As we await Sunday’s introduction of the official lineup for the 25-person Politburo, the 7-person Standing Committee, the Premier and the President over the next five years, what has already become clear is that the Chinese Communist Party (CCP) has gone all in on Xi Jinping. While the field might possibly look somewhat different at the next Party Congress, the broad contours for the global picture for the coming five years are becoming clear. The bold brushstrokes were drawn by Xi during his nearly two-hour speech delivered last Sunday. Since then, there have been ample signs of what’s to come. The team being assembled around Xi will be made up of apprentices filling in with finer brush strokes for Xi, not near-peers willing to argue for painting a different landscape.

“Dystopia with Chinese Characteristics” (my title). Original print artwork by Yang Yongliang

So what are the big takeaways from the Congress so far for the global community to consider?

  • The great rejuvenation of the Chinese nation” is the goal for the CCP and Xi alike. There’s no daylight between Xi Jinping and the Party on this point. China wants back at the center of the world.
  • Zero-COVID policy can only change marginally. It bears the weight of Xi’s claim that “Chinese-style democracy” is superior to traditional Western-style democracy. Look, fewer people died, right?
  • Whatever the economic headwinds, the ship of state will stay “secure” and on-course as long as Xi is at the helm. (Translation: state security and ideology to be prioritized over Deng’s economic reforms)
  • Taiwan’s incorporation into China — which, post-Hong Kong, is now only feasible by outright coercion or military force — is the sine qua non of the full achievement of China’s great rejuvenation

And what are some key things that we’ll be watching in this this space in the weeks and months ahead to gauge Xi’s and the CCP’s success in making progress toward this vision:

  • Fall-out from Russia’s invasion of Ukraine (neither of which were mentioned once in Xi’s speech)
  • Performance of China’s economy in light of Covid lockdowns, real estate sector implosion, regulatory crackdown on tech firms, and the drag of Belt & Road Initiative debt burdens
  • Push-back from the U.S. and Europe, from non-aligned nations and the developing world, and from China’s own citizens as Xi pushes dictatorship with Chinese characteristics as his “new choice for humanity.”
  • And, most crucially from my individual perspective, the “tech-tonic” shocks upending global economies as competition over microchip innovation, production and supply continues to ramp up

The Fat Lady won’t be singing in Beijing until Sunday but we know who’s in the lead after three innings. In the deciding game of this once-every-five year series, the Emperor For Life team currently holds a three-to-nothing lead over the Court of Rivals team.

Chinese President Xi Jinping attends the opening ceremony of the 20th National Congress of the Communist Party of China, at the Great Hall of the People in Beijing, China October 16, 2022. REUTERS/Thomas Peter

Who scored? As reported by Josh Chin in today’s Wall Street Journal (see below), Ding Xuexiang, Xi’s Chief of Staff, and Li Qiang, party boss in Shanghai, are both being widely mooted in Beijing as favorites to land Standing Committee appointments. Both are “Xi’s men.” Given the nature of the National Congress process, a candidate whose name is being touted loudly at this stage of the process is almost guaranteed to be formally anointed come Sunday. Additionally, the fact that Li Qiang’s name is being advanced as the likely Premier to replace Li Keqiang means another run based on the scoring system set up in my Chutes and Ladders post last Friday. So, after three innings, score three for the Emperor For LIfe team.

The third name being picked in today’s reporting by Josh Chin is Li Xi, the top party official in Guangdong Province. This player is harder to score in the sense that Guangdong is the province most committed to international trade and investment and Xi has been actively narrowing that space. For instance, during his nearly two hour speech during the opening of the Congress on Sunday, Xi mentioned “security” (read, “surveillance”, “lack of consumer data protection” and “insecurity for private investors”) more than sixty time while giving lip-service to market forces only three ties. Of course, Xi may be bringing Li Xi on board precisely to keep Guangdong on a tight leash but there’s at least some possibility that Li Xi could represent a balancing perspective representing power blocs more committed to maintenance of international trade linkages, if not economic liberalization. We’ll score Li Xi as a Court of Rivals batter who was stranded on second without scoring. After three innings, no runs in for Court of Rivals team.

Final comment: The score may only be 3-0, but the game is shaping up as a total rout by Team Emperor For Life.

Stay tuned for further updates as we get to the later innings. For now, take a look at Josh Chin’s fine reporting below from today’s Wall Street Journal.

China’s Xi Jinping Likely to Pack Party Leadership With Allies in Show of Strength

Shanghai party chief is a front-runner for premier, people close to party leaders say, despite outrage over Covid-19 lockdown

Chinese leader Xi Jinping is preparing to name loyalists to top positions in the Communist Party hierarchy, according to people close to party leaders, in a move that would strengthen his hand as he confronts mounting challenges at home and abroad—from a sluggish domestic economy to Western resistance to Beijing’s ambitions on the world stage.

One of the allies Mr. Xi aims to promote is Li Qiang, currently the top party official in Shanghai, the people said. Earlier this year, Mr. Li shouldered blame for a weekslong Covid-19 lockdown during which tens of millions of residents in the country’s financial center struggled to access food and medical care.

Mr. Li is likely to be elevated to the Politburo Standing Committee, the party’s top decision-making body, according to the people, who say the 63-year-old is also considered a leading contender to be named premier at China’s annual legislative gathering next spring.

China’s premier has traditionally assumed responsibility for the country’s economy, which has been battered in recent months by Mr. Xi’s zero-tolerance approach to Covid-19, a dramatic downturn in the property market and a regulatory crackdown that has created uncertainty for business.

China’s National Bureau of Statistics postponed the release of third-quarter gross-domestic-product data on Monday, a day before it was set to be published. An official at the statistics bureau cited unspecified work arrangements as the reason for the delay.

