On the governance of modern Shanghai

Maybe it’s harder than Xi Jinping would have us think … ripples are disturbing the waters of a harmonious China

ChinaDiction was founded by Chris Taylor, a long-time observer of China, Taiwan and cross-strait affairs. Below is an edited extract of the ChinaDiction newsletter from May 20. Click here for the original version on the ChinaDiction website.

Shanghai’s getting food deliveries again, and some people are even going for walks in their neighborhoods – or at least their compounds. But don’t jump to any conclusions: Shanghai has not officially opened; it just officially doesn’t have any more “community transmission.”

Zero-Covid essentially means starving Covid of human-host cells and it will beat a retreat to whatever bat cave it emanated from. But today, just, for example, Shanghai had 858 new cases – 88 of them symptomatic – so we have to assume those cases were all discovered in quarantined conditions.

On-the-edge editorializing, it’s difficult to see how this all doesn’t devolve into manipulated statistics and victory theatrics.

Experiences elsewhere – look to Taiwan, which held Covid-19 at bay valiantly for two years and is now rapidly approaching 100,000 cases a day – would suggest that the latest variants of SARS-COV-2 are not as amenable to lockdown measures as earlier variants of the virus. What worked in Wuhan may not work in Shanghai without some sleight of hand.

In the meantime, is Shanghai really poised to go back to “normal,” At least one local resident interviewed by Bloomberg was happy with the latest developments.

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Whether the new rules stick and expand to a newly reopened Shanghai will depend on politics and, of course, the prevalence of the virus itself.

ChinaDiction assumes the below is not photoshopped, and that nature really is reasserting its claim on China’s hub of commerce.

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Would you trust this man to fix the economy while you’re busy trying to become President and General Secretary for life?
Premier Li Keqiang and those rumors. Photo: Online

He’s Premier Li Keqiang and whether he’s headed for bigger things, or perhaps a quiet life under house arrest, is the big question circulating from one high-castle China watching garret to another via Tweets and op-ed pieces in all the big-name media sources.

Bloomberg (paywall) said:

Premier Li Keqiang’s warning of China’s ‘complicated and grave’ employment situation on Saturday was particularly dire, even for someone who has sounded the alarm for months. But it was also notable another reason: It didn’t mention President Xi Jinping’s Covid Zero strategy. 

Just days earlier, the Politburo Standing Committee – on which both Xi and Li sit – warned China’s citizens not to question Covid-control policies that have locked down cities across the country, including Shanghai. That statement, by contrast, contained no mention of the economy. 

The Wall Street Journal (paywall) opines that Li is stepping out of the shadows – and not to find his keys:

For years, President Xi Jinping has sidelined China’s second most powerful political figure, Premier Li Keqiang. Now, Mr. Li is re-emerging as a force in his own right, a potential counterbalance atop the Chinese government that hasn’t been seen for nearly a decade.

With China mired in its worst economic funk in recent memory, Mr. Li is helping press China’s authoritarian leader to dial back some measures that steered the country away from Western-style capitalism and contributed to China’s economic slowdown, according to government officials and advisers close to decision-making.

The Financial Times (paywall) acknowledges splits but is holding back on turning to phrases such as “irreparable fissures,” which is what we at ChinaDiction are inclined to think are emerging:

The fight is between senior party and government officials focused on economic growth and those more concerned with security and party control. Neither group threatens Xi’s primacy but the fallout has echoes of the infighting and policy guesswork that plagued China under Mao Zedong.

‘You’re beginning to see this phenomenon that we saw in the late Mao period,’ said Victor Shih, a professor of Chinese political economy at the University of California, San Diego. ‘Just because they’re all followers of Xi Jinping, doesn’t mean that there isn’t competition and power struggles.’

Bill Bishop, in his May 11 newsletter lays out the issues but is sensibly cautious on suggesting where it’s all headed;

There are increasing numbers of rumors and overseas stories about pushback against Xi. There is little question many are very unhappy with him, and that his policies are very problematic, but are the people talking to foreign media reflecting a real split that has political potential or are they just grumbling? Does the grumbling matter if the security services and the PLA support Xi?

A prominent overseas Chinese Youtube political talkshow pundit has been saying for over a week that different groups joined together to force Xi to “abdicate ??” peacefully and that it will happen at the 20th Party Congress, and Li Keqiang will take over as the compromise General Secretary. I remain very skeptical, but this claim and various spinoffs of it have legs.

