Newsletter 128 - August 21, 2022
Welcome to the 128th edition of Trade War.
Li Keqiang’s Shenzhen speech on market reform sparks renewed leadership rivalry rumors while others debunk idea that the premier presents any challenge to Xi Jinping (I certainly agree with the debunkers.)
Economy seems stuck in a never-ending slump captive to rolling pandemic lockdowns and a debt-saddled property sector, while censorship of news exacerbates the problem.
Foreign companies fearful of U.S.-China military conflict draw up contingency plans.
Promise fatigue sets in for multinationals still waiting for market access and China is in “self-destruction mode” laments longtime foreign businessman in Beijing.
Record drought hits supply chains for lithium batteries and solar panels in China’s Southwest province of Sichuan and Tesla asks government to support its components suppliers facing power shortages.
Chinese Canadian billionaire Xiao Jianhua gets 13 years in jail and his company an $8 billion fine and a Chinese retail company apologizes for acting too Japanese.
And my latest commentary in SupChina on what the Chinese SOEs delisting from the NYSE tells us about China’s economic direction.
All this plus more in this issue of Trade War.
Li Keqiang: Yellow River & Yangtze ‘will not flow backwards’
Premier Li Keqiang has given a speech in Shenzhen in which he pledges to continue Deng Xiaoping’s Reform and Opening policies, stirring a flurry of debate as to its significance.
In the speech (translation), Li used the colorful phrase “the Yellow River and Yangtze River will not flow backwards,” presumably in reference to his belief that despite recent setbacks, reform will continue inevitably.
The location is noteworthy, given Shenzhen’s status as a hub of entrepreneurial activity and has historical resonance: it was a key stop on Deng’s famed 1992 Southern Tour, in which he jumpstarted reforms after the economy sank into a stupor following the June 4, 1989 Tiananmen Square Massacre.
Does this constitute a resurgence of some long-fought battle for influence between the premier and Xi? Some are making that argument, pointing to Li’s consistent support for a more open economy, while, by contrast, China’s top leader (and Li ‘s boss), clearly prefers a much more statist approach, what I have called elsewhere “Xi Jinping’s ‘Politics in Command Economy.’”
Keep reading with a 7-day free trial
Subscribe to Trade War to keep reading this post and get 7 days of free access to the full post archives.