Others likely to join the Standing Committee include Mr. Xi’s chief of staff, Ding Xuexiang, and the top party official in Guangdong province, Li Xi, who once worked as a secretary to a veteran of the Communist revolution with close ties to Mr. Xi’s family.

The people close to party leaders cautioned that final deliberations on the makeup of the Standing Committee won’t be revealed until Sunday when the party elite is due to complete the membership of its top decision-making bodies for the next term.

China’s State Council Information Office didn’t respond to requests for comment.

The makeup of the next Standing Committee and the identity of the next premier have been the subject of intense speculation among Chinese politics watchers ahead of this week’s twice-a-decade party congress in Beijing, where Mr. Xi is poised to break with recent precedent and claim a third term as party leader.

While Mr. Xi seems assured of securing another five years in power, growing public frustration over his management of Covid-19 and the economy has provided ammunition to potential rivals trying to check his power by ensuring his allies don’t monopolize senior appointments.

If Mr. Xi gets his way, despite the pushback, he would surround himself with like-minded officials and upend succession norms that the party had honed over recent decades to prevent a return to Mao-style dictatorship. This might make it easier for Mr. Xi to pursue his priorities, but it also raises the stakes should that agenda fail, political analysts said.

“The risk of things going wrong and him getting the blame is much greater,” said Ryan Manuel, managing director of Bilby, a Hong Kong-based artificial intelligence firm that analyzes Chinese government documents.

With more allies holding key positions, Mr. Xi, who turns 70 next year, may start to delegate some of his authority to his trusted lieutenants as he gets more advanced in age, some of the people said. He has fewer political opponents to worry about, having neutralized many of them with anticorruption purges and cut off retired party elders from meddling in politics, they said.

A promotion for Li Qiang would mark a surprising political comeback. He appeared to be given extra leeway in handling a local Covid-19 outbreak in Shanghai in February, but infections spread out of control. A wave of online anger over the ensuing lockdown spilled over into physical clashes with officials, prompting several analysts to predict Mr. Li had lost his chance at making the Standing Committee.

China’s current premier, Li Keqiang, is due to step down next spring after completing two five-year terms—the maximum allowed under China’s constitution. He has occasionally contradicted Mr. Xi and pressured the Chinese leader to dial back policies seen as hurting growth. Political analysts nevertheless consider him one of China’s least influential premiers, whose sway over the economy dissipated as Mr. Xi centralized decision-making in his own hands.

Li Qiang, Li Xi and Li Keqiang aren’t related.

Analysts say other candidates to succeed Li Keqiang include Wang Yang, the head of China’s top government advisory body, the Chinese People’s Political Consultative Conference, and Hu Chunhua, currently the youngest among the country’s four vice premiers. In recent decades, Chinese premiers had prior experience as vice premier, a criterion that both Messrs. Wang and Hu satisfy.

Some foreign officials and academics have regarded Messrs. Wang and Hu as standard bearers for liberal-minded overhauls that favor market principles. Both are seen as being outside Mr. Xi’s orbit, having been brought along by other political patrons, though both have publicly backed the Chinese leader’s policies. The people close to party leaders said Mr. Hu may fall short of making the Standing Committee.

Among likely new members of the Standing Committee, Li Xi, Guangdong’s party chief since 2017, could step up as the next chief of the party’s top anticorruption watchdog, the Central Commission for Discipline Inspection, the people said.

Mr. Ding, the 60-year-old aide to Mr. Xi, is positioned to be named executive vice premier early next year, according to the people.

Top party theorist Wang Huning and anticorruption czar Zhao Leji are likely to join Mr. Xi as the only members of the current Standing Committee to get another term, though both are likely to be given new responsibilities, the people said.

He Lifeng, the top official at China’s state economic-planning agency and a friend of Mr. Xi since the 1980s, is likely to assume control over economic and financial policy, The Wall Street Journal previously reported. In this role, Mr. He would succeed Vice Premier Liu He, who has been Mr. Xi’s top economic adviser and his point man in trade talks with Washington.

The people close to party leaders and political analysts say Mr. Xi isn’t expected to elevate any potential successors to the Standing Committee, as doing so would undermine his own authority as paramount leader.

Both Li Qiang and Li Xi are too close to Mr. Xi in age to be considered viable successors. While Mr. Ding is younger, he has never served as a regional party boss—an experience long considered an unwritten prerequisite for candidates seeking China’s top political office.

Many in the business community see Li Qiang as a relatively liberal party leader who prefers discussing commercial deals to politics. In the early 2000s, he served as the top commerce official in the coastal province of Zhejiang, home to what would become major private companies including Alibaba Group Holding Ltd. He was later promoted to party secretary of Wenzhou, a city in Zhejiang that became a thriving entrepreneurial hub after China opened up its economy in the late 1970s.

After Mr. Xi became party leader in 2012, Mr. Li took top jobs in the relatively affluent regions of Zhejiang and Jiangsu, before he was elevated to Shanghai party boss in 2017.

If Mr. Xi can make Li Qiang premier, he would be able to consolidate control over the formulation of economic and social policy, said Chen Gang, a senior research fellow at the National University of Singapore’s East Asian Institute. “China’s reform and opening will continue, but the pace will slow down. Zero-Covid policy will continue, and Li may rely on stimulus policies to boost the economy,” he predicted.

Write to Josh Chin at Josh.Chin@wsj.com

Please accept my apology for the mysteriously truncated version of yesterday’s post you received and please click here to access to the corrected and full version of that post. Thanks to several of you for pointing this issue out to me promptly and thanks to all of you for your patience with this goof.

Kevin Rudd, global president of the Asia Society and former Prime Minister of Australia, knows China well. He wrote in yesterday’s Wall Street Journal that:”The 20th Congress, which gets under way Oct. 16th will be different (from other Congresses since the opening of the 1982 reform era). There’s only one appointment that matters now: Xi Jinping, China’s Chairman of Everything. The delegates will reappoint Mr. Xi to a third five-year term as general secretary by a vote of 2,296 to 0.”

