Of New Gods and Old Ghosts

A weekly bulletin offering news and analysis related to the Middle Kingdom.

The Lead

  1. Xi Jinping Thought to enter China’s constitution: The second plenary session of the 19th CPC Central Committee was held on Jan 18 and 19. The key agenda item was a proposal to amend the Chinese constitution, something that hasn’t happened since 2004. Prior to the plenary there were assurances that the proposed amendment would not bring about a major structural shift in the governance system. What that meant was that primarily the change would be about the inclusion of Xi Jinping Thought in the constitution. And that’s precisely what’s been reported by the Chinese press as the outcome on Friday. Further details of the decisions taken at the plenum are expected to be announced over the course of the next 24 hours. For now, we can be rest assured that Xi is firmly on par with Mao and Deng, whose names are also mentioned in the Preamble.
  2. Strengthening Party/Xi’s control: The CPC’s Politburo Standing Committee heard reports this week from key Party members’ groups of the Standing Committee of the National People’s Congress, the State Council, the National Committee of the Chinese People’s Political Consultative Conference, the Supreme People’s Court and Supreme People’s Procuratorate.

Chinese media reports on the meeting offer little of substance in terms of what was discussed. Rather, they highlight that it was agreed that all these bodies must ensure the primacy of the CPC Central Committee with Xi Jinping as the core.

  • For instance, the statement that was issued after the meeting stated that:For the whole Party, it should be “a primary political principle and essential political rule” to safeguard the authority of CPC Central Committee and its unified and centralised leadership.
  • All bodies should maintain a “correct political stance, direction, principle and path.”

Meanwhile, China’s State Council also met on Wednesday, with the statement following the meeting being along the same lines, i.e., pledging to closely follow CPC Central Committee with Xi at the core. Clearly, efforts of the past four decades of building a division of labour and distinctions between the roles of Party and government are steadily being undone.

Another key outcome of the State Council meeting was a push for rural businesses and start-ups. One should view this policy from the point of view of the 2020 target of eliminating poverty, the pressure to create 8–10 million jobs a year and government efforts to curb urban migration and encourage reverse-migration from cities back to rural areas.

Also earlier in the week, the Central Commission for Discipline Inspection (CCDI) met for its second plenary session. The communique issued following the plenary on Saturday pledged to safeguard the position of Xi “as the core of the CPC Central Committee and the whole Party.”

The rest of the statement calls for ensuring strict Party self-governance, excluding those who are “disloyal and dishonest,” building a supervisory network over all state functionaries, punishing those engaged in corruption and combining the fight against corruption with that against criminal gangs.

  1. People’s Daily backs Xi’s global vision: The Communist Party’s leading newspaper, the People’s Daily, published a fascinating editorial this week. You can read a summary of the piece here. The article essentially pledges the paper’s support for Xi’s international agenda.

It identifies key problems facing the global system, such as democratic deficit, governance deficit, development trap, wealth gap, terrorism and climate change. And then talks about a new international order taking shape, which is creating broad strategic room for China. “We are fully aware of our responsibilities. We should resolutely support the core, faithfully follow the leader, use our courage and morale…and make strides toward a brighter future,” it reads.

Importantly, the piece bestows upon Xi the title of “Lingxiu.”. The term essentially means leader, but has a deeper connotation of the individual being an exalted visionary. This Global Times piece offers a bit more on the significance of the use of the term.

My two cents in all of this is that the piece was primarily meant for the domestic audience, which is rather insular and has lived with the idea of a China that follows a “non-interference” policy globally. But with China’s interests evolving and global engagement growing, there is a need to build public support.

  1. Trump-Xi talk: Xi Jinping called US President Donald Trump this week to discuss growing trade tensions and the North Korea issue. China views the recent thaw between Seoul and Pyongyang as a positive sign. But is still concerned with US policy, as was evident in its outrage over the Vancouver summit. In my view, the key aspect of the conversation between the two was trade. Chinese reports of the call highlighted Xi’s desire to kickstart key, established dialogue mechanisms between the two sides and a statement on the need to “expand the cake of cooperation.” The former is in the context of Trump’s threats of punitive, “shock and awe” as some reports had put them, trade action. The latter is a reference to Trump’s repeated calls for addressing the trade deficit.

