An ongoing economic breakdown and President Xi Jinping’s inability to secure decent relations with the West appear to be causing a power struggle between him and powerful factions even as he prepares to consolidate his power at the Party Congress in 2022.
An exclusive white paper by the Jamestown Foundation claims that the powerful figures arraigned against the President include former Vice-President Zeng Qinghong and current Vice-President Wang Qishan. Rumours of in-fighting were apparently reported in semi-official NetEase and Sohu websites, adding that “several senior officials in the political-legal apparatus, which includes the police, the secret police and the courts, had plotted ‘sinister and treacherous’ actions against a top party leader, generally thought to be Xi”. The Foundation says these reports have since been deleted.
Factionalism at the top, reported to be impossible given Xi’s near-total control over the party, government and the PLA, is said to have worsened in recent months. It is being fuelled by the country’s mediocre economic performance. The Foundation report says: “In the wake of the near-bankruptcy of Evergrande Group, one of the largest real-estate conglomerates in the world, more property and financial firms are reportedly unable to service their multi-billion yuan debt burdens. The total national debt reached 335 per cent of GDP at the end of last year, while external debt alone has breached the $2.68 trillion mark.”
While the infrastructure sector is debilitated, reports say local government investment vehicles are steeped in debt, having incurred loans of “53 trillion yuan ($8.23 trillion) through the end of 2020, up from 16 trillion yuan ($2.5 trillion) in 2013”. China also faces a power crunch that is “partially caused by depleted coal supplies”.
There is nothing positive to report from the foreign affairs front as well. “On the foreign-policy front, trade talks with the U.S. have yet to be reopened, and the Biden administration is persevering with efforts to build a coalition of like-minded nations to counter China’s increasingly aggressive behavior in areas including in the Taiwan Straits, the East China Sea and South China Sea.”
President Xi himself is busy preparing for the 20th Party Congress in 2022. His supporters insist the groundwork is being laid for anointing him as the “core for life” of the Chinese Communist Party.
The Jamestown Foundation report tries to link faces of Xi’s critics to their patrons in order to test the in-fighting theory. It says that punitive actions taken against certain persons is the result of the government coming down heavily against the patrons of such persons. It refers to well-known Chinese journalist Hu Shuli, founder-editor of the liberal online magazine, Caixin.com, getting away scot free for her free, even derisive and sarcastic comments against President Xi for his foreign policy failures.
The report says: “Over the past 20 years, Hu has written and edited many controversial stories exposing the wrongdoings of powerful officials and princelings (offspring of party elders). Her courageousness is attributed to the “protection” provided by Wang Qishan, who was a member of the Politburo Standing Committee (PBSC) and Secretary of the Central Commission for Disciple Inspection – the party’s highest anti-graft body – during Xi’s first term (2012-2017). Wang is considered by many to be one of Xi’s closest allies, he was given the highly respected title of Vice-President in 2013, and that he was once considered Xi’s main advisor on relations with the US. However, Wang has gradually fallen out of favor with the supreme leader since leaving the Politburo in 2017.” It is said Hu is living dangerously despite having a powerful mentor.
Another close friend of Wang, a real-estate moghul named Ren Zhiqiang, was, however, not spared, and thrown in jail on charges of corruption after his internet posts about a “disrobed clown who insists on being the emperor”.
The second leader said to be taking on President Xi is former PBSC member and Vice President Zeng Qinghong, said to be a close aide of former president Jiang Zemin and a major leader of the so-called “Shanghai Faction”. “Zeng is believed to be the ‘protection umbrella’ behind several multi-billion enterprises. One of these enterprises, Fantasia Holdings, which is headed by his niece Zeng Baobao, was recently downgraded to ‘default’ status by rating agencies due to failure to pay interests on bonds and promissory notes. As of the middle of this year, Fantasia had current liabilities – those that have to be repaid within a year – of nearly 50 billion yuan ($7.5 billion).”
Zeng has been blaming the highest party authorities for her company’s downfall and her target is said to be Xi who has recently cracked down on several real estate and technology companies.
Xi’s supporters feel the President may purge his critics in the near future. He never shrank away from purging his “arch-enemy, former PBSC member and internal security czar Zhou Yongkang, who was sentenced to lifetime imprisonment in 2015”. The purges are said to be going on because Zhou “still has large numbers of followers and underlings in the police, the secret police, and the judicial system”. Xi had arrested three former Vice Ministers of public security – Li Dongsheng (2013), Meng Hongwei (2018) and Wang Like (2020) for “economic and disciplinary infractions”.
The latest is that “former executive Vice Minister of Public Security Fu Zhenhua was being investigated for similar crimes”. The Foundation report says: “Even though Fu played a key role in the investigation of Zhou Yongkang in 2013 and 2014, he is believed to have lost Xi’s trust due to his close association with other Zhou protégés such as Wang Like. Most of the disgraced former senior police cadres have been accused of “forming cliques and factions” within the internal security system.”
Currently, anti-graft units that owe allegiance to Xi are “investigating 25 financial units including the People’s Bank of China, major state banking and insurance companies as well as regulatory agencies such as the China Securities Regulatory Commission and the China Banking Regulatory Commissions”. As Wang Qishan and Zeng Qinghong have, in both their public and private capacities, been active in the investment and banking sectors, it is possible that more protégés of these alleged political foes of Xi may yet be uncovered, the report says.
The denouement of these in-fightings will be known at the 20th Party Congress. Xi hopes the congress will “confirm his ability to retain his status as party General Secretary, State President and Chairman of the party’s Central Military Commission for a decade”. In the meantime, the report says, “internecine bickering within the party could move beyond rhetorical allusions, and bring about the downfall of at least a couple of former Politburo and PBSC members”.