I don’t disagree with the main point that Kevin Rudd is making here but there is also a more nuanced view that is important to bring to bear. Wednesday’s post set the table for this more nuanced view. That perspective involves understanding the seven appointments which will be announced on Sunday to the Standing Committee under Xi. The crux of the issue is whether those seven appointments represents a line-up of Xi loyalists — in which case Rudd’s take is spot on — or whether there are appointments enfranchising power-bases at odds with Xi’s direction and indicating that the Party wants some checks on Xi’s untrammeled authority.

Here’s my cheat-sheet to reading next week’s Standing Committee appointments in light of this question:

Chutes & Ladders: 20th CPP National Congress Edition

So what to watch for?

(Scenario 1) Signs that the CCP is totally bought into Xi being Chairman of Everything

Premier Li Keqiang (aged 67 and therefore normatively eligible for another term) is gone

— No one in their early 50s joins the Standing Committee (showing Xi doesn’t want heir apparent)

Chen Min’er, a Xi loyalist and champion of Xi’s war on poverty, is appointed

Ding Xuexiang, a Xi loyalist and Xi policy enforcer, is appointed

(Scenario 2) Signs that the CCP wants some checks on Xi’s untrammeled exercise of power

He Lifeng, an internationally-friendly protégé of retiring economic czar Liu He, is appointed

Hu Chunhua, who like Xi had a stellar early career but hasn’t been close with him since, is appointed

Li Hongzhong, party boss of Tianjin and not “a dyed-in-the-wool” Xi man, is appointed

Li Xi, party boss of independently minded Guangdong province, is appointed

Finally, keep an eye on Chen Quanguo, party boss of Xinjiang in charge of Uyghur “reeducation,” and Liu Jieyi, head of the Taiwan Affairs Office and the political dimension of the Taiwan reunification project. Whether their stars shine brightly or dim will also give an indication of the degree of CCP support for Xi’s hardline policies on these two fronts.

So that’s the scorecard I recommend you follow. We’ll circle back next week and tally up the score after the Standing Committee line-up has been brought out, in rank order, onto the main stage of the 20th National Party Congress.

With the 20th National Congress of the Chinese Communist Party (CCP) kicking off this coming Sunday, it’s useful to step back from the game of handicapping short-term odds and to take for a moment a longer-term perspective. We can return to anticipating the likely ‘chutes and ladders’ of 20th National Congress outcomes later this week: the (near-certain) likelihood of Xi Jinping securing a third term as President, unprecedented in the post-Mao era, and an examination of the ascendent and dimming stars of various Standing Committee incumbents and candidates and what that portends for the next five years. For now, it’s useful to step back and evaluate how it came to be — and what it means for China’s future — that Xi stands on the threshold of entering the CCP pantheon with near-totalitarian power. The key question to consider is whether Xi managed to bend the CCP and the country to his will or whether Xi’s rise reflects what the CCP has willed for China’s future.

A screen shows Chinese President Xi Jinping during a show commemorating the 100th anniversary of the founding of the Communist Party of China at the National Stadium in Beijing, China June 28, 2021. REUTERS/Thomas Peter TPX IMAGES OF THE DAY

The two best authorities on this question are Elizabeth Economy (The Third Revolution: Xi Jinping and the New Chinese State [2018] and The World According to China [2022]) and Kerry Brown (Xi: A Study in Power [2022]). Informed by their insights, I will attempt a super-summary of the forty-years which have led up to Sunday’s moment in history and then tackle that key question.

~ ~ ~

The market reforms which the CCP started experimenting with behind the curtain in 1978 and which it then publicly introduced in 1982 had an extraordinary run of success in elevating China’s economy. This occurred first under Deng Xiaoping’s informal leadership from 1982 through 1997 and then continued, in somewhat overlapping fashion with Deng’s tutelage, under the more regularized leadership of, first, Jiang Zemin (1993-2003) and then, starting in 2003, Hu Jintao. By 2007, post-WTO economic reforms were coming on stream, more far-reaching liberalizations were on the horizon, and a new system of divided authority and orderly succession in the Standing Committee was taking shape. (Under this system, the posts of President and Premier as well as the seven (usually) Standing Committee slots could not be held by any one person for more than two five-year slots. If at the time of a National Congress, occurring every five years, a one-term incumbent was 67 years old or less, he (virtually always a ‘he’) would be eligible according to the “seven up, eight down” rule to serve another five year term. If he was 68 or older, however, he would be obliged to step down.)

In 2007, Western observers, myself included, could be forgiven for thinking that China was on a development path in line with Western values and the post-WWII world order. But starting with the Financial Crisis and then, over the next fifteen years, this alignment started to diverge. Progressively, in step with Xi’s anointment as President in 2012 following his leadership struggle with Bo Xilai and his subsequent consolidation of power through his signature “Tigers & Flies” anti-corruption campaign, Xi started positioning his “Rejuvenated” China as deserving equal political stature on the world stage with the United States and equal, if not superior, stature to the West in matters of values and culture. His triumphalist speech at the 2017 National Congress made this claim explicitly and emphatically for all the world to hear. The Belt & Road Initiative and the Zero-COVID policy became Xi’s monumental stages — internationally and domestically — for playing this claim out for all the word to see.

Despite serious setbacks in 2022 with an imploding real estate market and a diminished tech sector, with COVID lockdowns and social discontent, and with the embarassment which his “friend without limits” has caused Xi personally in Ukraine, Xi looks set to enter the CCP pantheon this Sunday to be installed on a pedestal he has made for himself — higher than Deng Xiaoping’s and not lower than Mao Zedong’s.

