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Xi Urges Politburo Members to Report Issues Objectively, Not Just the Positives

At a recent Chinese Communist Party’s (CCP) Politburo meeting, General Secretary Xi Jinping emphasized the need for top leaders to “maintain high political sensitivity and unity under the centralized leadership of the CCP’s Central Committee.” He warned about “transforming non-political risks into political ones” and called for “objective and timely reporting of issues.” The CCP Politburo is a top decision-making body of the Chinese Communist Party, consisting of 24-members.

Xi said that members should uphold the authority of the CCP Central Committee, strengthen the “Four Awarenesses,” “Four Confidences,” and “Two Upholds.” Amid complex domestic and international environments, leaders must “grasp the strategic initiative” and “enhance foresight to see essence through phenomenon and understand situations politically.”

He stressed the importance of preventing and resolving political risks, promptly blocking various hidden dangers from turning into political ones. Leaders should “reflect real-life situations objectively, not just reporting good news.” Xi stated that members should adhere to “high-quality development over blind expansion, seek practical results rather than falsified data, and build long-term foundations instead of damaging finances.”

Source: Central News Agency (Taiwan), December 23, 2023
https://www.cna.com.tw/news/acn/202312230031.aspx

Briefings | | |   Government/Politics

Wang Huning’s Directive: Manipulate Taiwan’s Election Through Fragmented Grassroots Infiltration

Top Chinese government official Wang Huning reportedly held a meeting in Beijing in early December to coordinate efforts to intervene in Taiwan’s upcoming presidential election, which is scheduled for January 13, 2024. A number of different Chinese government departments and agencies were reportedly assigned specific tasks with the aim of subtly influencing Taiwan’s presidential election without attracting international scrutiny. Agencies with representatives attending the meeting include the CCP’s Department of Propaganda, the Department of Taiwan Affairs, the Ministry of Defense, the Ministry of National Security, and the CCP’s United Front Work Department.

The key strategy of China’s cognitive warfare against Taiwan has been to present voters with a “choice between war and peace.” Although Xi Jinping recently stated in public that China does not have plans to attack Taiwan in 2027 or 2035, Beijing still wants Taiwanese voters to feel that there is a threat of war if Taiwan refuses to peacefully integrate with Mainland China.

Beijing’s layered, multi-channel information campaign aims to manipulate Taiwanese public opinion while avoiding the most overt forms of interference that could provoke international condemnation.

The shift from overt influence strategies of the past to a more subtle, distributed approach may reflect China’s current economic weakness, which limits its ability to spend large amounts of money on influence campaigns. Beijing’s continued efforts to influence the politics of Taiwan despite current economic headwinds demonstrates the importance that China places on its Taiwan unification objective.

One specific tactic employed by Beijing is to offer visits or discounted tours in China for Taiwanese representatives from the media, businesses, and government. Local officials are taken on exchanges and given discounted tours with the hope that Beijing can win influence and change these representatives’ perceptions and voting behavior. Other tactics includes using China’s propaganda departments to amplify Beijing’s criticisms of Taiwan’s Democratic Progressive Party (DPP) government, as well as distorting media reports coming out of Taiwan before disseminating them through Chinese social media to sway public opinion.

Taiwan has implemented safeguards against electoral interference, and analysts say that China’s influence / incentives may have limited impact on voting behavior. However, the high-level coordination led by a senior Chinese leader demonstrates the priority Beijing places on covertly intervening in the Taiwanese democratic process to serve its political agenda of asserting control over the island.

Source: Voice of America, December 8, 2023
https://www.voachinese.com/a/china-keeps-interfering-in-taiwan-s-elections-ignoring-biden-s-warnings-20231208/7389984.html

Briefings | | |   Government/Politics

Chinese Money Flows into Gold

Gold demand in China continues to rise, supporting high international gold prices. Chinese spot prices have exceeded international benchmarks since August 2023. Reasons for the high demand from China include economic concerns like the Chinese real estate slump and devaluation of the yuan, as well as global instability resulting from deteriorating Chinese foreign relations and wars abroad.

Chinese demand for gold reach 789 tons in 2022, making up 20% of global demand. Increasing purchases by Chinese individuals are lifting prices. Gold ETF holdings are up 27% since the end of 2022 as investors seek stability.

