Trade War
Welcome to the 133rd edition of Trade War.
While rumors of a coup against Xi Jinping are unconvincing, don’t think there aren’t powerful CCP members unhappy with his monopoly power. And remember that Xi himself has warned of the threat of seeming coup plotters in the past.
Starlink helping Iranians evade government censorship is sure to raise concerns in China - in particular, about how it might be used in a future conflict over Taiwan. That’s not going to win Elon Musk new friends in Beijing.
Biden once again says U.S. is ready to support Taiwan - but did he say something even more precedent shattering? That’s what some are saying. Top banks state they are ready to leave China in event of Cross Strait hostilities. Foreign Minister Wang Yi talks tough at the UN. And Secretary of State Antony Blinken warns China about supporting Russia in its invasion of Ukraine.
Youthful consumers in China stop spending. Credit bubble keeps unwinding. And European companies facing bleak prospects.
Hong Kong becomes hardship posting as it loses its allure with financial firms. And Singapore beats out Hong Kong in financial center ranking.
And what explains the remarkable longevity of the Chinese Communist Party, why Xi Jinping broke with his father and has become such an anti-reformer on the economy, plus three new book recommendations from me in the Washington Post.
Xi Jinping coup rumors? ‘Come on, people’
As rumors swirl that some kind of coup has happened with Xi Jinping under house arrest, here’s some helpful advice:
“Rule number one of Chinese politics watching: don’t believe (basically routine) rumors of palace coups in the lead up to a Party Congress unless the evidence is truly overwhelming,” writes Yale University professor Taisu Zhang in a tweet thread.
“Rule number two: don’t believe rumors of coups that can only be traced to overseas Chinese media.”
“Which all leads to rule number three: let’s have some common sense, shall we? What would a coup against the most powerful Chinese politician of the past 40 years realistically look like? Normalcy in Beijing with no visible large scale troop movements whatsoever? Come on, people.”
(And I would add, take them even less seriously when they are being pushed by those with Falun Gong affiliations, as is the case this time.)
Retired Indian military officers and Falun Gong journalists
“For once Twitter’s algorithm seems to be working properly. I have received literally ZERO tweets claiming there’s a coup in a China. I wouldn’t even know about the rumors were it not for the tweets I see debunking them,” tweets George Washington University professor Donald Clark.
“You don’t follow enough retired Indian military officers and Falun Gong journalists. It’s not the algorithm, it’s the echo chamber,” tweets former U.S. Department of Defense official Drew Thompson in response.
‘Endangering political security’
Of course, there is no doubt that some powerful CCP members are unhappy about Xi’s monopoly of almost all political power. The sentencing on Friday of top security official Sun Lijun, given death with a two-year reprieve, hints at that dissent.
According to the charges against him, Sun is guilty of “unscrupulously cultivating personal followers and interest groups to achieve personal political gains” and “seriously undermining the unity of the Party and endangering political security."
Senior officials have claimed before that there were earlier coup attempts narrowly averted too. And remember that Xi himself suggested previously that something akin to a coup plot had happened.
“[Xi’s] three-volume tome, “The Governance of China”, touted as a distillation of “Xi Jinping thought”, contains only anodyne speeches, with grittier parts removed,” reported The Economist last year.
“Pore through those available only in Chinese and a different picture emerges. In 2016 he talked of party members who “openly curse the party”. In 2018 he said: “Political problems within the party had not been fundamentally resolved.” He accused some members of “paying only lip-service” to the party’s leadership, and of remaining corrupt. Speaking in January at the Central Party School, a training academy for senior officials, Mr Xi said the country faced an “unprecedented increase” in domestic and external risks.”
Elon Musk: ‘Activating Starlink’
As Elon Musk activates Starlink to help the protesting people of Iran get access to the global web, you can be sure that China’s leaders are watching and don’t like it one bit.
As I said to the Financial Times several months ago after Musk used Starlink to support Ukraine in resisting Russia’s invasion (and as was reported in Trade War, Newsletter 120 - June 25, 2022), state-affiliated military researchers in China have been “very clear” that Starlink “poses a threat to China,” given the possibility it could be used to support Taiwan in a military conflict.
“Their concern almost certainly is shared by the Chinese government and military,” I told the Financial Times.
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