This enthronement could not have been scripted by one man. The near absolute consolidation of power in the hands of one person could not be the work of one person unless there were far more evidence of resistance and rebellion in the ranks of other CCP power-brokers whose oxen had been gored. As this incisive opinion piece by Kerry Brown in yesterday’s New York Times persuasively argues, Xi’s leadership ethos is the CCP’s ethos and Xi’s laser-focus on making China “strong, respected and feared” will remain as strong even when Xi leaves the stage. It will remain for as long as the CCP can keep the lights on and the stage lit.

The answer is that many things were lost. China’s move to terminate all official bi-national cooperation with the U.S. to mitigate the effects of climate change was not only short-sighted. It was, for China, a classic case of cutting off one’s nose to spite one’s face. The action was purely political — to protest a visit to Taiwan by Speaker of the U.S. House of Representatives Nancy Pelosi, a visit that had ampled precedent going back to 1977 when Speaker Newt Gingrich visited Taiwan. The consequences of China’s unprecedented and over-reactive action — eliminating countless programs to reduce greenhouse gas emissions, promote improve water quality, conserve natural habitats and bio-diversity — will have as much of a detrimental effect, if not more, on developing China as it will on the United States’ developed economy.

Here’s a case study of one opportunity — built for scale and speed — that has been lost …

(click for original, free to read version of this article from Environmental Progress & Sustainable Energy)

by Doug Barry, Senior Director of Communications, U.S.-China Business Council

(view original article in USCBC’s Fifty States, Fifty Stories series)

U.S.-China EcoPartners Terry Cooke (CPGP) & Mme. Song Yuyan (TEDA EcoCenter) sign with Philadelphia & Tianjin Mayors

Policy entrepreneurs are plentiful in America. You can find them everywhere, devoting ideas and energy to getting things done. Terry Cooke founded the non-profit China Partnership of Greater Philadelphia with a focus on getting the United States and China to cooperate on climate change. Getting what he wants done has become more challenging as the two countries ping pong between cooperation, competition, and conflict. 

How did he get here and how is he managing multiple challenges simultaneously? He’s been interested in global affairs for a long time, starting in 1988 when he joined the US Commerce Department as a foreign commercial service officer in Shanghai. His two-year posting there bracketed the Tiananmen Square convulsion. Years flew by with postings in Tokyo, Berlin, and Taiwan. In 2002 he took leave from the foreign service and started a consulting business focusing on Taiwan and high tech. 

In 2006, Cooke joined the World Economic Forum (WEF) as Director of Asian CEO Partnership with a focus more on Japan than China. He left in 2008. “It was too much travel,” he recalled. “I worked in New York, had my family in Philadelphia, commuted to Geneva, and had responsibility for multiple events in Asia.” 

One of the best parts of the WEF job was sitting in on multiple sectoral meetings with CEOs. His main takeaway was that many of these corporate leaders were talking about the challenges of climate change, not as PR or greenwashing, but about the need to transform their companies into low-carbon leaders. “I decided that was the hook that I wanted to hang the second half of my career on when I came back to Philadelphia.” 

Cooke recalled his time in Berlin and the impression made by comparing what was then called West Germany with the East, which at the time was terribly polluted. When the Berlin Wall fell, the country united and the cleanup of the Eastern part of the country began. The lesson was that great progress to improve the environment is possible if the political will exists and if clear policy creates predictability for businesses and investors. 

The good old days 

In 2010, Cooke joined the Wilson Center, a Washington, DC think tank, as senior fellow for US-China climate cooperation. His research there led to publication of his book Sustaining US-China Cooperation in Clean Energy. Coincident with this research, Secretary of Energy Steven Chu introduced a “national labs program for the 21st century” for clean energy technologies as an outgrowth of the 10-year framework for US-China cooperation on energy and the environment pioneered by Treasury Secretary Hank Paulson in the waning years of the George W. Bush administration. 

President Barack Obama and Secretary Chu worked to expand Paulson’s program, adding three US-China clean energy research centers in different industrial areas: electric vehicles initially at the University of Michigan, clean coal at the University of West Virginia, and energy efficient buildings through a Penn State-led program at the Philadelphia Navy Yard. 

“Disappointing as these decisions were, there was still potential in the climate change mitigation space, even as other areas like micro-electronics drifted further off-limits.”

To support and expand the energy-efficient buildings program, Cooke founded in 2011 the China Partnership of Greater Philadelphia whose mission was raising awareness and facilitating collaboration to create and bring to market low-carbon solutions for the built environment. For the first years, things went great with lots of local and Chinese partners, mayoral visits, and stakeholders to plan low-carbon futures for urban centers in the United States and China.  In 2014, China Partnership of Greater Philadelphia and its partner organization in China, the TEDA EcoCenter, were competitively selected for and awarded a prestigious U.S.-China EcoPartnership Award, administered jointly by the U.S. and PRC Governments.

Cooke (rear row, 2nd from left) at 2014 EcoPartnership Award Ceremony with former SecState John Kerry and Ambassador Max Baucus

“We had some fits and starts, including an unfortunate near-death experience involving IP piracy.” Isn’t this ironic given the long-standing concerns the US government and private sector have about “collaborations” that lead to forced technology transfers and outright pilfering? “It would be if that’s what happened. Instead, the main culprit was an American in an American company.” The company did not want to make a public fuss because of reputational concerns. “We had to shift focus and change our business model to make sure that would never happen again, but it was a one-off, not something endemic with the work we were doing.” 

Pulling the plug on energy cooperation 

If not as immediately dire, there were other experiences that could have been crippling to his non-profit. Two of them involved former president Donald Trump, who pulled the United States out of the Paris Climate Accords and in 2020 terminated the US-China EcoPartnership program just seven days before leaving office. “Disappointing as these decisions were, there was still potential in the climate change mitigation space, even as other areas like micro-electronics drifted further off-limits.” 

