Exclusive Insight: How Li Qiang Will Redefine the Boundary Between the Chinese Government and the Market

Lab leak most likely origin of Covid-19, Energy Department says; China dismisses lab leak claim; Xi’s pick for next chief of staff draws speculation before leadership shuffle

Today's issue of "The China Brief" covers a range of topics, including the U.S. Energy Department's conclusion that the Covid pandemic most likely arose from a laboratory leak, China's dismissal of the claim, and growing tensions between the two countries. Other stories include Qualcomm's collaboration with major Chinese smartphone makers to introduce satellite-enabled communication capabilities, speculation over who will be Chinese President Xi Jinping's new chief of staff, the missing China Renaissance founder and his cooperation in an ongoing investigation, Tencent's risk control executive departing as the company revamps its financial businesses to comply with regulatory requirements, and the latest update on the murder case of Hong Kong model Abby Choi.

And here’s today’s exclusive insight:

Exclusive Insight: How Li Qiang Will Redefine the Boundary Between the Chinese Government and the Market

Li Qiang’s political career took root in Wenzhou. Zhejiang, for historical reasons, had a lighter touch of planned economy, a lower proportion of state-owned enterprises, and a faster pace of reform and opening up. Wenzhou, situated in an area where "the sky is high and the emperor is far away," allowed for a quicker pace in the reform and opening up process than in most parts of Zhejiang. (Editor’s note: Tian Gao Huang Di Yuan is a Chinese idiom that literally translates to "the sky is high and the emperor is far away." It is used to describe a situation where the central government is distant and not paying close attention to local affairs. The idiom is often used to suggest that local officials have a greater degree of autonomy in their decision-making.) As a result, the governance methods employed in Wenzhou are unique, with the government intervening only when necessary and minimizing interference as much as possible. Li Qiang continued to apply this approach while governing Zhejiang, Jiangsu, and Shanghai, where the private economy is developed and marketization levels are high. Li Qiang coined the term "dian xiao’er economy" to describe this approach, wherein the government should respond to any market demand, avoid interfering with anything, and be willing to serve as a "dian xiao’er" for enterprises to foster a world-class business environment. (Editor’s note: "dian xiao’er" literally means "waiter" or "shop assistant" in Chinese. In the context of the article, it is used to describe a governance approach where the government serves as a "waiter" for enterprises and responds to market requests.)

With Li Qiang's experience and qualifications, he seeks to expand the “dian xiao’er” approach throughout China, as it is the only method he is well-versed in. However, the economic foundations of certain provinces, such as the Northeast or Northwest, differ from that of Zhejiang, with a higher proportion of state-owned enterprises, a lower level of marketization, and historical legacy issues. As such, it is uncertain whether the implementation of Li Qiang’s tried and true model would prove successful in such areas, and Li Qiang must consider whether to reform the economic foundations of these provinces beforehand.

Introducing the "dian xiao’er " model necessitates a systematic overhaul of the government's governance system, leading to significant changes in the existing government agencies. This aligns with Xi Jinping's call for governance reform, intending to establish a governance framework for future generations.

(This commentary is part of the series “Assessing Li Qiang's Governance.” It is written by Ou Sanduo, a special analysis expert for "The China Brief.")

WSJ: Lab Leak Most Likely Origin of Covid-19 Pandemic, Energy Department Now Says

The U.S. Energy Department has concluded that the Covid pandemic most likely arose from a laboratory leak, according to a classified intelligence report recently provided to the White House and key members of Congress. The shift by the Energy Department, which previously was undecided on how the virus emerged, is noted in an update to a 2021 document by Director of National Intelligence Avril Haines’s office. The new report highlights how different parts of the intelligence community have arrived at disparate judgments about the pandemic’s origin. The Energy Department now joins the Federal Bureau of Investigation in saying the virus likely spread via a mishap at a Chinese laboratory.

