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Public Questions China’s New Housing Pension System, Suspects Disguised Property Tax Program

China’s Vice Minister of Housing and Urban-Rural Development, Dong Jianguo, stated at a press conference on August 23 that the government is studying the establishment of a system for building inspections, housing pensions, and housing insurance. Currently, 22 cities, including Shanghai, are conducting trials. He stated that, when purchasing a property, homeowners will have already set up a personal account for payment into a public “residential special maintenance fund.” The focus of the trial is for the government to establish such a fund.

Netizens have widely discussed this “Housing Pension System” topic, speculating that the system could be a disguised form of property tax. The official “Construction Magazine” WeChat account of the Ministry of Housing and Urban-Rural Development published an editorial on August 26 stating that Vice Minister Dong’s original statement regarding the new pilot program mentioned that “the focus of the trial is for the government to establish a public account,” and that this public account does not require contributions from the public.

Mainland Chinese netizens are not convinced, however. Some have questioned why there is a rush to raise additional funds as there is already a “residential special maintenance fund” in place.

Source: Epoch Times, August 24, 2024
https://www.epochtimes.com/gb/24/8/26/n14317935.htm

Briefings | | |   Economy/Resources Government/Politics

RFI Chinese: PwC Expects Six-Month Business Ban from Chinese Authorities

Radio France Internationale (RFI) Chinese Edition recently reported that PwC China told clients it that expects Chinese authorities to impose a six-month business ban starting as early as September. This will be part of punitive measures imposed on PwC following a PwC audit of collapsed Chinese real estate developer Evergrande. China’s securities regulator said in March that Evergrande had reported an inflated revenue of nearly US$80 billion in Mainland China in the two years prior to defaulting on its debt in 2021. The regulators charged that PwC China’s audit of Evergrande’s accounting records had been improper.

PwC’s business ban and a potential hefty fine are probably the toughest action ever taken by Chinese regulators against a Big Four accounting firm. The Chinese government has stepped up scrutiny of the role of auditors in financial scandals, this time in the crisis-ridden real estate sector, which once contributed about a quarter of China’s GDP. PwC China was China’s highest-revenue accounting firm in 2022, with revenue reaching 7.9 billion yuan (around US$1.11 billion). PwC China’s rival Deloitte China was given a US$31 million fine last year for “serious audit deficiencies” related to Deloitte’s audit of China Huarong Asset Management. As part of the penalty imposed by Beijing, Deloitte China suspended operations for three months last year.

Many of PwC’s publicly listed Chinese clients have been banned for three years from cooperating with audit firms sanctioned by the authorities. This year, PwC China lost at least two-thirds of its accounting revenue from its Chinese-listed clients. That being said, Chinese-listed companies and state-owned enterprise clients account for only a minority of PwC China’s revenue; PwC is actively reassuring its largest internationally-listed clients, including internet giants Alibaba and Tencent, that it can complete their 2024 audits work.

Source: RFI Chinese, August 22, 2024
https://tinyurl.com/zdtten7b

Briefings | | |   Government/Politics US-China Relations

RFA: Shanghai and Shenzhen Stock Exchanges Adjust Information Disclosure Mechanism

Radio Free Asia (RFA) recently reported that the Shanghai and Shenzhen Stock Exchanges have adjusted their information disclosure mechanisms, ceasing publication of daily net trading volume data and other data starting from August 19. This has cut off information on the flow of foreign funds into China’s A-shares market through the Hong Kong markets. Thus, it is now impossible to calculate the flow of foreign capital in and out of Mainland China.

Under the new reporting mechanism, the Shanghai and Shenzhen exchanges will not let investors know the net buying and selling data of the overall northbound (direction of mainland) funds or the flows for the top ten active stocks on a given day. The Hong Kong Stock Connect program has been adjusted accordingly.

The RFA quoted a scholar saying that data on foreign investment in China are critical long-term indicators that play an important role in observing the Chinese economy. The Chinese government understands that making the data regarding the country’s stock market more opaque will only lead to faster withdrawal of foreign capital from China, yet it has still taken this step, showing that there must not be much foreign investment left in the Chinese stock market. It seems that China is preparing measures to prevent the further withdrawal of foreign capital. This is just like how China stopped disclosing unemployment data when the unemployment rate was rising sharply.

The new disclosure mechanism makes it easier for the government to fabricate market data in accordance with its political and economic needs, influencing retail investors who do not have a full picture of the market.