The shifting binaries involved with competition and cooperation were making the scope for business cooperation more limited and the non-profit’s work more problematic. Competition is now spilling into the space previously marked by cooperation. The shriveling of discourse between government leaders has only made things more difficult. 


“What used to be very effective work through industrial cooperation in lowering emissions is now off the table, though some academic and some intergovernmental climate cooperation continues.”

Early in the Biden administration, excitement was generated by the appointment of John Kerry as climate envoy. Kerry and his PRC counterpart, Xie Zhenhua, had worked closely and cooperatively under Biden’s vice presidency during the Obama administration but Biden administration policy would not be a simple reset to that period. While cooperation continues in areas such as scientific exchange and standards setting, industrial cooperation toward low-carbon goals now enjoys little federal-level support. This even as the planet continues to warm and nations like China and India continue to struggle reducing their addiction to coal. 

Kerry recently pointed out in a Foreign Affairs article that there’s still time to avoid disaster but that in the coming years many trillions of dollars will be needed to fund and field clean energy technology. The money, he said, must largely come from the private sector which stands to gain from what could amount to a new industrial revolution. 

Cooke worries that the emphasis on zero-sum competition with China over recent years will make broad cooperation in climate change extremely difficult. “The competition drive is spilling into areas that used to be defined by cooperation,” he said. One example is the network of 11 national-level eco parks organized through the Greater Philadelphia-Tianjin EcoPartnership. Germany invested in one such park in 2020, focused on green maritime technology, to the tune of more than $3 billion. The PHL-TJ EcoPartnership had defined a focus on energy-efficient, securely smart and healthy buildings at sustainable-city scale for this network of 11 eco-parks. The emphasis was on large-scale opportunities supported by very large companies and leavened by the innovation of smaller, entrepreneurial companies. “Given the problems in the bilateral relationship, that large scale opportunity has receded for the foreseeable future at least.”  

Enter the contradiction 

Cooke is highly attuned to the potential for contradiction between commercial competition and climate cooperation, worrying that when Kerry steps down, the space for commercially led environmental solutions to be applied at scale and speed in the two largest global economies will shrink even more. 

“What used to be very effective work through industrial cooperation in lowering emissions is now off the table, though some academic and some intergovernmental climate cooperation continues.” He concedes that the continuation of even these relationships is not assured given the political environment in both countries.  

“My organization was about creating a platform for a US-Sino Eco-Park in China bringing advanced energy efficiency services and technologies to the park. That is viewed negatively now in Washington. What’s disappointing is that other countries friendly to us are now established in China in commercial areas that we’re better at but won’t be able to contribute to because official reluctance for cooperation.” 

Cooke says: “The United States needs to be smart about its clean energy approach to China. Yes, China wants to dominate an emerging 21st century industry. But if we out-innovate and out-compete China technologically, we can access their market profitably and also collaborate commercially to forestall the worst effects of climate change. Is it really in the US interest not to have active engagement with China, aside from discrete small companies that are more easily taken advantage of? I’d prefer to see us going in with a convoy approach of large companies and smaller innovators protected by US government policies and focused on delivering measurable, low-carbon solutions at a globally impactful scale. To my mind, this is a huge missed opportunity.”

Cooke as panelist at 2016 U.S.-China EcoPartnership event at Diaoyutai Compound, Beijing

Cooke’s non-profit, which he recently rebranded as ReGen250 to accommodate additional, non-China-focused environmental programs, continues to assess options for low-carbon partnerships with China. What elements would a US private sector partner want to support that his organization could strongly endorse? “Alternatively, we can just decide we’re only going to focus on local programs in the Mid-Atlantic to increase access to a greener built environment.”  

What about the Department of Energy’s prior interest in cooperation? “I have had some high-level discussions within the Department. The entire group that previously supported the commercial exchange at this high level between the national government and subnational actors, including Eco-Partners and city level groups, is not active right now. It was disappointing to learn that.” 

“Despite the challenges in the US-China relationship, subnational initiatives, especially in energy and climate change mitigation solutions, should be encouraged and supported.”

Despite the setbacks, Cooke believes there are still areas for engagement with China regardless of the government in power. One involves people-to-people exchanges, albeit challenging at the present moment given China’s zero-COVID policies. Examples of programs that deserve to survive are the adoption of Chinese children, music (he helped the Philadelphia Orchestra create an artist residency program in China) and artistic exchange, student exchange, and most importantly, business. He believes that the once promising universe of business cooperation has constricted but there still remain spaces outside of sensitive technologies where businesses can and must connect. 

As a member of the local ecosystem that support US-China commercial relations, he’s not giving up. Rather, he envisions the different China business-related ecosystems across the United States networking and sharing best practices. He said that one such effort was made recently at a Midwest university, but he expressed some disappointment at the fact that the focus turned out to be on a recently discovered vulnerability involving WeChat. It was a security-led briefing, not the commercially minded dialogue that is needed. 

Cooke isn’t ready to walk away from his gift of multi-stakeholder cooperation on climate change or the imperative for non-profits like his to act locally and globally. “Efforts at the subnational level have an important place in helping American companies navigate a complex environment in China. They have a great potential impact because they can organize a well-protected convoy in the place of one isolated boat, big or small.” 

“Despite the challenges in the US-China relationship, subnational initiatives, especially in energy and climate change mitigation solutions, should be encouraged and supported.” 

(view original article in USCBC’s Fifty States, Fifty Stories series)

So interesting how an existential threat — near-term: Russia/Ukraine; longer-term: China/Taiwan — helps focus the national mind.