In contrast, the White House readout, says that Trump “expressed disappointment” that the deficit had continued to grow and termed the situation as “not sustainable.” Meanwhile, there are reports that Trump is considering a “big fine” as part of a probe into China’s alleged theft of intellectual property. Reuters reports that an announcement is likely by the end of the month during his State of the Union address.

Other stories:

  1. Economy: China’s economy expands 6.9 pct in 2017, beats forecasts/ China’s Economic Growth Looks Strong. Maybe Too Strong/ Important to note here that the share of consumption has actually declined with exports picking up in 2017, boosting growth. This Reuters report and FT analysis are good reads on this. Also read: China’s SOEs hit record profits
  2. China-Taiwan: China cracks down on foreign companies calling Taiwan, other regions countries/ China is destroying imports that say ‘Made in Taiwan’ as part of its massive political crackdown/ Taiwan denies permission for nearly 200 China flights amid routes row
  3. China-Japan: China, Japan trade accusations after Chinese warship seen near disputed Diaoyu Islands/ Turnbull deepens Japan defence ties/ Here’s the joint statement issued after the Turnbull-Abe talks. Do note the language about the South and East China seas, the Indo-Pacific and on deepening security cooperation. The two sides are keen to ink a visiting forces agreement, which is something that China is keenly watching and its media has been very critical of. You can read some of the criticism here:
  4. Tokyo-Canberra ‘quasi-alliance’ threat to peace
  5. Russia embraces China’s ways of payment
  6. Xi Jinping’s Debt Clampdown Has Left a Trail of Dead Projects
  7. Outspoken Chinese human rights lawyer Yu Wensheng held by police
  8. Arrested Former C.I.A. Officer Had Ties to Chinese Spies, Ex-Colleague Says
  9. China sends underwater robots in race against time to plug leaking oil tanker
  10. PBOC orders financial institutions to halt cryptocurrency trading services

Indian Interest

  1. The ghost of Doklam: Ever since the August 2017 conclusion of the Doklam standoff, there have been repeated reports of Chinese military activity in the region. Chinese media have since pointed out that the standoff exposed some gaps in the PLA’s preparedness. And that has meant more infrastructure build-up and expanded troop presence. This is something that the Indian media has picked up repeatedly, questioning China’s intentions and urging vigilance.

This week the region was once again in focus, after The Print reported that China occupies North Doklam, with armoured vehicles & 7 helipads. The report has led to a political backlash domestically in India, with the opposition Congress Party accusing the government of misleading the nation on the disengagement in Doklam. Even Lobsang Sangay, president of the Central Tibetan Administration in India, has chimed in on the discussion. The Indian government has termed the reports of the Chinese build-up as not accurate.

But in all this, it is important to note that the region in question in The Print report, as Nitin Gokhale points out, is Chinese territory. Moreover, another analytical Twitter thread by Gokhale offers insight into how the Indian military is responding to the Chinese challenge.

Other Stories:

  1. Entire China could soon be within India’s nuclear strike zone — A report on the Agni V missile test/ Chinese reaction: China should enhance presence in Indian Ocean to counter India’s missile tests: experts
  2. With an eye on China, India is looking to buy more US-made advanced sub-hunting planes
  3. Quad navy chiefs take the stage in Delhi; discuss China
  4. China’s rise has allowed India to make its presence felt: S. Jaishankar
  5. China slams Indian army chief’s remarks as ‘unconstructive’
  6. Government to raise 15 new battalions for Pakistan, China borders
  7. China Won’t Attempt Further Misadventure In Arunachal Pradesh: Eastern Command Chief
  8. Confiscating foreign-owned assets can be enemy of Chinese investment in India
  9. ‘Secret Superstar’ Blazes New Trail for Indian Cinema in China
  10. Overseas crackdown: China’s realty projects in India are in deep trouble
  11. China’s cycle-share platform Ofo pedals into India

