiang cremation data.

Earlier today I published this week’s episode of the Sharp China podcast- Qin Gang Disappears; Kissinger Makes a Surprise Trip to Beijing; Chip Lobbying and Email Hacking in DC; More Worrisome Economic Data. From the show notes:

On today's show Andrew and Bill begin with the mystery surrounding foreign minister Qin Gang, who has not been seen in public since June 25th. As the foreign ministry stays silent, what might explain his retreat from public view, and how does this situation reflect on Xi Jinping and the party? Then: Henry Kissinger makes a surprise visit to Beijing, meets first with Defense Minister Li Shangfu, while John Kerry meets with Li Qiang and Wang Yi to talk common ground on climate issues. Will either of them get an audience with Xi? From there: U.S. chip firms lobby the executive branch, Chinese hackers access the emails of Secretary of Commerce Gina Raimondo, and the optics get trickier for Biden's China policy. At the end: Weak economic data for Q2 and a window into who's actually driving the changes to China's relationships with the West.

You can listen to it here.