China’s economy is showing signs of slowdown. Both the manufacturing and property sectors are struggling, and heavy corporate debts are threatening operations. The yuan hit 15-year lows against the US dollar in September 2023, sparking speculation that China has limited gold imports to defend its currency.

Chinese investors distrust the yuan amid uncertainty, buying gold as a “stateless currency” and inquiring about offshore real estate, e.g. Japanese properties. Inquiries from China, Hong Kong and Taiwan to one Japanese real estate agency rose 40% between January and November of 2023.

Ongoing gold inflows and foreign property investment reflect persistent economic unease. But with policy stimulus now improbable, the poor outlook on growth may remain until issues around housing, the yuan, and debt show improvement. For the foreseeable future, Chinese demand for gold looks set to keep international prices elevated.

Source: Nikkei, December 15, 2023
https://zh.cn.nikkei.com/china/ceconomy/54310-2023-12-15-08-38-33.html

Briefings | | |   Economy/Resources

China: Negative Commentary on Economy is a National Security Risk

China’s Ministry of State Security recently published an article saying that economic security is the foundation of national security. It said that economic threats must be dealt with to promote China’s economic recovery and “high-quality development [of the economy]. The article accused foreign critics of fabricating false narratives about China’s economy to undermine market confidence and impede growth. It vowed to crack down on illegal activities that jeopardize economic security.

Meanwhile, social media platforms like Weibo are instructing bloggers to avoid pessimistic comments about China’s economy or face severe punishment. Some users were notified that downplaying the economy has become a “red line” that risks heavy penalties if crossed. This reflects the CCP’s heightened sensitivity to dissent and its effort to control public discourse about economic issues.

The article tied economic security to the national security concepts emphasized by Xi Jinping. It blamed foreign actors for creating “discourse traps,” manufacturing false narratives about China’s economic decline. The article did not address concerns about how China’s own policies have contributed to the trend of economic decoupling between China and global economy.

By framing economic commentary as a national security issue rather than just economic analysis, the CCP is severely restricting speech within China. Self-censorship by firms like the China International Capital Corporation (CICC) and social media platforms show the chilling effect of this new policy. Some Chinese netizens have noted that, ironically, the act of banning negative comments about the economy may itself be damaging to perceptions about the Chinese economy and business environment.

Source: Voice of America, December 15, 2023
https://www.voachinese.com/a/china-s-ministry-of-state-security-says-badmouthing-china-s-economy-endangers-national-security-20231215/7399543.html

Briefings | | |   Social Stability

Official Media on Chinese Economy: Maintain High Vigilance against Black Swan Events

The Chinese Communist Party’s Central Economic Work Conference listed real estate as a key area for risk prevention. State media stated that high vigilance is needed to guard against black swan events and gray rhino events that could destabilize the economy.

A commentary in the China Economic Daily said that the conference made clear arrangements to resolve risks around real estate, local debt, small banks, and illegal finance. According to the article, the goal is to hold the line against systemic risks while supporting development. This requires caution, preparation, and deeper consideration of potential troubles to guard against economic “rhino” events.

The article said that China faces many challenges – deep economic contradictions, accumulating risks, and an unfavorable global context. “In order to ensure smooth modernization, we must adhere to [the principle of] high-quality development and security.”

The Central Economic Work Conference emphasized stability through steady progress. More policies aim to stabilize expectations, growth, and employment. China will continue proactive fiscal policy and prudent monetary policy.

The commentary stressed that strong bottom-line thinking is indispensable. China must be cautious as when “walking on thin ice” and must “think of danger during times of peace.” It must estimate difficulties fully and be stable in coordinating resolution of local debts.

Source: Central News Agency (Taiwan), December 17, 2023
https://www.cna.com.tw/news/acn/202312170102.aspx

Briefings | | |   Government/Politics

Japan Says China May be Underreporting Increase in CO2 Concentration

Japan’s Ministry of the Environment has questioned the accuracy of China’s reported annual increase in carbon dioxide concentrations. According to Japan’s greenhouse gas observing satellite, IBUKI, China’s annual CO2 concentration increase ranged from 0.6 to 1.2 ppm between 2009-2022. However, international databases calculating China’s emissions based on information published by China, such as fossil fuel consumption and number of power plants, estimate an annual increase of just 0.2 to 0.8 ppm. No such discrepancies were found for Japan and the United States using similar methodology.