There is a long history of rumors getting pushed out overseas, recycled back into China, some officials start talking about them, then they get pushed back out overseas as “confirmed”. There is also a long history of the losing side of any political struggle leaking misinformation. At this point all I can say is maybe there is more than just grumbling about Xi along with tactical adjustments by him to deal with the sudden increase in risks, but my base case is that he is still on track for a very successful 20th Party Congress. I would be ecstatic to be wrong.

Nikkei Asia (paywall) is more assertive on the question of a power crisis:

Premier Li Keqiang’s recent sudden comeback to power is the talk of the town in China. 

China’s premier is traditionally responsible for macroeconomic policies, as the head of the State Council, China’s government. But President Xi Jinping has concentrated power in his hands, and for the past nine years, Li’s authority was in name only.

But the dynamics have changed, dramatically, over the past month.

Members of the Chinese Communist Party were astonished on Saturday morning as they turned the pages of the People’s Daily, the mouthpiece of the ruling party. On Page 2 was the full text of a speech delivered by Li three weeks prior. 

The impact was not so much the content of the premier’s words at the April 25 conference on clean politics, but the 10,000-character space the speech was given in the official paper.   

Can China – the upper echelons of its politics at least – not have a huge fight about this?

It’s not just cabbages in Shanghai, global supply-chain chaos, support for an incredibly unpopular and increasingly unsuccessful war in Europe, inflation and possible impending food shortages everywhere you look, but Xi’s attacks on the private sector, which ironically he’ll need to continue to lock down cities to serve his zero-Covid policy.

He may achieve a successful 20th Party Congress, but it won’t be the joyride he possibly expected a year ago. He is now likely weakened politically in ways that don’t go away overnight.

Oh, and, yes, right, The Wall Street Journal (paywall) reports that an internal directive will “bar senior officials from owning property abroad or stakes in overseas entities, whether directly or through spouses and children.” It’s a move that’s sure to win over his 20th Party Congress electorate. It’s difficult sometimes not to think that it’s Xi versus the world and given he’s won so far, he’s sure he’ll continue to do so.

All that can be said at this point is that he will continue to win until he doesn’t, but in the meantime, a lot of people would like to see him on his way.

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Come visit Xinjiang
Inside Kashgar in the Xinjiang Autonomous Uyghur Region. Photo: Unknown

That’s what the United Nations human rights chief has been planning to do for a very long time – and now it’s finally confirmed, the South China Morning Post reports (paywall).

Michelle Bachelet’s trip to China will last six or seven days and will include a visit to Xinjiang, where the Chinese government has been accused of cultural genocide.

While a spokeswoman … said no exact date had been officially confirmed, Bloomberg earlier reported that it will take place next week.

The SCMP reported that the United States high commissioner will meet with senior government officials in Xinjiang.

In other words, it’s highly, highly unlikely she will return with anything but good news.

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Biden in Asia to ‘counter China’
Joe Biden went on a whirlwind Asian trip. Courtesy of the White House

US President Biden has been in Asia this week “as he tries to refocus attention on a top foreign-policy priority of countering China,” The Wall Street Journal reports (paywall).

Biden is visiting Japan and South Korea, and, according to the Journal …

… will also shore up a partnership with Australia and India and formally unveil an economic initiative designed to bolster trade and investment with the region, though some allies and partners have given the plan mixed reviews for lacking specifics and not widening access to U.S. markets.

Meanwhile, US national security adviser Jake Sullivan told reporters on Wednesday that US intelligence thinks it highly likely that North Korea could conduct a nuclear test, a missile test – or both – during Biden’s trip, due to the usual “rising tensions.”

At the time of press, North Korea had launched no missiles, which could be due to supply-chain bottlenecks, said one Taipei-based tech reporter.

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What’s in a word?

Quite a bit when billions of dollars are involved, reports The Economist, which notes that JPMorgan lost its position as the lead underwriter for the Hong Kong listing of Kia Chinese cloud-computing firm when it described China’s ailing tech sector as “uninvestable.”

Actually, according to Bloomberg, editors at the bank had in fact tried to replace the “uninvestable” word with the more neutral word “unattractive,” but – as editors will – they “missed some mentions.”

All is well. Two days after Alex Yao, of JPMorgan Chase, released his gloomy “uninvestable” report, he released a new one in which he says, according to the The Economist:

Thanks to some encouraging noises on the [US] delisting dispute, Mr Yao believes that geopolitical risks have receded enough to give his valuation framework some purchase once again. He duly offered new, higher price targets for 18 companies.

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The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy of China Factor.