The Biden Administration announced on Tuesday that, in rapid-fire sequence following the launch of the multi-lateral Indo-Pacific Economic Framework (IPEF) in Tokyo last week, the U.S. Government is making a decisive step, through Executive Action, in the direction of a bilateral U.S.-Taiwan Free Trade Agreement (FTA).

The economic logic in support of a U.S.-Taiwan FTA was evident 20 years ago. Here, dusted off, are two publications which make that point:

Now, finally, U.S. domestic political logic is swinging in line with the geoeconomic imperatives. If it comes to pass, it will have been worth the wait.

Over 10 years, Xi Jinping has methodically amassed power. Beginning with an unprecedented consolidation of military support, Xi then launched his ‘Tigers and Flies’ campaign, sidelining his political rivals along with officials accused of corruption. Over many years he patiently laid the groundwork to elevate Xi Jinping Thought to match the official stature of Mao Zedong Thought, and edge out Deng Xiaoping Thought, in the CCP’s ideological pantheon. He then overturned international commitments regarding Hong Kong, and brought that free-wheeling and Westernized city to heel with the introduction of a new security law. At the last 19th Party Congress in 2017, Xi tossed aside Deng’s “hide-and-abide” (韜光養晦、有所作為) approach to international relations and gave a triumphalist speech, announcing that China had not only arrived on the world stage but that it deserved central position on that stage. With the outbreak of the Covid-19 epidemic, Xi used sharp-elbow tactics to block scientific investigation into its origins in China and ordered sweeping zero-Covid lockdowns to highlight his government’s ability to take more effective action than was possible for democratic governments in the US and the West.  The Winter Olympics were meant to be Xi’s star-turn to demonstrate — more to the Chinese people than to international audiences (many of whom undertook diplomatic boycotts of the Games because of oppression of Uyghurs in Xinjiang and other issues) — that he was a flawless and unrivalled champion.  He even went so far as to claim that the authoritarian system he presided over represented a superior form of democracy to Western liberal democracy.

Chinese President Xi Jinping during a show commemorating the 100th anniversary of the founding of the Communist Party of China

Along this path to unrivalled power in China, Xi first jettisoned the system of collective rule by the Standing Committee of the Politburo which Deng had put in place to guard against recurrence of unbridled rule by any one individual, epitomized by the last years of Mao’s rule.  Longer term, Xi’s aim in amassing power has been to discard the limit of a president to two five-year terms, another safeguard Deng put in place and which he himself observed.

The announcement of leadership for the next five-year term will happen at the CCP’s 20th Party Congress in Beijing this autumn. At that meeting, Xi is widely expected to be named for a precedent-shattering third term. This will mark a historic high-point for Xi. His systematic consolidation of power has been designed, in part, to create an air of inevitability about this outcome. While his selection is still overwhelmingly likely, a number of significant fissures have appeared in recent weeks which crack this façade of total control.

ZERO-COVID

While undoubtedly successful in limiting the number of infections, hospitalizations, and deaths in the first two years of the pandemic, Xi’s Zero-Covid policy has created a raft of problems for China more recently, most notably during the highly-transmissible omicron phase. While incidences of infection, hospitalization and death have been dropping worldwide, they have been surging in China, with the number of confirmed cases more than quadrupling from mid-February to mid-March of this year. Elderly citizens are especially at risk due to their low rates of vaccination and hospitals have already become overwhelmed, due in part to the low number of hospital beds on a per capita basis in China. While it can be argued that the Zero-Covid policy ‘bought time’ for the development of vaccines, Xi’s championing of the locally developed Sinovac vaccine and his refusal to permit the use of more clinically-effective vaccines developed in the West, has blunted that advantage somewhat since the Sinovac vaccine is notably less effective against the omicron variant. The Zero-Covid policy has also meant that there is practically zero immunity in the Chinese population as a result of exposure to the virus as it becomes endemic worldwide. If SARS-COV-2 can be compared to a flame, China’s population is like a vast field of tinder. Finally, the economic and social costs have become glaringly apparent with the lockdown of an entire province, Jilin, in the northeast and the of Shenzhen and Dongguan – China’s two largest manufacturing hubs for information and communications technology (ICT) — in the south.

While Xi will, with considerable justification, continue to claim credit for his “triumph” over the coronavirus, China is by no means out of the pandemic woods and the setbacks of the last month make his strident claims ring more hollow, both internationally and domestically.

REAL ESTATE

In September last year, Chinese real-estate development firms began to feel the severe discomfort of a massive hang-over following years of real-estate speculation partying.  The problems were most evident in real-estate giant Evergrande but soon spread to a host of other significant players in the field such as Fantasia, Modern Land, China Property Group and Xinyuan Real Estate Group.  At the institutional level, the problems hitting the $5 trillion sector were the result of a unique PRC nexus of aggressive real estate development, lax banking, and local government incentive structures.  More simply, the problems resulted from “unrestrained borrowing, expansion as an end-in-itself, and corruption.”  

While the PRC Government claimed this week that the real-estate free-fall has been “stabilized,” pricing data from real estate developers across the country continue to show sharp deterioration. Also this week, Evergrande announced a further delay in sharing its plan for restructuring and for paying back bonds and other financial obligations.  The government has strong reason to put on a brave face while throwing up a curtain of opacity around the problem.  Property-related industries account for more than 30% of China’s economic output.  Continued problems in the sector could drag China’s growth below the optimistic, post-pandemic official target of 5% growth, a minimum level which must be maintained in the years ahead for China to escape the ‘middle income trap.’ More immediately, it risks alienating an important swath of the urban public, 80% of whose household wealth is tied up in real estate and who see their property values plummeting. (A particularly aggrieved segment of this population are buyers who have paid up front to the developers, as is common in China, for a property not yet built and for which construction has halted indefinitely while values continue to slide).

