Xi's Personnel Moves; Control Over Markets; Xinhua Praises Chinese Democracy; Trump's Asia Itinerary--Sinocism 10.17.17

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Today’s short issue highlights only a few items as there is just not that much interesting news as we head into the Party Congress, which opens Wednesday at 9AM Beijing time. The first press conference was this morning and the spokesman confirmed that the Congress will end October 24, as expected. So we should know with certainty on October 25 the makeup of the new Central Committee, Politburo and Standing Committee.

The overwhelming propaganda aside, Xi and the Party really are heading into this Congress quite confident, and justifiably so. And we should expect even more confidence going forward.

Victor Shih and Jude Blanchette have conducted an interesting study of Xi’s efforts to consolidate power-1.3 Billion People Are in One Man’s Grip:

Since assuming leadership of the party in 2012, Xi has used his first five-year term to prosecute a multi-pronged attack on rival party and government officials, patronage networks, and institutions within the party-state — all with the goal of eliminating competing centers of power and the much-maligned “vested interests.” New data show that this has, for Xi, been a massive success. And this week’s 19th National Party Congress will further Xi’s cause…

In what may be an effort to pick his battles wisely, Xi has turned his attention to the lower levels instead, where he has overseen a massive shake-up in the provincial leadership, with 23 of the 31 party secretaries being reassigned since 2016 alone. While every general secretary does his best to re-align the provinces in his favor, Xi’s reach here is unparalleled.  For comparison, in the two years prior to the 17th Party Congress, Hu Jintao’s “mid-term” congress, 17 provincial party secretaries were moved, while Chen Liangyu was the only former or current Politburo member felled for corruption through Hu’s entire tenure as general secretary.

But this is only part of the story. For all the acumen Xi has shown in centralizing power, he has still not achieved complete mastery over the top leadership. Xi’s allies — officials with shared work experience prior to his elevation into the Politburo, as well as the “princelings” like himself who are the children of the founding generation of revolutionaries — still occupy only a small share of key positions in the regime. This should not be seen as an indication of weakness, but rather as a measure of the importance of this week’s 19th Party Congress as the crucial platform for Xi to assert his dominance of the regime by moving his followers into these key positions.

Reuters reports on the likely promotion of one member of Team Xi, General Zhang Youxia, to become a vice chairman of the Central Military Commission-China combat veteran, close ally of Xi, to get promotion:

Zhang would replace Fan Changlong, who is expected to retire during the 19th Communist Party Congress which begins on Wednesday. The other vice chairman, Xu Qiliang, is expected to stay on, the sources said…

Zhang is also expected to be promoted to the Communist Party’s 25-member Politburo, one of its elite ruling bodies, three of the sources said.

One source with ties to the leadership said that the fathers of Xi and Zhang - Xi Zhongxun and Zhang Zongxun - had been close.

Xinhua published an English-language commentary crowing about the superiority of the PRC political system-Enlightened Chinese democracy puts the West in the shade:

As parties in the West increasingly represent special interest groups and social strata, capitalist democracy becomes more oligarchic in nature. The cracks are beginning to show, with many eccentric or unexpected results in recent plebiscites.

Under the leadership of a sober-minded, forward-looking CPC, Chinese-style democracy has never been healthier and China has absolutely no need to import the failing party political systems of other countries.

After several hundred years, the Western model is showing its age. It is high time for profound reflection on the ills of a doddering democracy which has precipitated so many of the world's ills and solved so few. If Western democracy is not to collapse completely it must be revitalized, reappraised and rebooted.

I want to bang my head the desk. And then I look at Trump and Brexit and think the West is starting to make it too easy for the CCP. And then I do bang my head on the desk…

Lingling Wei of the Wall Street Journal has an important story on the Party’s pullback from the mooted reforms towards giving markets a more decisive role-China’s Xi Approaches a New Term With a Souring Taste for Markets:

In today’s China, state intervention attempts to engineer economic outcomes, ranging from raw-materials prices to the value of stocks and the currency. State-owned corporate giants are bulking up, with private capital funneled into them for support. The agency Mr. Xi toyed with dismantling is back in the driver’s seat.

Going into his second term, Mr. Xi finds relying on markets too risky and state capitalism a better model. When the Chinese leadership talks of reform today it doesn’t mean economic liberalization as it did in, say, the era of Deng Xiaoping. It means fine-tuning a government-led model…

Ms. Wei reports that the 2015 stock market crash and botched Renminbi reform was a turning point:

The conclusion of the Chinese leadership since then, say officials and government advisers, has been that the up-and-down cycles of the markets, something they can’t control, make outcomes too uncertain.

In May of this year, China’s central bank added to its formula for setting the yuan’s official rate a “countercyclical” factor—a tool to defy pressures exerted by currency markets. The move, reflecting a mistrust of markets, came after senior officials complained the yuan seemed unable to go up even when China’s economy improved, according to people close to the central bank.

The article also hints at what Xi was really doing when he disappeared for nearly two weeks in September 2012:

Before he was anointed China’s leader, in the fall of 2012, Mr. Xi mysteriously vanished for two weeks. The absence was never fully explained. People with knowledge of it say he spent some of that time in Zhejiang, huddling with a few close advisers in the city of Zhuji in the Yangtze River delta, to brood over his vision for China.

John Pomfret argues in a Washington Post column that Xi Jinping is a “defender of Stalin’s legacy” and attempting to “revive Stalin’s communist ideology”:

Xi has positioned himself as the defender of Stalin’s legacy. As he declared following the 18th Party Congress five years ago which inaugurated his first term in office: ‘‘To dismiss the history of the Soviet Union and the Soviet Communist Party, to dismiss Lenin and Stalin, and to dismiss everything else is to engage in historic nihilism, and it confuses our thoughts and undermines the party’s organizations on all levels.’’

Central to Stalin’s teaching is the idea that the creation of enemies is essential for sustaining the rule of a revolutionary party. Since taking power in 2012, Xi has found new enemies everywhere. He has launched the fiercest crackdown against dissent since the 1989 suppression of pro-democracy protests. Party members are urged to maintain vigilance against the plots of Western liberal democracies who Xi has argued are dedicated to derailing China’s revolution…

In the fall of 1971, on his second visit to China, Henry Kissinger — during meetings with Zhou Enlai to plan for Richard Nixon’s historic visit to China — mentioned a drumbeat of anti-American propaganda that had appeared in the Chinese press. Zhou assured Kissinger that it was not important. China’s state-run media, he said, was simply firing “empty cannons.” But attacking America does matter to the Communists; it was a centerpiece of their ideology. Almost five decades later, as Xi Jinping prepares to lead China for another five years, this remains the case.

The White House has released the itinerary for President Trump’s Asia trip. He will start in Hawaii on November 3, then visit Japan on the 5th, South Korea on the 7th, Beijing on the 8th, Vietnam on the 10th and the Philippines on the 12th.

North Korea of course will be at the top of the agenda. CNN reported Monday that North Korea is not interested in diplomacy until it has developed an ICBM that can reach the US East Coast. I have also heard that the North Koreans have cancelled an upcoming track II to meeting with the US in Oslo. A more confident Xi who has emerged from the 19th Party Congress may take a more assertive approach to solving the North Korea crisis, but so long as the US and the PRC have divergent strategic goals for the Korean peninsula it is hard to see a constructive solution.

And on that happy note, get ready for the 19th Party Congress opening ceremony in about 13 hours. Thanks.