III. Belt & Road

  1. BRI and India: An interesting piece by the IPCS’s Sreejith Nair discusses how India can and should look to gain from BRI. The essential argument is that India should look to piggyback “for economic and political gains, with minimal, carefully planned supplements to it (BRI)…” On the issue of whether such a move would imply participation in BRI, Nair argues that, “Providing external connectivity to the BRI through complementary value additions is different from signing up as its member.”

Other Reads:

  1. Chinese investment in Belt and Road countries stable at $14.4 billion in 2017
  2. Belt and Road high on CELAC meeting agenda
  3. China Development Bank commits $250bn to Belt and Road
  4. Time to focus on CPEC projects execution: Sartaj
  5. Do Read: CPEC: “Iron Brothers,” Unequal Partners
  6. John Kerry: US will eventually join TPP and BRI
  7. ‘Belt And Road’ Will Determine Afghanistan, China’s Future — says Liu Jinsong, China’s new ambassador to Afghanistan
  8. China, Bangladesh road project hits bribe bump
  9. Using the yuan for bilateral China-Pakistan trade
  10. ‘Make Trade, Not War’ is China’s daring plan in the Middle East

Military Matters

  1. China revamps military inspections: As per a new regulation issued this week, inspection teams will be established to monitor military personnel. Xinhua says that senior Party members at the rank of military corps and above will now be overseen by full-time inspection teams. Regular inspection teams will also supervise Party committees of the Central Military Commission, the army, navy, air force, rocket force, and strategic support troops of the People’s Liberation Army (PLA) as well as the armed police. The key aspect in all of this is institutionalizing an inspection system. This Global Times piece offers some insight, although very limited, into why this change is being brought about. Meanwhile, this War on the Rocks piece offers a good background on the anti-corruption campaign in the military and the reforms that have been undertaken

Other Reads:

  1. Tass reports that Russia has begun the delivery of S-400 missile systems to China as per a 2014 agreement
  2. China’s Military Base in Afghanistan — A good analytical piec
  3. Do read: How China’s military is girding for battle, and what it means for neighbours
  4. China launches new guided-missile frigate ‘Wuhai’
  5. Beijing’s new ‘landing ship’ could be used to help invade Taiwan, Chinese media suggests
  6. China J-20 stealth jets on training ops in Tibet
  7. China-Myanmar hold defense and diplomacy dialogue

Beijing’s Take

Courting Africa: Chinese foreign minister Wang Yi embarked on a visit to four African nations earlier this week. A new year visit to Africa is now part of a long-standing tradition in Chinese diplomacy. This year, the timing of the visit couldn’t be more fortuitous, given the controversy that the US president finds himself in over abuse remarks regarding African/developing nations.

During his visit to Rwanda, Angola, Gabon and Sao Tome and Principe, Wang reiterated Chinese support for African development. He termed the African countries partners in BRI, promised that China would aid their economic diversification and industrialization goals, laid the groundwork for the FOCAC meeting in Beijing this year and dismissed claims that Chinese projects were leading to deepening debt. FOCAC has significantly been elevated to summit status this year.

Despite that, the nature of Chinese approach  i.e. that of concessional loans for projects and acceptance of “in kind” returns — coupled with and the size of some African economies means that escaping the charge of neo-colonialism isn’t going to be easy for Beijing.

That notwithstanding Beijing continues to be the most significant trading player in the continent, and it remains keen to deepen its engagement. For those keen on a broader understanding of China-Africa ties, this 2017 CFR backgrounder is a good place to start, also this piece summarizing a 2017 McKinsey & Company report (report is linked in the article) on Chinese businesses in Africa also offers some interesting insight.

And for those interested in understanding all of this from an Indian point of view, these two pieces are excellent starting points:

This article first appeared on the Indian National Interest.