While Xi has voiced loud promises to not let the bottom fall out of this sector and to support homeowners currently caught in the fallout, there is little evidence on the ground of these promises translating into reality.  Meanwhile, the situation risks alienating the public and sowing dissent among officials.

‘COMMON PROSPERITY’

As measured by the Gini coefficient, China ranked fourth in the world in 2022 for greatest wealth disparity and inequality (after South Africa, Namibia and Sri Lanka). While Deng Xiaoping had announced famously in the late 1980s that “to get rich is glorious” and to “let some get rich first,” the extreme degree of inequality persisting in China four decades later is a source of growing social and political concern. The heady days of 10% growth have long ago disappeared and Chinese who thought they would be boarding on a later rail-car in the national train of prosperity now worry that the train may have departed, stranding them on the platform.

To counter this source of social unease, Xi unveiled with great fanfare in 2021 a policy of ‘Common Prosperity.” Writ large, this policy was meant to cement Xi’s place — side-by-side with Mao and with Deng slightly in the background – in China’s pantheon of modern heroes.  In this telling, Mao was the one who roused China to throw off its ‘Sick Man of Asia’ bondage to foreign imperialists and to stand up. Deng contrived a transitional stage of capitalist-style wealth-creation for enough Chinese that China could attain wealth and power (富权). It was left to Xi to complete this project of national rejuvenation, by reinstituting a Marxist “Common Prosperity’ for all Chinese and returning China to the center of the world stage.

Without getting into either the ideological weeds (such as Xi’s ‘Dual Circulation’ strategy) or deep into the tangle of economic measures (e.g., restrictions on overseas listings by Chinese companies, user-data and other controls put on Chinese Big Tech firms, clampdown on student test-prep and video game commercial sectors, etc) which Xi embraced in 2021 to advance his Common Prosperity agenda, the general effect was felt quickly and keenly in the form of abrupt economic slowdown. In the first quarter of this year, the Common Prosperity program has been ‘walked back’ by numerous party officials who have emphasized that it represents a historic project more than an immediate project. Premier Li Keqiang, in his lengthy speech to 3,000 deputies at the opening of the National People’s Congress earlier in the month, mentioned Common Prosperity only one time. For educated Chinese — who have been skillfully parsing official pronouncements closely ever since the Cultural Revolution for clues about where the country is headed — this lack of visibility and endorsement for Xi Jinping’s signature program represents a remarkable degree of push-back for Xi by top-level leaders.

UKRAINE

Chris Buckley’s report in last Friday’s New York Times traces the contours of what is potentially the most damaging crack to appear in Xi’s carefully-crafted, monolithic façade of power and control.  The article details the war of words that has erupted on the Chinese internet following the warning delivered by a respected scholar and politically-connected insider, Hu Wei, to the effect that China “risked becoming a pariah if it didn’t denounce Russia’s invasion of Ukraine.” As was covered in last week’s post and as continues to play out this week, Chinese officials have contorted themselves by claiming to be neutral and wanting peace while following Putin’s lead in not calling the ‘special military operation’ either a war or an invasion, in not objecting to Russia’s violation of Ukraine’s sovereignty and territorial integrity, and in amplifying Kremlin disinformation about U.S. bio-military labs in Ukraine. 

As argued last week, this has the potential to grow into a strategic blunder for China with significant geopolitical fall-out. It may affect not only Xi’s ambitions to retake Taiwan – the last territorial piece in his China Rejuvenation plan – but to bear long term costs for China as a rising power in the Indo-Pacific region and for its standing in the world at large.

None of this is to suggest that Xi will not get his third term as President this fall. It is only to say that the carefully-cultivated blooms of infallibility and inevitability are now off the XJP rose.

Xi has been in power for less than half of Putin’s tenure (18 years as President and 4 years as the power behind the throne for Medvedev) but there are doubtless people in Zhongnanhai wondering to themselves, post-Putin’s invasion, whether Deng didn’t get it right with his moves to limit the untrammeled exercise of power by an individual leader.

On February 4th, at the conclusion of their day-long summit in Beijing, Vladimir Putin and Xi Jinping declared that the friendship between Russia and China “has no limits.” That same day, the Beijing Winter Olympics officially began, ending a little more than two weeks later on February 20th. On February 24th, Russia’s full-scale invasion of Ukraine began.

There has been extensive analysis of the three major miscalculations Putin has made up to this point: (1) his overestimation of the readiness and effectiveness of his military machine; (2) his underestimation of the resilience and fighting spirit of the Ukrainian people; and (3) the speed and scale with which NATO and EU countries, along with many others, have come together to sanction Russia and to support Ukraine (in all ways short of direct military involvement on, or in the air above, Ukrainian territory). It is too early to tell whether a fourth major miscalculation may have to do with Putin’s misplaced faith in the degree of economic, financial and trade support which China would provide Russia to backfill against these sanctions).

But what about Xi Jinping? What is his calculus for advancing (his interpretation of) China’s interests through this crisis? And what miscalculations has he appeared to have made so far?

Xi’s first miscalculation was immediate and damaging. He is known to have had some discussion with Putin on Feb. 4th about the imminent “special operation” in Ukraine. It is not clear whether Putin lied to him or Xi simply failed to ask the right questions to take Putin’s measure. In either case, Xi Jinping is known to have been caught by surprise and ‘perturbed’ by the scale, duration and ruthlessness of Putin’s “special operation.” As described in my February 4th post “Four Seismic U.S.-China-Russia Shifts,” Putin’s move forced Xi, unexpectedly and very publicly, to choose between his new-found friendship without limits and adherence to China’s mantra-like stated policy of non-interference in the affairs of sovereign nations, as enunciated in 1954 in Zhou Enlai’s Five Principles of Peaceful Co-existence (and championed explicitly with regard to Ukraine’s territorial integrity following Russia’s annexation of Crimea in 2014)