Source: RFA, August 19, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/ec-stockmarket-foreigncapitalwithdraws-08192024053127.html

Briefings | | |   Economy/Resources Government/Politics

The Impact of China’s Consumption Tax Reform

According to a Decision reached during the Third Plenary Session of the 20th Central Committee of the Chinese Communist Party, China will “move the collection stage of the country’s consumption tax to later stages,” and will also “gradually  allocate revenue from consumption tax to local governments.” Chinese media outlet The Paper reported that this decision to “delay the collection stage of the consumption tax” is meant to shift the tax source and collection point from the place of production to the place of consumption, meaning that a great part of tax revenue will be collected in the jurisdiction of the end consumer.

This policy change will have two main impacts. First, the base price for the consumption tax will increase from the factory price to the wholesale or retail price, which means that the Chinese government will collect more revenue from consumption tax. Second, the tax source will shift from the place of production to the place of consumption, resulting in a decrease in tax revenue for major production provinces (e.g. Shanghai, Guizhou, Yunnan, Hubei, Hunan) and an increase in tax revenue for provinces with large populations and large amounts of consumption (e.g. Guangdong, Shandong, Henan, Zhejiang, Sichuan).

“Allocating to local governments” means that the central government of China will no longer be the sole beneficiary of such consumption taxes; consumption tax revenue will now be shared with local governments. The northeastern, central, and western regions of China are likely to receive greater consumption tax than the eastern regions.

Sources:
1. The Paper, July 19, 2024
https://www.thepaper.cn/newsDetail_forward_28110425
2. Radio Free Asia, July 22, 2024
https://www.rfa.org/mandarin/yataibaodao/jingmao/lu-china-third-plenum-tax-policy-07222024155434.html

Briefings | | |   Economy/Resources Government/Politics

Leaked Documents Reveal CCP Plan to “Eliminate” Falun Gong, Escalating Persecution

The Falun Dafa Information Center has reportedly obtained information from insiders in China’s Ministry of Public Security’s (MPS) regarding the organization’s new plan to “dismantle Falun Gong worldwide,” including in the United States. Falun Gong (also called Falun Dafa) “is an ancient spiritual practice in the Buddhist tradition.” The Chinese Communist Party (CCP) started persecuting Falun Gong in 1999 and has continued its persecution of the practice until today. The CCP has also targeted the Shen Yun performing arts group, which showcases traditional Chinese culture and religious beliefs and aims to raise awareness about the CCP’s persecution of Falun Gong.

The Falun Dafa Information Center’s report stated that “it is abundantly clear both from sources inside China as well as from observable attacks (on Falun Gong and Shen Yun) over the past few months that these escalations against Falun Gong have already begun and are trending into uncharted territory. The internal documents explicitly state that the regime’s aim is to ‘eliminate Falun Gong worldwide.’”

The MPS’ new plan has five tactics:

  1. “Coordinated propaganda attacks against Shen Yun, Falun Gong”
  2. “Inciting conflict between Falun Gong and the U.S. Government”
    The MPS indicates it will deploy a two-pronged strategy:

    1. Incite Falun Gong practitioners to distrust and even protest the U.S. government.
    2. Provoke the U.S. government to investigate Shen Yun Performing Arts and other organizations founded by Falun Gong practitioners.
  3. “Cutting communication channels that expose persecution inside China,” blocking Falun Gong practitioners in China from contacting their overseas supporters
  4. “Manipulating search engines and disseminating content in multiple formats” as a means to “carry out the offensive” against Falun Gong.
  5. “Provoking distrust and internal divisions within the Falun Gong community”

Source: Falun Dafa Information Center website
https://faluninfo.net/weaponizing-social-media/

Briefings | | |   @CS Government/Politics Social Stability US-China Relations

Retired CCP Cadre and Professor Urges CCP to Step Down, Proposes “Federal Republic of China” Unifying Mainland China with Taiwan

Veteran Chinese Communist Party (CCP) cadre and retired professor from Renmin University, Leng Jiepu, recently published an open letter addressed to the two Vice Chairmen of the CCP Central Military Commission, proposing the establishment of a Federal Republic of China and urged the CCP to step down.

The open letter is available on X platform. Leng talked with a reporter from the Epoch Times on August 11 to confirm that he was the author of the open letter.

Leng’s letter was addressed to Zhang Youxia and He Weidong, the two Vice Chairmen of the Central Military Commission, and was also communicated to the general public. He mentioned that he had learned that Xi Jinping was very ill and unable to work and that all party, government, and military affairs had fallen on Zhang and He. He expressed his hopes the two would support his proposal. Leng mentioned that the hanging of a large banner “The CCP Must Step Down” on Sitong bridge in Beijing in 2022 and the march with banners calling for the “Downfall of the CCP” in several cities have indicated that “the situation (for the CCP) is not optimistic.” He therefore suggested that the CCP take “the route of compromise” by establishing a Federal Republic of China and unifying the country with Taiwan, calling his proposal “the best possible solution.” He also proposed specific operational steps, including the formation of a “Grand Committee for the Unification of the Chinese Nation.”

