The memes that lay bare China's youth disillusionment; Exclusive: Personnel Is Politics, Personnel Is Economy: Xi Jinping's Coming Months of “Wall Excavation”
Taiwan swings into action as Chinese warplanes cross median line; South Korea police arrest dozens for corporate spying after probe
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Exclusive: Personnel Is Politics, Personnel Is Economy: Xi Jinping's Coming Months of “Wall Excavation”
In October 2022, at the 20th National Congress of the Communist Party of China (CPC), Xi Jinping achieved centralized and unified power. The new Politburo, Secretariat, and Central Committee were all composed of his former colleagues, subordinates, and associates.
At the National People's Congress (NPC) convened in March 2023, the Prime Minister and Vice Prime Ministers from the previous cabinet were all replaced. Except for He Lifeng, none of the new Prime Minister and Vice Prime Ministers had experience working in the State Council system.
Surprisingly, Xi Jinping chose to temporarily retain most of the ministers at the ministerial level, including those who had exceeded the retirement age and had not been elected to the Central Committee, such as Yi Gang, the Governor of the People's Bank of China, Liu Kun, the Minister of Finance, and Guo Shuqing, the Chairman of the China Banking and Insurance Regulatory Commission. The reform plan for party and state institutions passed at the 20th CPC Congress, only a part of it submitted to the NPC for review and approval, focuses mainly on financial and science and technology management departments. This year's economic growth rate was set relatively conservatively, roughly around 5%.
The complete replacement of the Prime Minister and Vice Prime Ministers seems contradictory to the basic retention at the ministerial level. However, if we consider China's State Council as a city wall, when Xi Jinping had the power to demolish and rebuild the wall, he chose stability. Instead of tearing down the wall, he opted to "excavate the wall" brick by brick, under the premise of stabilizing the situation with the old ministers. This can be observed in the recent personnel changes in the State Council system. Such changes are expected to continue over the coming months.
The focus of the current "wall excavation" is the financial system and central enterprise system, colloquially referred to as the "money bag". Over the past decade, Xi Jinping has gradually consolidated power over the military ("gun barrel"), the political and legal system ("knife bar"), and the propaganda system ("pen barrel"). He has just begun to take over the "money bag". Unlike the power systems mentioned above, the "money bag" is industry-specific, having accumulated a considerable amount of debt and financial risk over the years. If the "wall" is pushed down rashly, it can easily trigger a risk explosion. Choosing "wall excavation" extends the cycle of personnel adjustments but significantly reduces risk.
China recently announced its economic data for the first quarter, leading to discussions about whether there is deflation. The data on growth and industry are mixed: on the one hand, the GDP growth rate seems decent and the gap with the annual target is not large. On the other hand, data on employment, consumption, and government debt are rather bleak. I believe that the current economic situation is caused by an interplay of three factors:
China's economic growth rate is in a downward trend, transitioning from high-speed growth to medium-speed growth;
Measures to prevent and control the pandemic over the past few years have led to a large number of economic entities, especially small and medium-sized enterprises, going bankrupt or closing down. Economic recovery requires policy support and time;
The Chinese government has proactively deleveraged and eliminated financial risks. Excessive debt corresponds to excessive production capacity and excessive employment, which will be a difficult process to digest.
Solving these economic problems caused by these three factors can't rely solely on simple monetary and fiscal policy adjustments. It requires a combination of policies and structural reforms. A caretaker cabinet can't achieve these, and obviously, they can't be achieved without controlling the "money bag". This means that before the gradual personnel adjustments are fully completed, China's economy cannot substantially improve. Of course, major risks are also unlikely to erupt. China's stock market is neither cold nor hot, and sharp falls or rises are equally unlikely.
Personnel is politics, personnel is economy. For global investors, Xi Jinping's upcoming months of "wall excavation" is a rare opportunity. Currently, asset prices evidently have not reflected expectations for comprehensive deepening reforms and the stimulation of the economy through various policy combinations after the completion of personnel "wall excavation".
Taiwan swings into action as Chinese warplanes cross median line
The Independent
Taiwan's defence ministry has claimed at least 10 Chinese warplanes crossed the sensitive median line of the Taiwan Strait on Sunday, while four Chinese warships carried out "joint readiness combat patrols". It follows China sending more than 30 planes towards Taiwan last week. China claims Taiwan as part of its territory and has repeatedly conducted military exercises near to the island. Taiwan's President Tsai Ing-wen pledged new technologies and policies to strengthen the island's rescue and defence capabilities. Honduras opened an embassy in Beijing on Sunday, months after breaking off relations with Taiwan in favour of China.
South Korea police arrest dozens for corporate spying after probe: Yonhap
Japan Times
South Korean police have detained 77 people suspected of involvement in 35 cases of industrial espionage revealed during a national investigation. While most targets were domestic, eight were linked to the leaking of technology secrets to other countries, including China. As reported recently, South Korean lawmakers have called for legislation that would allow prosecutors to order companies to hand over records suspected of stealing trade secrets.
China complains to South Korean ambassador in tit-for-tat move after Seoul summoned Beijing’s envoy
The Toronto Star
A Chinese official has issued a complaint to South Korea's ambassador to China following Seoul's response to a meeting between its Ambassador to South Korea and a South Korean opposition leader. The remarks came in response to Xing's comments accusing South Korea of leaning towards the US. The two countries are struggling to balance their respective relationships with the US and China, amid growing competition between the two global powers. The diplomatic spat highlights bilateral difficulties and underscores the ongoing struggle of countries that are highly dependent upon exports in navigating their diplomatic relationships.
Zelensky says ‘counter-offensive actions’ have begun – Ukraine latest
The Independent
Britain’s Ministry of Defence has claimed that Ukraine has “penetrated” the first line of Russian defences in some areas and is making “good progress” in its counter-offensive in the tense conflict between Russia and Ukraine. Kyiv has conducted “significant operations” over the past 48 hours in southern and eastern parts of the country. The move comes after an increase of fighting in Ukraine in recent weeks, with President Volodymyr Zelensky confirming on Saturday that counter-offensive and defensive actions were already underway. The comments appear to confirm the long awaited pushback of Putin’s troops. Ukraine has also accused Russia of blowing up the Kakhovka dam, which has caused flooding and directly affected over 30,000 people. The UK will provide an extra £16m of humanitarian aid to Ukraine following the destruction of the dam.
China has been spying from Cuba since at least 2019, White House says
The Independent
The White House has confirmed that China has been using Cuba as a spy base since at least 2019, following reports last week that the two nations had agreed in principle to build a spy station on the island. While declining to confirm the details of the reports, the White House said President Joe Biden had been briefed on "China’s efforts to expand its global military and intelligence presence". The US has taken diplomatic and other steps to "slow down" the Chinese government's influence in Cuba, the statement added. China has accused the US of "spreading rumours and slander".
The memes that lay bare China's youth disillusionment
BBC
A fifth of those aged between 16 and 24 in China are unemployed, and many of those who have graduated from university are struggling to find work. Viral memes inspired by a short story from over 100 years ago are becoming the incendiary tool for this age group to express their discontent. The tale of Kong Yiji, a failed scholar who lived in poverty, has become a code word for discontent in a bleak employment market. These memes – or Kong Yiji literature as they are known in Chinese - now run into the hundreds, and can be found on nearly every social media platform in the country and encompass rap songs, rewrites of the tale and animated videos. China is expecting a record 11.5 million graduates this year, raising concerns that not enough suitable jobs are available for young people, hence the memes.
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