Evidence of Xi’s miscalculation of Putin’s intentions in Ukraine became apparent in the initially hesitant and fence-sitting response by the PRC officials during the first two weeks of the crisis. On the one hand, Chinese officials refused to refer to the invasion publicly with any term other than Putin’s Orwellian “special operation” terminology; pivoted reliably to blaming the crisis on NATO rather than Russia aggression; blocked a series of actions from being taken against Russia in the U.N. Security Council; amplified Russian disinformation about the U.S. operating bio-military labs in Ukraine (a play out of the FSK, formerly KGB, playbook which suggests that Putin is contemplating the use of bio- or chemical weapons and is ready to throw sand in the world’s eyes by blaming the U.S. and/or NATO for their eventual use); and has even embedded Chinese journalists with Russian military units on the ground in Ukraine. On the other, China says its the friend of both Ukraine and Russia; talks about the need for the cessation of violence; offers publicly to mediate between the two sides while not actually taking any steps toward a mediation effort); and repeats the mantra of its Five Principles of Peaceful Coexistence as if Putin’s actions in Ukraine were taking place in some parallel universe.

There have been other related miscalculatiions. For instance, the PRC Government has been repeatedly caught off balance by the Biden Administration’s aggressive use of classified U.S. intelligence findings, with his Administration quickly de-classifying key reports and pushing the information out into the public sphere, both domestically and internationally. This began with President Biden’s sharing in real-time with the world the U.S. intelligence community’s pre-invasion assessments that Putin had made the decision to invade. This very public use of previously hush-hush intelligence findings marks a clear break from past White House precedent and has also been aimed at China in recent weeks: first, in divulging the fact that Xi Jinping had prior knowledge of the invasion from his Feb. 4th meeting with Putin and that Xi had, in fact, asked Putin to hold off on initiating that military operation until after the conclusion of the Beijing Winter Olympics; and, second, in disclosing publicly on the eve of Secretary of State Anthony Blinken’s March 14th meeting with China’s top diplomat Yang Jiechi the fact that Beijing had received requests from Moscow for military and economic assistance to aid its war effort. These and other revelations have punctured China’s contrived public posture and shown that, behind the peaceful resolution rhetoric and thin veil of neutrality in the conflict, the reality is that China is not sitting on the fence but has indeed been coming down on Russia’s side.

The initial confusion in China’s response and now the growing evidence of China’s support, up to a point, for Russia were probably to be expected : under-the-table support for Putin was inevitable given the top-down nature of Chinese government decision-making and the personal investment which Xi had made in Putin and Russia just weeks earlier. Just as powerfully through, China wants to keep some fig-leaf semblance of its Five Principles of Peaceful Coexistence policy because its repudiation would roil China’s international relations, among others, with its Belt & Road Initiative partner countries. Equally, it does not want to run afoul of the trip wire of U.S.-led financial and economic sanctions by aiding Russia overtly with military aid, financial relief or with trade in sanctioned commodities like microchips, especially following the stern warning delivered by Secretary Blinken earlier this week.

Over the last week, there are signs that the Beijing leadership is trying to “elevate” its initial indecision and aloofness into what it believes can be a long-term winning strategy for coming out ahead of the West when flames die out and the dust settles from the Ukraine conflagration. The Zhongnanhai thesis is that it is not worldwide supporters of post-WWII liberal democracy that are rallying to support Ukraine as much as it is a “civilizational” struggle between a Russian identity promulgated by Putin and a Western identity and set of values represented primarily by the U.S. and Europe. The thinking goes that, if China stands back from this clash, it can pick up the pieces and emerge stronger than either of the two depleted civilizational antagonists. This accords with Xi Jinping’s decade-long championing of the rejuvenation, and even superiority, of Han identity and the Chinese model. In Xi’s thinking, this policy of studious and disciplined aloofness — limited to cheering on Russia with “dog-whistle” encouragement and forms of back-channel support it can get away with while seizing opportunities to denigrate the West to his domestic audience and to countries in Central Asia, the Pacific, and Africa — has two clear advantages: (1) it avoids any risk for Xi in decisively backing ‘a loser’ in Putin, an outcome already sealed in his international pariah status and increasingly likely on the battlefield even if Kiev is taken and the war shifts to an insurgency; and (2) it gives Xi space to attend to the many immediate challenges facing him in the run-up to the critical Party Congress this fall where he is bidding for a third, controversial term as President. Those challenges include: a sharp fall-off in economic performance (brought on in part by excesses of his own Common Prosperity policy introduced over the past year; rapidly rising Covid case-counts and lock-downs in Shenzhen and Donguan in the south, in Shanghai and in Jilin to the northeast; and the recent hardening of attitudes toward China throughout much of the world as ably analyzed by Elizabeth Economy in The World According to China and in her Jan/Feb 2022 article in Foreign Affairs.

The jury is out but I submit that this policy of official aloofness may well prove to be Xi Jinping’s biggest and longest-lasting miscalculation with regard to Ukraine. Xi may think in ethno-nationalist terms, but much of the world’s response is underpinned by non-Western allies such as Japan, South Korea and Singapore who have benefitted from, and are committed to upholding, the post-WWII order based on national sovereignity and the rule of law. In fact, it is Taiwan which represents and symbolizes the fullest repudiation of Xi’s thesis. Absent some mis-adventure by North Korea (which is a disturbing possibility) or a premature move by Xi to extinguish the symbol Taiwan represents (which I consider very unlikely in the near-term), Xi’s official ‘aloofness’ and sub-rosa support for Putin will be remembered by the world in the wake of the Ukraine conflict. There are times when a person, or a nation, must choose sides. Not choosing sides in such situations is, in fact, a choice that is noticed and remembered. Pretending not to choose sides while actually backing the ‘wrong side’ is morally repugnant. There is not a middle way.

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