Japan claims China’s published information may be inaccurate and will present these findings at the upcoming 28th Conference of the Parties (COP28) to the UN Framework Convention on Climate Change (UNFCCC) in Dubai. A Japanese senior official stated that inaccurate emissions reporting from major emitters like China could undermine global emissions reduction targets, as it skews calculations on progress.

Through satellite observation technology, Japan aims to improve transparency in emissions reporting. Reliable, accurate emissions data is crucial for setting and meeting climate change targets among all nations. Japan intends to keep contributing objective emissions data gathered through satellite monitoring to further emissions transparency, accountability, and broader climate action. The findings question whether China has been forthcoming in reporting its emissions and climate mitigation progress to date.

Source: Radio France International, December 8, 2023
https://rfi.my/AAEy

Briefings | | |   Geo-Strategic Trend

Economic Bailout with Chinese Characteristics: Controlling Public Opinion on the Economy

China’s economy slowed significantly in 2022 due to multiple headwinds including COVID-19 impacts, strained international supply chains, over-regulation of sectors (e.g. real estate), and weak domestic consumption. Against this backdrop of negative economic news, Chinese authorities have stepped up propaganda efforts and media controls to bolster public confidence.

At a recent meeting, the CCP Politburo stressed the need to “strengthen economic propaganda and public opinion guidance” on the economy. State media like People’s Daily and Xinhua have since published unequivocally-upbeat commentaries, quoting Xi Jinping’s reassurances about progress towards high-quality development and solid progress in overcoming the post-pandemic transition. Such overtly-promotional coverage aims to shape perceptions now that growth has slipped below targets.

Starting in 2021, officials shut down many non-state social media accounts that were speaking negatively about the economy (“black mouth” accounts). In 2022, top finance influencers on the internet – Wu Xiaobo, Ren Zeping and Hong Hao – faced speech bans despite their large numbers of followers. Economic analysts suspect such muzzling of dissenting voices will now further intensify, aiming to suppress doubts about the official claims regarding economic recovery.

Authorities are blaming China’s current economic struggles on external factors like US-China ties and global supply chains. Domestic weaknesses remain apparent – the long-troubled property sector still drags heavily, and Chinese consumers have become thrifty amidst uncertainty conditions.

As 2024 begins, Xi Jinping has clearly prioritized projecting strength and stability regarding growth prospects, given the recent Politburo directive to reinforce propaganda and guidance.

Source: Central News Agency (Taiwan), December 11, 2023
https://www.cna.com.tw/news/acn/202312110286.aspx

Briefings | | |   Government/Politics

China’s Local Government Debt Soars to $40 Trillion In November; Half of New Issuance is for Refinancing

In the first 11 months of 2023, China’s local governments issued RMB 9.14 trillion (US$1.28 trillion) in bonds, exceeding the RMB 7.4 trillion (US$1.04 trillion) issued throughout all of 2022. Half of the bonds issued this year were used for debt refinancing. The scale of refinancing bonds saw an 82% annual increase to RMB 4.59 trillion (US$643 billion). In contrast, RMB 4.55 trillion (US$637 billion) in new bonds (not for refinancing) were issued, down 4% annually.

Two main factors drove the large increase in refinancing bonds. First, RMB 3.6 trillion (US$504 billion) worth of local government bonds are maturing this year, putting pressure on government finances. Refinancing bonds are helping to repay these old debts. Second, to reduce risk, China’s Ministry of Finance allowed for special refinancing bonds with extended redemption periods. Since October of this year, over 20 provinces/municipalities in China have issued a collective RMB 1.3 trillion (US$182 billion) in these special bonds, far higher than the RMB 200 billion (US$28 billion) issued last year.

By the end of October, 2023, China’s local government debt balance passed RMB 40 trillion (US$5.6 trillion) for the first time ever. This is double the figure from before 2019, when local government debt stood at less than RMB 20 trillion (US$2.8 trillion).

Taiwan’s Central News Agency cited a statement by China’s Ministry of Finance that rapid local debt growth since the pandemic outbreak is related to increased fiscal expansion and local debt scales.

Source: Central News Agency (Taiwan), December 5, 2023
https://www.cna.com.tw/news/acn/202312050237.aspx

Briefings | | |   Economy/Resources