NYT: China Dismisses Latest Claim That Lab Leak Likely Caused Covid

China has dismissed the US Energy Department's claim that a laboratory leak in Wuhan, China caused the Covid pandemic. The response marks the latest exchange in a political debate between the two countries about the origins of the virus. China has repeatedly called for Covid tracing to be scientific, not political, and for the US to stop defaming China. The issue adds to the growing friction between Washington and Beijing, which has also been fuelled by a spy balloon incident and US accusations of China potentially supplying weapons to Russia for use in Ukraine.

Nikkei: Qualcomm chips to power satellite tech in Chinese smartphones

Qualcomm is working with three major Chinese smartphone makers, Honor, Oppo and Xiaomi, to introduce smartphones with satellite-enabled communications capabilities. The Snapdragon Satellite allows two-way messaging for emergency use, SMS messaging and other messaging applications. MediaTek and Samsung are also working to bring satellite-based communications to mass-market smartphones, with MediaTek partnering with Motorola and Bullitt to demonstrate 5G non-terrestrial networks on smartphones. Samsung is working to integrate satellite communications tech into its own Exynos modem solutions to accelerate the commercialization of 5G satellite communications.

Nikkei: Xi’s pick for next chief of staff draws speculation before leadership shuffle

The successor to Chinese President Xi Jinping's current chief of staff, Ding Xuexiang, has yet to be named, which is unusual as it is generally announced following the Communist Party's congress in October. Ding is expected to be appointed vice-premier in March, and his replacement may be a focus of the Central Committee's second plenum. Potential candidates include Wang Xiaohong, who is considered one of Xi's most trusted allies, and Meng Xiangfeng, who serves under Ding as a deputy director. The lack of an announcement may be connected with proposed organizational reforms being considered by the Xi leadership.

Nikkei: Missing China tech banker Bao Fan aiding investigation, company says

China Renaissance founder Bao Fan is "currently cooperating in an investigation" by "certain authorities" in China, according to a company regulatory filing. This announcement comes ten days after the bank stated it was unable to contact Bao, a former Morgan Stanley and Credit Suisse banker. The sudden disappearance of Bao, who is known for brokering top tech deals, sent a chill through the markets. Speculation has arisen about Bao's link to China's top anti-graft body, the Central Commission for Discipline Inspection, vowing to crack down on corruption in the financial sector and its links to powerful officials.

Caixin: Tencent's top risk control executive to depart amid fintech revamp

Tencent's vice president in charge of risk control and the general manager of its wealth management arm, Tengan Funds Sales, Yang Jun, is set to leave the company as the tech giant revamps its financial businesses to comply with regulatory requirements. Yang's departure comes amid discussions between Tencent and regulators over its financial business restructuring. As part of Beijing's campaign to lower financial risks, the regulators require the platform companies to restructure their sprawling financial services and apply for a financial holding company license. Unlike rivals Alibaba Group and JD.com, Tencent's financial businesses are still scattered inside the group, hindering the restructuring progress.

Reuters: Any China lethal aid to Russia would come at real costs, U.S. warns

White House national security adviser Jake Sullivan has warned China that providing lethal aid to Russia in its invasion of Ukraine would have "real costs" for Beijing. In a TV interview, Sullivan said China had not moved toward such aid but had not taken the option off the table. The US has warned its Chinese counterparts in private conversations about the consequences of providing such aid. CIA Director William Burns said there was no evidence of any lethal equipment already being sent. Last week, President Joe Biden promised Ukraine $500m in new military aid to help fight better-equipped Russian forces.

SCMP: 4 suspects in murder of Hong Kong model Abby Choi remanded in custody without bail after court appearance

Four former family members of Hong Kong model Abby Choi, who was recently murdered, were remanded in custody without bail after appearing before court on charges of murder and perverting the course of justice. The model’s ex-husband, Alex Kwong, was charged alongside his parents and older brother. Defendants, each flanked by two police officers, displayed no visible reaction as court clerks read out charges against them. Police are still searching for the rest of Choi's remains after some body parts were found in a soup pot.

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