Source:
1. Epoch Times, August 12, 2024
https://www.epochtimes.com/gb/24/8/12/n14309516.htm
2. X Platform, @china_epoch
https://x.com/china_epoch/status/1822441580361372096?s=42

Briefings | | |   @CS Government/Politics

Another Chinese Young Man Confronts CCP, Calls for Xi Jinping’s Resignation

Recently a Chinese young man has attracted attention by calling for the ouster of Xi Jinping using a wifi router to spread his message.

On August 14, Su Yutong, a Chinese freelance writer living in Germany, released a video on the web and stated: “A young person from China who has been promoting the movement to dismantle the Great Firewall (CCP’s internet censorship/blockade system) was imprisoned in a psychiatric hospital on political charges. This morning, I received this video showing that he has once again confronted the CCP.” In the video, the young man shouted: “Oppose the CCP’s internet censorship and control of speech,” “No privileges, we want equality,” and “We need freedom of speech and internet freedom.” The video was recorded outdoors. The young man hoped that Chinese people would be able to “see the true face of the CCP.” The young man also mentioned that, in the past, he had used routers and other equipment to broadcast messages such as “Xi Jinping, step down.” The authorities issued a warrant for him as a “political criminal,” ransacked his home, and confiscated his equipment including routers, laser sound systems, transmitter modules, and mobile phones.

On August 16, Su Yutong posted again on the X platform again, identifying the young man as Yan Zhongjian, born in February 1999. Su received a message from a friend entrusted by Yan: the friend and Yan had agreed that, if Yan could not be contacted for a certain period of time, the friend would release Yan’s personal information and call on netizens to show concern and support for him.

The young man followed in the footsteps of several other dissidents in recent history. For example, in October 2022 Peng Lifa posted banners and played recordings denouncing the Chinese Communist Party and asking for the ouster of Xi Jinping. On July 30 of this year, Fang Yirong posted similar messages on an overpass in Hunan Province (see this ChinaScope briefing).

Source: Epoch Times, August 17, 2024
https://www.epochtimes.com/gb/24/8/17/n14313098.htm

Briefings | | |   @CS Government/Politics Social Stability

The First Known Survivor of CCP’s Forced Organ Harvesting Speaks Out in Washington, DC

Cheng Peiming, a 58-year-old Chinese man from Northeast China, is regarded as the first known survivor of the Chinese Communist Party’s (CCP’s) program of forced live organ harvesting from prisoners of conscience. On August 9, at a forum in Washington, D.C., he publicly shared his experience in which the Chinese authorities forcibly removed his organs twenty years ago.

Cheng stated that he was repeatedly detained and tortured by the CCP for practicing Falun Gong. In 2002 he was sentenced to eight years in prison. In July 2004, in a state of good health, he was dragged from prison to a hospital where guards tried to make him sign a form of consent for surgery. When he refused to sign, the guards knocked him down and anesthetized him. When he woke up three days later, Cheng found himself handcuffed to a bed with a 35-centimeter-long incision on his chest. In 2006, prison guards again took Cheng to a hospital. He said, “They had no reason for any surgery, so I knew I would be killed.” He managed to escape while the guards were sleeping. Cheng spent the next nine years hiding in China and managed to flee to Thailand in 2015. Four years ago, with assistance from the U.S. government, he came to America through the United Nations refugee program.

When media reports on China’s forced organ harvesting practices first emerged in 2006, Cheng realized that this was what had happened to him. It was only after arriving in the U.S. that transplant specialists confirmed through scans that part of his liver and left lung had been removed. Cheng said that he still cannot feel certain parts of his chest and struggles daily with severe pain throughout his body.

In 2019 an independent tribunal in London (“The China Tribunal”) ruled that the CCP has committed crimes against humanity through its continuous harvesting of organs from minority groups, including Falun Gong practitioners. Two years later, a United Nations human rights expert reported that, in addition to Falun Gong practitioners, other minorities, including Uyghurs, Tibetans, Muslims, and Christians detained in China, had also become targets of forced organ harvesting. In June of this year the U.S. House of Representatives passed the Falun Gong Protection Act, aimed at compelling the CCP to end its persecution of Falun Gong and the forced harvesting of organs from detained practitioners.

Source: Radio Free Asia, August 9, 2024
https://www.rfa.org/mandarin/yataibaodao/renquanfazhi/kw8-forced-organ-harvesting-08092024135324.html

Briefings | | |   @CS Government/Politics Social Stability